2.15) PROVISION, CONTINGENT LIABILITIES & CONTINGENT ASSETS
Provisions are recognized when the Company has a present obligation, as a result of past events, for which it is
probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be
made for the amount of the obligation.
If the effect of the time value of money is material, provisions are discounted to reflect its present value using a current
pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the
obligation. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance
cost.
A contingent liability is a possible obligation that arise 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 recognised because it is probable that an outflow of resources will not be required to settle the
obligation. However, if the possibility of outflow of resources, arising out of present obligation, is remote, it is not even
disclosed as contingent liability. The company does not recognize a contingent liability but discloses its existence in the
financial statement.
Contingent assets are neither recognized nor disclosed in the financial statements.
2.16) IMPAIRMENT OF NON-FINANCIAL ASSETS
At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than deferred tax
assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset's
recoverable amount is estimated. For impairment testing, assets are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets
or Cash generating units ("CGU"). The recoverable amount of an asset or CGU is the greater of its value in use and its
fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific
to the asset or CGU. An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its
recoverable amount. Impairment losses are recognised in profit or loss. An impairment loss is reversed only to the
extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognized.
2.17) EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the net profit for the period attributable to equity shareholders by
the weighted-average number of equity shares outstanding during the period. The weighted-average number of equity
shares outstanding during the period and for all years presented is adjusted for events such as bonus issue; bonus
element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares) that have
changed the number of equity shares outstanding, without a corresponding change in resources.
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.
2.18) INVENTORIES
Inventories are valued at lower of cost and estimated net realisable value. Obsolete, defective and unserviceable stocks
are provided for. Materials-in-process are valued at raw material cost and estimated cost of conversion. Cost of
finished goods includes conversion and other costs incurred in bringing the inventories to their present location and
condition
Cost of Inventories is computed on FIFO basis. Goods in transit, if any, are stated at actual cost incurred up to the date
of balance sheet.
2.19) FINANCIAL INSTRUMENTS
I. FINANCIAL ASSETS
A) Initial Recognition And Measurement
Financial assets are recognised when the Company becomes a party to the contractual provisions of the
instrument. Financial assets which are recognised at fair value through profit and loss (FVTPL), its
transaction cost are recognised in the statement of profit and loss. In other cases, the transaction costs are
attributed to the acquisition value of the financial asset. Trade receivables and debt securities are initially
recognised when they are originated. All other financial assets and financial liabilities are initially recognised
when the Company becomes a party to the contractual provisions of the instrument.
B) Classification And Subsequent Measurement
a) Amortised cost: A financial asset is measured at amortised 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.
b) Fair value through other comprehensive income (FVOCI): A financial asset is measured at FVTOCI 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.
c) Fair value through profit and loss (FVTPL): A financial asset which is not classified in any of the above
categories is measured at FVTPL.
Financial assets are not reclassified subsequent to their recognition, except if and in the period the Company
changes its business model for managing financial assets.
C) Cash And Bank Balances
i. Cash and Cash Equivalents which includes cash in hand, deposits held at call with banks and other
short term deposits which are readily convertible into known amounts of cash, are subject to an
insignificant risk of change in value and have maturities of 3 months or less from the date of such
deposits. These balances with banks are unrestricted for withdrawal and usage.
ii. Other Bank Balances which includes balances and deposits with banks that are restricted for
withdrawal and usage.
D) Equity Instruments
All other equity investments are measured at fair value, with value changes recognised in Statement of
Profit and Loss, except for those equity investments for which the Company has elected to present the value
changes in 'Other Comprehensive Income'.
E) T rade Receivables and Loans
Trade receivables are initially recognised at fair value. Subsequently, these assets are held at amortised cost,
using the effective interest rate (EIR) method net of any expected credit losses. The EIR is the rate that
discounts estimated future cash income through the expected life of financial instrument.
F) Debt Instruments
Debt instruments are initially measured at amortised cost, fair value through other comprehensive income
('FVOCI') or fair value through profit or loss ('FVTPL') till de-recognition on the basis of (i) the entity's
business model for managing the financial assets and (ii) the contractual cash flow characteristics of the
financial asset.
G) Impairment of Financial Asset
In accordance with Ind-AS 109, the Company applies Expected Credit Loss (ECL) model for measurement
and recognition of impairment loss on the following financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, security
deposits, bank deposits and bank balance.
b) Trade receivables
The Company follows 'simplified approach' for recognition of impairment loss allowance on trade
receivables which do not contain a significant financing component. The application of simplified approach
does not require the Company to track changes in credit risk. Rather, it recognises impairment loss
allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that
whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not
increased significantly, 12 month ECL is used to provide for impairment loss. However, if credit risk has
increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument
improves such that there is no longer a significant increase in credit risk since initial recognition, then the
entity reverts to recognising impairment loss allowance based on 12-month ECL.
The impairment losses and reversals are recognised in Statement of Profit and Loss.
H) Income recognition
Interest Income
Interest income is accrued on a time proportion basis, by reference to the principal outstanding and effective
interest rate applicable.
Dividend Income
Dividend income from investments is recognised when the right to receive payment has been established.
II. FINANCIAL LIABILITIES
A) Initial Recognition And Measurement
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the
instrument. Financial liabilities are initially measured at the amortised cost unless at initial recognition, they
are classified as fair value through profit and loss. In case of trade payables, they are initially recognised at
fair value and subsequently, these liabilities are held at amortised cost, using the effective interest method.
B) Classification And Subsequent Measurement
Financial liabilities are subsequently measured at amortised cost using the EIR method. Financial liabilities
carried at fair value through profit or loss; are measured at fair value with all changes in fair value recognised
in the Statement of Profit and Loss.
C) De-Recognition of Financial Instruments
The Company derecognizes a financial asset 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.
A financial liability (or a part of a financial liability) is derecognized from the Company's Balance Sheet when
the obligation specified in the contract is discharged or cancelled or expires.
III. Offsetting of Financial Assets and Financial Liabilities
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when,
and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to
realise the asset and settle the liability simultaneously.
2A RECENT INDIAN ACCOUNTING STANDARDS (IND AS)
Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under
Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2025, MCA has not notified
any new Standard or amended any existing standard which are applicable from April 1, 2024.
2B significant accounting judgements, estimates and assumptions
a) The preparation of financial statements in conformity with Ind AS requires the management to make
judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these
estimates are based on the management's best knowledge of current events and actions, uncertainty about
these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying
amounts of assets or liabilities prospectively.
b) Information about critical judgments in applying accounting policies, as well as estimates and assumptions that
have the most significant effect to the carrying amounts of assets and liabilities within the next financial year,
are included in the following notes:
i. Measurement of defined benefit obligations - Note 20
ii. Measurement and likelihood of occurrence of provisions and contingencies - Note 20 & 27 and 38
iii. Recognition of Deferred Tax Liabilities - Note 7
The fair values of financial instruments as below have been classified into three categories depending on the inputs used
in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements).
The categories used are as follows
Level 1: Quoted prices (unadjusted) in active markets: This level of hierarchy includes financial assets or liabilities that
are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. This category
consists of mutual fund investments.
Level 2: Valuation techniques with observable inputs: 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).
Level 3: Valuation techniques with significant unobservable inputs: 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
a) Short-term Financial Assets and Liabilities are stated at carrying value which is approximately equal to their fair
value.
b) Management uses its best judgement in estimating the fair value of its financial instruments. However, there are
inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value
estimates presented above are not necessarily indicative of the amounts that the Company could have realized or
paid in sale transactions as of respective dates. As such, fair value of financial instruments subsequent to the
reporting dates may be different from the amounts reported at each reporting date.
Note 41: Financial Instruments and Risk Review (Continued)
B. Financial Risk Management Framework
The Company's business activities are exposed to a variety of financial risks, namely credit risk, liquidity risk and market
risk (currency risk and interest rate risk). The Company's management and the Board of Directors have the overall
responsibility for establishing and governing the Company's risk management framework. The Board of Directors which
is responsible for developing and monitoring the Company's risk management policies. The Company's risk management
policies are established to identify and analyze the risks faced by the Company, to set and monitor appropriate risk limits
and controls, periodically review the changes in market conditions and reflect the changes in the policy accordingly. The
key risks and mitigating actions are also placed before the Audit Committee and Board of Directors of the Company.
i) Credit Risk
Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual
obligations. Financial instruments that are subject to credit risk principally consist of trade receivables, investments,
loans, cash and cash equivalents, other balances with banks and other financial assets. None of the financial instruments
of the Company result in material credit risk.
Trade Receivable: The Company's exposure to credit risk is influenced mainly by the individual characteristics of each
customer. The demographics of the customer, including the default risk of the industry and country, in which the
customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals,
establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants
iii) Market Risk
Market risk is the risk that the changes in market prices such as foreign exchange rates, interest rates and equity prices
will affect the Company's income or the value of its holdings of financial instruments. Market risk is attributable to all
market risk sensitive financial instruments including foreign currency receivables and payables and long-term debt. The
objective of market risk management is to manage and control market risk exposures within acceptable parameters,
while optimizing the return.
a) Currency Risk
The Company is subject to the risk that changes in foreign currency values impact the Company's exports revenue. As
at 31s March, 2023, the net unhedged exposure to the Company on holding assets (trade receivables ) other than in
their functional currency is as under:
Note 42:
The Company operates in a single segment i.e. textile having the same risk and return. Hence reporting as per Indian
Accounting Standard (Ind AS) 108 "Operating Segments" is not applicable.
Note 43: Leases
The Company had initially adopted Ind AS 116, Leases, effective from April 01, 2019, using the modified retrospective
approach. However, upon reassessment, it was determined that the provisions of Ind AS 116 are not applicable to the
Company, as the arrangements previously considered as leases do not meet the definition of a lease under the standard.
Accordingly, all balances related to right-of-use assets, lease liabilities, and associated adjustments have been
derecognized from the books of account. The net impact of the reversal has been recognised in the Statement of Profit
and Loss during the current year. Comparatives have not been restated.
Note 44:
During an earlier year, a Memorandum of Understanding (MOU) was entered between the company and its two directors.
As per the terms of MOU, the company will use the power supplied by the meters standing in the name of such directors
and makes payment of electricity bills directly to the power supply company.
Note 45: Disclosure under section 186(4) of the Companies Act, 2013
The required details of the investments made during the year and investments outstanding as on 31.03.2025 are given in
note 6 to the financial statements.
Note 46:
The company could not take balance confirmations from some of trade receivables and trade payables as at close of the
year; therefore, the balances of some of trade receivables and trade payables are subject to confirmation and
consequential reconciliation/adjustments arising therefrom if any.
Note 47: Disclosure under Micro, Small and Medium Enterprises Development Act, 2006
The principal amount of ^9,58,335 due to Micro, Small and Medium Enterprises (MSMEs) as at the end of the year remains
unpaid, with no interest payable thereon.
Note 49: Additional regulatory information required by Schedule III of the Companies Act 2013:
a) Valuation of PP&E and Intangible Assets: The Company has not revalued its property, plant and equipment
(including right-of-use assets) or intangible assets or both during the current or previous year.
b) Loans and Advances in the nature of Loans to Promoters, Directors, KMPs and the related parties: The
Company has not granted loans and advances in the nature of loans to Promoters, Directors, KMPs and the
related parties either severally or jointly with any other person.
c) Details of Benami Property: No proceedings have been initiated or are pending against the Company for
holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules
made thereunder.
d) Willful Defaulter: The Company has not been declared willful defaulter by any bank or financial institution or
Government and any Government Authority.
e) Relationship with Struck off Companies : The Company does not have any transaction/relationship with any
struck off company
f) Registration of Charges or Satisfaction with Registrar of Companies: The Company does not have any charges
or satisfaction which is yet to be registered with ROC beyond the statutory period.
g) Compliance with number of layers of companies: The Company has complied with the number of layers
prescribed under the Companies Act, 2013.
h) Compliance with approved scheme(s) of arrangements: The Company has not entered into any scheme of
arrangement which has an accounting impact on current or previous financial year.
i) Utilisation of borrowed funds and share premium:
A. The Company has not advanced or loaned or invested 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 whatsoever by
or on behalf of the Funding Party (Ultimate Beneficiaries), or
b) Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
B. The Company has not received any fun from any person(s) or entity(ies), including foreign entities
(Intermediaries) with the understanding that the Company 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 to or on behalf of the Ultimate Beneficiaries.
j) Undisclosed Income: There is no income surrendered or disclosed as income during the current or previous year
in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.
k) Details of Crypto Currency or Virtual Currency: The Company has not traded or invested in any crypto currency
or virtual currency during the current or previous year.
Note 50:
The Company has reclassified previous year figures to conform to this year's classification.
As set out in our attached report of even date For and on behalf of the Board of Directors
For K. K. JHUNJHUNWALA & CO.
Chartered Accountants S/d- S/d-
Firm Registration no. 111852W Narendra Kr. Sureka Pradeep Kr. Sureka
Managing Director Whole Time Director
S/d- DIN 01963265 DIN 01632706
CA Surendra Sureka
Partner
Membership no. 119433 S/d- S/d-
UDIN: 25119433BMHPSU2619 Archit Sureka Jyoti Kothari
Chief Financial Officer Company Secretary
Mumbai, May 21, 2025
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