K. Provisions, Contingent Liabilities and Contingent Assets
(i) Provisions involving substantial degree of estimation in measurement are recognised
when there is a present obligation as a result of past events and it is probable that
there will be an outflow of resources embodying economic benefits in respect of
which a reliable estimate can be made.
(ii) Provisions are discounted if the effect of the time value of money is material, using
pre-tax rates that reflects the risks specific to the liability. When discounting is used,
an increase in the provisions due to the passage of time is recognised as finance
cost. These provisions are reviewed at each Balance Sheet date and adjusted to
reflect the current best estimates.
(iii) Insurance claims are accounted on the basis of claims admitted or expected to be
admitted and to the extent that the amount recoverable can be measured reliably and
it is reasonable to expect ultimate collection. Any subsequent change in the
recoverability is provided for. Contingent Assets are not recognised.
(iv) Contingent liability is a possible obligation that may arise from past events and its
existence will be confirmed only by occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of the Company or it is not
probable that an outflow of resources embodying economic benefits will be required
to settle the obligation and the same are not recognised but disclosed in the financial
statements.
L. Intangible Assets
(i) The costs of computer software acquired and its subsequent improvements are
capitalised. Internally generated software is not capitalized and the expenditure is
recognized in the Statement of Profit and Loss in the year in which the expenditure
is incurred.
(ii) The cost incurred for right to un-restricted usage of power transmission system for
drawal of power from State grid to its mills were capitalized as the Company is
expected to yield future economic benefits.
(iii) The useful lives of intangible assets are assessed as either finite or indefinite. Intangible
Assets with finite lives are carried at cost less accumulated amortisation and impairment
losses if any and are amortised over their estimated useful life based on straight-line
method. The Company do not have any intangible assets with indefinite lives.
The estimated useful lives of intangible assets with finite lives are assessed by the
internal technical team as detailed below, that are different from the useful lives
prescribed under Part C of Schedule II of the Companies Act, 2013:
(iv) The intangible assets that are under development phase are carried at cost including
related expenses and attributable interest, and are recognised as Intangible assets
under development.
(v) The residual values, useful lives and methods of amortisation of intangible asset are
reviewed at each reporting date and adjusted prospectively, if appropriate.
M. Investment Properties
(i) An investment in land or buildings both furnished and unfurnished, which are held
for earning rentals or capital appreciation or both rather than for use in the production
or supply of goods or services or for administrative purposes or sale in the ordinary
course of business, are classified as investment properties.
(ii) Investment properties are stated at cost, net of accumulated depreciation and
impairment loss, if any except freehold land, which is carried at cost.
(iii) The Company identifies the significant parts of investment properties separately,
which are required to be replaced at intervals. Such parts are depreciated separately
based on their specific useful lives determined on best estimate basis upon technical
advice.
(iv) Depreciation on investment properties are calculated on straight-line method based
on useful life of the significant parts as detailed below, that are different from the
useful lives as indicated under Part C of Schedule II of the Companies Act, 2013:
(v) The residual values, useful lives and methods of depreciation of investment properties
are reviewed at each reporting date and adjusted prospectively, if appropriate.
N. Operating Segments
(i) Operating segments are identified on the basis of nature and usage of products and
reported in a manner consistent with the internal reporting provided to Chief Operating
Decision Maker. The Company's business operation comprises of two operating
segments viz., Textile and Windmills.
O. Financial Instruments
(i) The Company initially determines the classification of financial assets and liabilities.
After initial recognition, no re-classification is made for financial assets, which are
categorised as equity instruments at FVTOCI, and financial assets / liabilities that are
specifically designated as FVTPL. However, other financial assets are re-classifiable
when there is a change in the business model of the Company.
(ii) Fair Value Hedge
Changes in the fair value of forward contracts that are designated and qualify as fair
value hedges are recognized in the income statement, together with the changes in
the fair value of the hedged item that are attributable to the hedged risk. If the hedge
no longer meets the criteria for hedge accounting, changes in the fair value of the
hedged item attributable to the hedged risk are no longer recognized in the income
statement.
When a hedged item in a fair value hedge is a firm commitment (or a component
thereof) to acquire an asset or assume a liability, the initial carrying amount of the
asset or the liability that results from the entity meeting the firm commitment is
adjusted to include the cumulative change in the fair value of the hedged item that
was recognised in the balance sheet, with a corresponding gain or loss recognized
in Profit or Loss.
Financial Assets
(iii) Financial assets comprise of investments in equity, loans, trade receivables, cash
and cash equivalents and other financial assets.
Initial recognition and measurement
(iv) All financial assets are recognised initially at fair value plus, in the case of financial assets
not recorded at fair value through profit or loss (FVTPL), transaction costs that are
attributable to the acquisition of the financial asset.
(v) Where the fair value of a financial asset at initial recognition is different from its transaction
price, the difference between the fair value and the transaction price is recognised as a
gain or loss in the Statement of Profit and Loss at initial recognition if the fair value is
determined through a quoted market price in an active market for an identical asset (i.e.
level 1 input) or through a valuation technique that uses data from observable markets
(i.e. level 2 input).
(vi) In case the fair value is not determined using a level 1 or level 2 input as mentioned
above, the difference between the fair value and transaction price is deferred appropriately
and recognised as a gain or loss in the Statement of Profit and Loss only to the extent
that such gain or loss arises due to a change in factor that market participants take into
account when pricing the financial asset.
Subsequent measurement
(vii) For subsequent measurement, the Company classifies a financial asset in accordance
with the below criteria:
(a) The Company's business model for managing the financial asset and,
(b) The contractual cash flow characteristics of the financial asset:
Based on the above criteria, the Company classifies its financial assets into the
following categories
(viii) Financial assets are measured at FVTPL except for those financial assets whose
contractual terms give rise to cash flows on specified dates that represents solely
payments of principal and interest thereon, are measured as detailed below depending
on the business model:
Financial Liabilities
(xi) Financial liabilities comprise of Borrowings, Trade payables, Lease Liabilities and
other financial liabilities.
Initial recognition and measurement:
(xii) All financial liabilities are recognized initially at fair value minus, in the case of
financial liabilities not recorded at fair value through profit or loss (FVTPL), transaction
costs that are attributable to the acquisition of the financial liability.
(xiii) Where the fair value of a financial liability at initial recognition is different from its
transaction price, the difference between the fair value and the transaction price is
recognised as a gain or loss in the Statement of Profit and Loss at initial recognition
if the fair value is determined through a quoted market price in an active market for
an identical asset (i.e. level 1 input) or through a valuation technique that uses data
from observable markets (i.e. level 2 input).
(xiv) In case the fair value is not determined using a level 1 or level 2 input as mentioned
above, the difference between the fair value and transaction price is deferred
appropriately and recognised as a gain or loss in the Statement of Profit and Loss
only to the extent that such gain or loss arises due to a change in factor that market
participants take into account when pricing the financial liability.
Subsequent measurement
(xv) All financial liabilities of the Company are subsequently measured at amortised cost
using the effective interest method except for certain items like foreign exchange
forward contracts that do not qualify for hedge accounting are measured at fair
through profit or loss (FVTPL).
(xvi) Transaction cost of financial guarantee contracts that are directly attributable to the
issuance of the guarantee are recognised initially as a liability at fair value.
Subsequently, the liability is measured at the higher of the amount of loss allowance
determined as per impairment requirements of Ind AS 109 and the amount recognised
less cumulative amortization.
P. Fair value measurement
(i) The fair value of an asset or a liability is measured using the assumptions that the
market participants would use when pricing the asset or liability, assuming that the
market participants act in the economic best interest.
(ii) All assets and liabilities for which fair value is measured and disclosed in the financial
statements are categorised within fair value hierarchy based on the lowest level input
that is significant to the fair value measurement as a whole. The fair value hierarchy
is described as below:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2: Valuation techniques for which the lowest level inputs that are significant to
the fair value measurement is directly or indirectly observable.
Level 3: Valuation techniques for which the lowest level inputs that are significant to
the fair value measurement is unobservable.
(iii) For assets and liabilities that are recognised in the Balance sheet on a recurring
basis, the company determines whether transfers have occurred between levels in
the hierarchy by reassessing categorisation at the end of each reporting period (i.e)
based on the lowest level input that is significant to the fair value measurement as
a whole.
(iv) For the purpose of fair value disclosures, the company has determined the classes
of assets and liabilities based on the nature, characteristics and risks of the assets
or liabilities and the level of the fair value hierarchy as explained above.
6. Significant Estimates and Judgements
The preparation of the financial statements requires management to make judgements, estimates
and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities
and the accompanying disclosures, and the disclosure of contingent liabilities. Actual results
could vary from these estimates. The estimates and underlying assumptions are reviewed on
an on-going basis. Revisions to accounting estimates are recognised in the period in which
the estimate is revised if the revision effects only that period or in the period of the revision
or future periods, if the revision affects both current and future years.
Accordingly, the management has applied the following estimates / assumptions / judgements
in preparation and presentation of financial statements:
(i) Revenue Recognition
Significant management judgement is exercised in determining the transaction price and
discounts to customer, which is based on market factors namely demand and supply. The
Company offers credit period to customers and management judgment is exercised in
assessing whether a contract contains a significant financing component.
(ii) Property, Plant and Equipment, Intangible Assets and Investment Properties
The residual values and estimated useful life of PPEs, Intangible Assets and Investment
Properties are assessed by the technical team at each reporting date by taking into
account the nature of asset, the estimated usage of the asset, the operating condition of
the asset, past history of replacement and maintenance support. Upon review, the
management accepts the assigned useful life and residual value for computation of
depreciation / amortisation. Also, management judgement is exercised for classifying the
asset as investment properties or vice versa.
(iii) Current Taxes
Calculations of income taxes for the current period are done based on applicable tax laws
under new tax regime and management's judgement by evaluating positions taken in tax
returns and interpretations of relevant provisions of law and applicable judicial precedents.
(iv) Deferred Tax Asset
Significant management judgement is exercised by reviewing the deferred tax assets at each
reporting date to determine the amount of deferred tax assets that can be retained / recognised,
based upon the likely timing and the level of future taxable profits together with future tax
planning strategies.
(v) Provisions
The timing of recognition requires application of judgement to existing facts and
circumstances that may be subject to change. The litigations and claims to which the
company is exposed are assessed by the management and in certain cases with the
support of external experts. The amounts are determined by discounting the expected
future cash flows at a pre-tax rate that reflects the current market assessments of the time
value of money and the risks specific to the liability.
(vi) Segment Reporting
Management's judgment is exercised to aggregate two or more business segments as
single operating segment, based on economic characteristics, products, production process
and types of customer, which are similar in nature.
(vii) Contingent Liabilities
Management judgement is exercised for estimating the possible outflow of resources, if
any, in respect of contingencies / claims / litigations against the Company as it is not
possible to predict the outcome of pending matters with accuracy.
(viii) Classification of Investment
Management judgement is exercised in determining the following criteria while making
classification of investments:
- the intention of the Company to sell the investment immediately;
- the sale is highly probable;
- it is unlikely that significant change to the sale plan will be made and;
- that plan will not be withdrawn.
Based on this judgement, the investments are classified as "Investment held for sale", if
all the above criteria are met and continue to classify the investment as "Non-current
investment", if the above criteria are not met.
(ix) Impairment of Trade receivables
The impairment for trade receivables are done based on assumptions about risk of
default and expected loss rates. The assumptions, selection of inputs for calculation of
impairment are based on management judgement considering the past history, market
conditions and forward looking estimates at the end of each reporting date.
(x) Impairment of Non-financial assets (PPE / Intangible Assets / Investment Properties)
The impairment of non-financial assets is determined based on estimation of recoverable
amount of such assets. The assumptions used in computing the recoverable amount are
based on management judgement considering the timing of future cash flows, discount
rates and the risks specific to the asset.
(xi) Impairment of Investments in Associates
Significant management judgement is exercised in determining whether the investment in
associates are impaired or not is on the basis of its nature of long term strategic investments
and business projections.
(xii) Defined Benefit Plans and Other long term benefits
The cost of the defined benefit plan and other long-term benefits, and the present value
of such obligation are determined by the independent actuarial valuer. An actuarial valuation
involves making various assumptions that may differ from actual developments in future.
Management believes that the assumptions used by the actuary in determination of the
discount rate, future salary increases, mortality rates and attrition rates are reasonable.
Due to the complexities involved in the valuation and its long-term nature, this obligation
is highly sensitive to changes in these assumptions. All assumptions are reviewed at each
reporting date.
(xiii) Determination of lease term of contracts as non-cancellable term
Significant management judgement is exercised in determining the lease term as non¬
cancellable term of the lease, together with any periods covered by an option to extend
the lease if it is reasonably certain to be exercised, or any periods covered by an option
to terminate the lease, if it is reasonably certain not to be exercised, by considering all
relevant factors that create an economic incentive for it to exercise either the renewal or
termination.
(xiv) Fair value measurement of financial instruments / Firm Commitments
When the fair values of financial assets and financial liabilities could not be measured
based on quoted prices in active markets, management uses valuation techniques including
the Discounted Cash Flow (DCF) model, to determine its fair value. The inputs to these
models are taken from observable markets where possible, but where this is not feasible,
a degree of judgement is exercised in establishing fair values. Judgements include
considerations of inputs such as liquidity risk, credit risk and volatility.
(xv) Interests in other entities
Significant management judgement is exercised in determining the interests in other
entities. The management believes that wherever there is a significant influence over
certain companies belonging to its group, such companies are treated as Associate
companies even though it holds less than 20% of the voting rights.
(iii) Rights / Restrictions attached to Equity Shares:
The Company has one class of equity shares having a face value of $ 10/- each. Each Shareholder is eligible
for one vote per share held. The Company declares and pays dividend in Indian Rupees. In the event of liquidation
of the Company, the equity shareholders will be entitled to receive remaining assets of the Company, after
distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held
by the shareholders.
Notes: (i) Short term Borrowings from banks (other than Current maturities of Long term Borrowings) are secured by
way of first pari passu hypothecation charge on trade receivables and inventories of the Company, present
and future.
(ii) Loan from Others relates to borrowings availed from NBFC and it is secured by pledging of investment in
equity shares.
(iii) No Short term Borrowings from banks (other than Current maturities of Long term Borrowings) are secured
by way of subservient charge on the Current Assets of the Company.
(iv) The quarterly returns or statements filed by the Company with the banks or financial institutions are in
agreement with the books of accounts.
(v) The Company has used the borrowings from banks for the specific purpose for which it was taken as at the
reporting date.
(vi) Refer to Note No. 53 for information about risk profile of borrowings under Financial Risk Management.
Notes: (i) In respect of GST, the Assessing Officer has raised a demand of $ 7,106.71 Lakhs (PY: NIL) towards disallowance
of input tax credit on purchase of fixed assets, levy of tax on corporate guarantees, etc., for the period from
2020-21 to 2023-24, and on variation in inventory for the period from April 2024 to August 2024. The Company
has filed appeals against the entire demand within the prescribed due dates and has discharged $285.56 Lakhs
as pre-deposit by utilizing input tax credit through the electronic credit ledger. The appeals are currently pending
before the appellate authorities. Consequently, the balance demand of $6,821.15 Lakhs remains unpaid as at
the reporting date. The management believes that these demands may not crystallize into tax liabilities based on
judicial decisions favorable to the Company.
(ii) Income Tax Assessment have been completed up-to the Accounting Year ended 31st March, 2024 i.e.
AY 2024-25.
Defined Benefit Plan - Gratuity
The Gratuity payable to employees is based on the employee's service and last drawn salary at the time
of leaving the services of the Company and is in accordance with the rules of the Company read with
Payment of Gratuity Act, 1972. This is a defined benefit plan in nature. The Company makes annual
contributions to "Rajapalayam Mills Limited Employees' Gratuity Fund" administered by the Trustees and
managed by LIC of India, based on the Actuarial Valuation by an Independent external actuary as at the
Balance Sheet date using Projected Unit Credit method. The Company has the exposure of actuarial risk
such as adverse salary growth, change in demography experience, inadequate return on underlying plan
assets. This may result in an increase in cost of providing these benefits to employees in future. Since the
benefits are lump sum in nature, the plan is not subject to any longevity risks.
DISCLOSURE OF FAIR VALUE MEASUREMENTS
The fair values of financial assets and liabilities are determined at the amount at which the instrument could be exchanged
in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value of cash and short-term
deposits, trade and other short term receivables, trade payables, other current liabilities, short term loans from banks and other
financial instruments approximate their carrying amounts largely due to their short term maturities of these instruments.
Fair value hierarchy
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments and
investment properties by valuation technique:
Level 1 : Quoted (Unadjusted) prices in active markets for identical assets or liabilities.
Level 2 : Other techniques for which all inputs which have a significant effect on the recorded fair value are observable,
either directly or indirectly.
Level 3 : Techniques which use inputs that have a significant effect on the recorded fair value that are not based on
observable market data.
FINANCIAL RISK MANAGEMENT
The Board of Directors (BOD) has overall responsibility for the establishment and oversight of the Company's risk
management framework and thus established a risk management policy to identify and analyse the risk faced by the
Company. Risk Management systems are reviewed by the BOD periodically to reflect changes in market conditions and
the Company's activities. The Company through its training and management standards and procedures develop a
disciplined and constructive control environment in which all employees understand their roles and obligations. The Audit
Committee oversees how management monitors compliance with the Company's risk management policies and procedures,
and reviews the risk management framework. The Audit committee is assisted in the oversight role by Internal Audit.
Internal Audit undertakes reviews of the risk management controls and procedures, the results of which are reported to
the Audit Committee.
The Board of Directors regularly reviews these risks and approves the risk management policies, which covers the
management of these risks:
Credit Risk
Credit Risk is the risk of financial loss to the Company if the customer or counterparty to the financial instruments fails
to meet its contractual obligations and arises principally from the Company's receivables, treasury operations and other
operations that are in the nature of lease.
Receivables
The Company's exposure to credit risk is influenced mainly by the individual characteristic of each customer. The Company
extends credit to its customers in the normal course of business by considering the factors such as financial reliability of
customers. The Company evaluates the concentration of the risk with respect to trade receivables as low, as its customers
are located in several jurisdictions and operate in largely independent markets. In case of Corporate / Export Customer,
credit risks are mitigated by way of enforceable securities. However, unsecured credits are extended based on creditworthiness
of the customers on case to case basis.
Trade receivables are written off when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy
or failing to engage in a repayment plan with the company and where there is a probability of default, the company creates
a provision based on Expected Credit Loss for trade receivables under simplified approach as below:
Financial Instruments and Cash deposits
Investments of surplus funds are made only with the approved counterparties. The Company is presently exposed to
counter party risk relating to short term and medium term deposits placed with Banks. The Company places its cash
equivalents based on the creditworthiness of the financial institutions.
Liquidity Risk
Liquidity Risks are those risk that the Company will not be able to settle or meet its obligations on time or at reasonable price.
In the management of liquidity risk, the Company monitors and maintains a level of cash and cash equivalents deemed
adequate by the management to finance the company's operations and to mitigate the effects of fluctuations in cash flows.
Fund Management
Due to the dynamic nature of the underlying business, the Company aims at maintaining flexibility in funding by keeping both
committed and uncommitted credit lines available. The Company has laid well defined policies and procedures facilitated by
robust information system for timely and qualitative decision making by the management including its day to day operations.
Foreign Currency Risk
The Company's exposure in USD and other foreign currency denominated transactions in connection with import of
cotton, capital goods & spares, besides exports of finished goods and borrowings in foreign currency, gives rise to
exchange rate fluctuation risk. The Company has following policies to mitigate this risk:
Decisions regarding borrowing in Foreign Currency and hedging thereof, (both interest and exchange rate risk) and the
quantum of coverage is driven by the necessity to keep the cost comparable. Foreign Currency loans, imports and
exports transactions are hedged by way of forward contracts / packing credit in foreign currency which acts as natural
hedge against export receivable. The Company enters the above transactions, after taking into consideration the anticipated
Foreign exchange inflows/outflows, timing of cash flows, tenure of the forward contract and prevailing Foreign exchange
market conditions.
The Company uses derivative financial instruments viz. Foreign Exchange Forward Contracts exclusively for hedging
currency risks that arise from imports / exports transactions. The Company measures the risk by forecasting foreign
currency cash flows and manages its currency risks by appropriately hedging the transactions. When a forward contract
is entered into for the purpose of being a hedge, the Company finalizes the terms of those forward contracts to match
the terms of the hedged exposure i.e. receivables / payables / Firm Commitments. All identified exposures are managed
as per the policy duly approved by the Board of Directors.
Cash flow and fair value interest rate risk
Interest rate risk arises from long term borrowings with variable rates which exposed the company to cash flow interest
rate risk. The Company's fixed rate borrowing are carried at amortized cost and therefore are not subject to interest rate
risk as defined in Ind AS 107 since neither the carrying amount nor the future cash flows will fluctuate because of the
change in market interest rates. The Company is exposed to the evolution of interest rates and credit markets for its
future refinancing, which may result in a lower or higher cost of financing, which is mainly addressed through the
management of the fixed/floating ratio of financial liabilities. The Company constantly monitors credit markets to strategize
a well-balanced maturity profile in order to reduce both the risk of refinancing and large fluctuations of its financing cost.
The Company believes that it can source funds for both short term and long term at a competitive rate considering its
strong fundamentals on its financial position.
NOTE NO. 54
DISCLOSURE AS REQUIRED UNDER MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006:
The categorization of supplier as MSME registered under the Act under new definition, has been determined based on
the information available with the Company as at the reporting date. The Company has also considered suppliers as
MSME who possess the erstwhile MSME certificate for the period upto the reporting date, for the purpose of categorization
and disclosures. The disclosures as required under Micro, Small and Medium Enterprises Development Act, 2006:
e) Undisclosed Income
The Company do not have any transaction which are not recorded in the books of accounts that has been surrendered
or disclosed as income in the tax assessments under the Income Tax Act, 1961 during any of the years.
f) Relationship with Struck off Companies
The Company did not have any transactions with Companies struck off under Section 248 of the Companies Act,
2013 or Section 560 of the Companies Act, 1956 considering the information available with the Company.
g) Details of Crypto Currency or Virtual Currency
The Company did not trade or invest in Crypto Currency or virtual currency during the financial year. Hence
disclosure relating to it are not applicable.
h) The Company has neither advanced or loaned or invested, nor received any fund, to or from, any other persons
or entities (intermediaries) with the understanding that the intermediary shall:
(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on
behalf of the Company or
(ii) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.
Formula adopted for above Ratios:
(a) Current Ratio = Current Assets / (Total Current Liabilities - Security Deposits payable on Demand - Current
maturities of Long Term Debt)
(b) Debt-Equity Ratio = Total Debt / Total Equity
(c) Debt Service Coverage Ratio = (EBITDA - Current Tax) / (Principal Repayment Gross Interest)
(d) Return on Equity Ratio = Total Comprehensive Income / Average Total Equity
(e) Inventory Turnover Ratio (Average Inventory days) = 365 / (Net Revenue / Average Inventories)
(f) Trade receivables Turnover Ratio (Average Receivables days) = 365 / (Net Revenue / Average Trade receivables)
(g) Trade Payables Turnover Ratio (Average Payable days) = 365 / (Net Revenue / Average Trade payables)
(h) Net Capital Turnover Ratio = (Inventory Turnover Ratio Trade receivables turnover ratio - Trade payables
turnover ratio)
(i) Net Profit Ratio = Net Profit / Net Revenue
(j) Return on Capital employed = (Total Comprehensive Income Interest) / (Average of (Equity Total Debt))
(k) Return on Investment (Assets) = Total Comprehensive Income / Average Total Assets
Reasons for Variation if more than ± 25%:
Wherever there is a change in value from negative to positive or vice-versa, the computation of variation will be
misleading and hence not computed.
The increase in operating margin during the financial year 2025-26 results increase in Debt Service Coverage Ratio and
Return of Capital Employed.
NOTE NO. 56
EXCEPTIONAL ITEMS
Profit on Sale of Investment:
The Company has sold 2,772 Nos. of equity shares in M/s. Clean Max Opus Private Limited for a sale consideration
of $ 146.28 Lakhs after adjusting carrying cost of $ 125.95 Lakhs, the net profit on sale of investment was
$ 20.33 Lakhs.
Profit on Sale of Property, Plant & Equipment:
The Company has sold the old machineries for a sale consideration of $ 323.77 Lakhs. The WDV of old machineries
was $ 259.70 Lakhs. The Company has earned profit on sale of the above old machineries to the extent of
$ 64.07 Lakhs (PY: Profit of $ 74.19 Lakhs).
The aggregate net profit of $ 84.40 Lakhs (PY: $ 74.19 Lakhs) of above transactions is shown as an Exceptional Items
in the Statement of Profit and Loss.
NOTE NO. 58
CAPITAL MANAGEMENT
For the purpose of the Company's capital management, capital includes issued equity share capital and all other equity
reserves attributable to the equity holders of the Company. The primary objective of the Company's capital management
is to maximize the Shareholders' wealth.
The increase in capital gearing ratio as at 31-03-2026 was due to availment of Long term loans / reduction working
capital loan. The Capital Gearing Ratio is expected to come down in the forthcoming years, once the Fabric expansion
of projects start generating revenue / profits.
There are no significant changes in the objectives, policies or processes for managing capital during the years ended
31-03-2026 and 31-03-2025.
NOTE NO. 59
THE CODE ON SOCIAL SECURITY, 2020, THE INDUSTRIAL RELATIONS CODE, 2020, THE CODE ON WAGES,
2019 AND THE OCCUPATIONAL SAFETY, HEALTH AND WORKING CONDITIONS CODE, 2020
On 21-11-2025, the Central Government notified the Code on Social Security, 2020, the Industrial Relations Code, 2020, the
Code on Wages 2019 and the Occupational Safety. Health and Working Conditions Code, 2020 (collectively referred to as the
“Labour Codes”), subsuming various existing labour and industrial laws governing employee benefits during employment and
post employment period. The Ministry of Labour & Employment has notified the Central Rules and FAQs to facilitate assessment
of the financial impact arising from these regulatory changes. Accordingly, the Company has assessed the financial implications
based on an actuarial valuation in accordance with Ind AS 19 Employee Benefits read with FAQ issued by Institute of Chartered
Accountants of India (ICAI). Based on such assessment, the Company is of the view that the financial impact of these changes
is not material and, therefore, has not been presented as an exceptional item, though the impact has been recognised under
Employee Benefits Expenses in the Statement of Profit and Loss for the year ended March 31, 2026. The Company continue
to monitor the finalisation of State Rules and any further clarifications issued by the Government in relation to the Labour Codes
and will appropriately give effect to such changes in the books, as and when required.
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