N. Provisions, Contingent Liabilities and Contingent assets
Provisions are recognised when the Company has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Company will be required to
settle such obligation and a reliable estimate can be made of the amount of such obligation.
The amount recognised as a 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 risks
and uncertainties surrounding the obligation. When a provision is measured using the cash
flows estimated to settle the present obligation, its carrying amount is the present value of
those cash flows (where the effect of the time value of money is material).
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 recognised as an asset if it is virtually certain
that reimbursement will be recovered and the amount of the receivable can be measured
reliably.
A disclosure for a contingent liability is made when there is a possible obligation or a
present obligation that may, but probably will not require an outflow of resources
embodying economic benefits or the amount of such obligation cannot be measured
reliably. When there is a possible obligation or a present obligation in respect of which
likelihood of outflow of resources embodying economic benefits is remote, no provision or
disclosure is made
O. Earnings per share
Basic earnings per share is computed by dividing profit or loss attributable to equity
shareholders by the weighted average number of equity shares outstanding during the year.
Diluted earnings per share is determined by adjusting the profit or loss attributable to equity
shareholders and the weighted average number of equity shares outstanding for the effects
of all dilutive potential equity shares.
P. Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents
include cash on hand, deposits held at call with financial institutions/banks, other short¬
term, highly liquid investments with original maturities of three months or less that are
readily convertible to known amounts of cash and which are subject to an insignificant risk
of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in
current liabilities in the balance sheet..
Q. Borrowings
Borrowing cost incurred in connection with the funds borrowed for acquisition/erection of
assets that necessarily take substantial period of time to get ready for intended use, are
capitalized as part of such assets. Interest income earned on the temporary investment of
specific borrowings pending their expenditure on qualifying assets is deducted from the
borrowing cost eligible for capitalization. Borrowing cost also includes exchange
differences to the extent regarded as an adjustment to the borrowing costs. All other
borrowing costs are charged to revenue.
R. Inventories
Inventories are stated at the lower of cost and net realizable value. Net realizable value
represents the estimated selling price for inventories less all estimated costs of completion
and cost necessary to make the sale.
i) Cost of raw materials, components, stores, spares are valued at cost, determined on
a first-in-first-out basis.
ii) Materials and supplies held for use in production of inventories are not written
down if the finished products in which they will be used are expected to be sold at
or above cost. Slow and non-moving material, obsolesces, defective inventories
are duly provided for.
iii) By-products and scrap are valued at net realizable value and it is reduced from
cost of the main product.
iv) Excess/ shortages, if any, arising on physical verification are absorbed in the
respective consumption accounts.
v) The net realisable value of work-in-progress is determined with reference to the
selling prices of related finished products.
S. Cash flow statement:
Cash flows are reported using the indirect method, whereby the profit for the period
is adjusted for the effects of transactions of non-cash nature, any deferrals or
accruals of past or future operating cash receipts or payments and item of income or
expenses associated with investing or financing cash flows. The cash flows from
operating, investing and financing activities of the company are segregated.
Notes:
a) The average credit period of trade receivables varies from 15-45 days.
b) The above includes an amount of Rs.151.83 Lakhs for the year ended 31st March, 2025 and Rs.5.43
Lakhs for 31st March 2024 due from related parties.
c) The Company has used practical expedient by computing the expected credit loss for doubtful trade
receivables based on ageing of receivables, history of recoverability from the customers, credit
worthiness of the customers etc.
d) During the year, the company has recognised loss allowance of Rs. Nil under12 months expected
credit loss model.
e) Trade receivables include amounts due from the following customers which represent more than
10% of the total trade receivables of the company:
30. Capital Management
Equity share capital and other equity are considered for the purpose of Company’s capital
management.
The Company manages its capital so as to safeguard its ability to continue as a going
concern and to optimise returns to shareholders. The capital structure of the Company is
based on management’s judgement of its strategic and day-to-day needs with a focus on
total equity so as to maintain investor, creditors and market confidence.
The management and the Board of Directors monitor the return on capital as well as the
level of dividend to shareholders. The Company may take appropriate steps in order to
maintain, or if necessary adjust, its capital structure
ii) Defined Benefit Plans
c) Gratuity
The company has unfunded defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at 15 days salary
(last drawn salary) for each completed year of service as per the provision of the
Payment of Gratuity Act, 1972, as amended.
34. Impairment of Assets
According to an internal technical assessment carried out by the Company, there is no
impairment in the carrying cost of cash generating units of the Company in terms of Indian
Accounting Standard 36 'Impairment of Assets
35. Exceptional items of ? 20.36 Lakhs for the year ended 31.03.2024 is on account of profit on
sale of old machinery.
39. The Company has issued 5,00,000 9% Cumulative Redeemable Preference Shares of
?100 each, aggregating to ?500 lakhs. Although the terms of repayment are not specified,
as per Section 55 of the Companies Act, 2013, these shares are mandatorily redeemable.
Accordingly, they have been classified as Borrowings in accordance with Ind AS 32. The
related cumulative preference dividend has been accounted for as a finance cost.”
40. The Company has received unsecured loans aggregating to ? 1533.50 lakhs (Previous year:
?1571.16 lakhs) from promoters and related parties. These loans are unsecured, interest-
free, and do not have any fixed repayment schedule. Accordingly, these have been
presented as non-current borrowings, except to the extent that repayment is expected
within 12 months from the reporting date, in compliance with the requirements of Ind AS 1
and Schedule III to the Companies Act, 2013.”
41. The Company has accumulated tax losses and depreciation under the Income Tax Act.
Management has evaluated the probability of generating future taxable profits against which
these losses and depreciation can be utilized. Since realization is not virtually certain,
deferred tax assets have not been recognized in these financial statements in accordance
with Ind AS 12.”
# Earnings for Debt Service = Net Profit before taxes Non-cash operating expenses like
depreciation and other amortizations Interest other adjustments like loss on sale of Fixed assets
etc.
Note:
1) Due to restart of manufacturing activity during the year including job work, the working
capital cycle of the company like stronger liquidity, higher sales efficiency, better receivable
collections, and timely payment to suppliers thereby inventory, trade receivable and trade
payable ratios have been improved.
2) Due to no interest on loans & repayment during the year the Debt service coverage ratio is
not arrived
3) Due to negative earnings with negative equity the return on equity ratio is misleading and
hence not applicable or Zero
4) The improvement in ROCE was driven by higher operating profits and efficient utilization
of capital, reflecting better cost control, revenue growth, and optimized deployment of
resources
5) The decline in the Net Working Capital Turnover Ratio was primarily due to increased
current liabilities and reduced current assets, indicating higher dependence on short-term
financing and potential liquidity challenges.
6) Due to no investments made by the company the return on investment ratio is not applicable.
Additional regulatory information required by Schedule III
43. No proceeding has been initiated or pending against the Company for holding any Benami
property under the Benami Transactions (Prohibition) Act, 1988, as amended, and rules
made thereunder.
44. The Company does not have any charges or satisfaction which is yet to be registered with
ROC beyond the statutory period.
45. The Company has not traded or invested in Crypto currency or Virtual Currency during the
financial year.
46. There were no transactions relating to previously unrecorded income that have been
surrendered and disclosed as income during the year in the tax assessments under the
Income Tax Act, 1961.
47. Relationship With Struck Off Companies
The Company does not have any relationship or any transaction with struck off companies.
48. Utilisation of borrowed funds and share premium:
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 company (Ultimate Beneficiaries) or
b. provide any guarantee, security or the like to or on behalf of the ultimate
beneficiaries
The company has not received any fund from any person(s) or entity (ies), including foreign
entities (Funding Party) with the understanding (whether recorded in writing or otherwise)
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 on behalf of the ultimate beneficiaries
49. Since the company deals only in Manufacturing of Cotton yarn products and there are no
geographical segments to be reported.
50. The previous year figures have been re-grouped / re-classified wherever required to conform
to current year’s classification.
51. The financial statements are approved for issue by the Audit Committee and Board of
Directors at their meetings held on May 29, 2025.
As per our report of even date For and on behalf of Board
For CHEVUTURI ASSOCIATES
Chartered Accountants
Firm Regn.No.000632S
VANKA RAJA KUMARI VANKA RAVINDRANATH
Director Director
DIN .00480392 DIN .00480295
Partner
(CA RAJITHA VEMURI) V.HARI OBULA REDDY PEEYUSH SETHIA
ICAI M.No.228471 Chief Financial Officer Company Secretary
Date: 29th May 2025
Place: Tanuku
UDIN: 25228471BMKNZZ6773
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