K) Provision
Provisions are recognised in the balance sheet when the Company has a present obligation (legal or constructive) as a result of a past event, which is expected to result in
an outflow of resources embodying economic benefits which can be reliably estimated. Each provision is based on the best estimate of the expenditure required to settle
the present obligation at the balance sheet date. Where the time value of money is significant, provisions are measured on a discounted basis.
Constructive obligation is an obligation that derives from an entity's actions where:
(i) by an established pattern of past practice, published policies or a sufficiently specific current statement, the entity has indicated to other parties that it will accept
certain responsibilities and;
(ii) as a result, the entity has created a valid expectation on the part of those other parties that it will discharge those responsibilities.
L) Onerous contracts
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.
M) Income taxes
Tax expense for the year comprises current and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as
reported in the statement of profit and loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that
are never taxable or deductible. The Company's liability for current tax is calculated using tax rates and tax laws that have been enacted or substantively enacted by the
end of the reporting period.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying values of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally
recognised for all taxable temporary differences. In contrast, deferred tax assets are only recognised to the extent that it is probable that future taxable profits will be
available against which the temporary differences can be utilised.
The carrying value of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on the tax rates and tax laws
that have been enacted or substantially enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences
that would follow from the manner in which the Company expects, at the end of the reporting period, to cover or settle the carrying value of its assets and liabilities.
Deferred tax assets and liabilities are offset to the extent that they relate to taxes levied by the same tax authority and there are legally enforceable rights to set off
current tax assets and current tax liabilities within that jurisdiction.
Current and deferred tax are recognised as an expense or income in the statement of profit and loss, except when they relate to items credited or debited either in other
comprehensive income or directly in equity, in which case the tax is also recognised in other comprehensive income or directly in equity.
Deferred tax assets include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of
availability of set off against future income tax liability. MAT is recognised as deferred tax assets in the Balance Sheet when the asset can be measured reliably and it is
probable that the future economic benefit associated with the asset will be realised.
N) Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when
the payment is being made. Revenue is measured at the fair value of the consideration received or receivable net of discounts, taking into account contractually defined
terms and excluding taxes or duties collected on behalf of the government.
Sale of Goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there
are significant uncertainties regarding recovery of the amount due, associated costs or the possible return of goods.
Sale of Services
Revenue is recognised when it is earned and no significant uncertainty exists as to its realisation or collection.
O) Foreign Currency Transactions
The financial statements of the Company are presented in Indian rupees ('), which is the functional currency of the Company and the presentation currency for the financial
statements.
In preparing the financial statements, transactions in currencies other than the Company's functional currency are recorded at the rates of exchange prevailing on the date
of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are re-translated at the rates prevailing at the end of the
reporting period. Nonmonetary 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 that are measured in terms of historical cost in a foreign currency are not translated.
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 period.
Loans in foreign currency for financing the fixed assets are converted at the prevailing exchange rate on the transaction dates. Liabilities payable in foreign currencies on
the date of Balance Sheet are restated and all exchange rate differences arising from such restatement are adjusted with the fixed asset.
P) Borrowing Costs
Borrowings costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time
to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for the intended use or sale.
Q) Cash and Cash Equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, 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.
R) Trade Receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment, if
any.
S) Segment Reporting
Identification of Segments
The Company has identified manufacturing and export of cotton yarn and other various merchandise as its sole operating segment and the same has been treated as
primary segment. The Company's secondary geographical segments have been identified based on the location of customers and then demarcated into Indian and
overseas revenue earnings.
T) Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares
outstanding during the period. 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.
U) Contingent Liabilities & Contingent Assets
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. The company does not recognize a contingent liability but discloses its existence in the financial statements. Contingent assets are neither recognised
nor disclosed in the financial statement.
i) Rupee Term loan from Punjab National Bank - Kolkata is secured by:
a) Exclusive charge on Plant & Machinery, Furniture & Fixture etc. acquired or to be acquired out of Term Loan for its unit situated at Plot No. T-48, Kagal, Hatkanangale, Five Star
MIDC Industrial Area, Dist. Kolhapur, Maharashtra.
b) 1st Pari passu charge on existing Plant & Machinery located at plot no. T-48, Kagal, Hatkanangale, Five Star MIDC Industrial Area Dist. Kolhapur, Maharashtra and at Laxmi Tekadi
village Yavluj, Taluka-Panhala, Kolhapur, Maharashtra.
We have created charge as per Sanction Term of PNB, However, consortium Members are not agreeable for the same. The issue is under discussion in consortium and consortium
members have agreed to makeup with their higher authorities and the clause will be amended suitably as decided by the consortium members
ii) Working Capital Loan from Canara Bank, Specialised Mid Corporate Branch, Kolkata , Punjab National Bank, Mid Corporate Branch, Kolkata, Indian Bank, MCB Mission Row Branch,
Kolkata, Karnataka Bank Ltd, Overseas Branch, Kolkata and State Bank of India - Overseas Branch, Mumbai are secured by way of :
(a) First charge by way of hypothecation of stock of Raw materials, Work-in-process, finished goods and book debts relating to spinning unit at Village : Yavluj, District : Kolhapur,
Maharashtra, and processing unit at Kagal - Hatkanangale Five Star Industrial Area, MIDC, Village : Talandage, Tal. Hatkanangale, District : Kolhapur, Maharashtra and stock-in-trade at
trading unit at various ports/warehouses in India, both present and future in a form and manner satisfactory to the bank, ranking pari passu with each other participating working
capital banks in consortium.
(b) Second charge on all the fixed assets of the company situated at Village Yavluj & Talandage both at Kolhapur, both present and future ranking pari passu with each other among
participating working capital banks in consortium.
(c) Personal guarantee of some of the Directors of the Company.
iii) Guaranteed Emergency Credit Line (GECL 2.0) Loan from Canara Bank, Specialised Mid Corporate Branch, Kolkata, Punjab National Bank, Mid Corporate Branch, Kolkata, Indian
Bank, MCB Mission Row Branch, Kolkata and State Bank of India - Overseas Branch, Mumbai, and Karnataka Bank Ltd, Overseas Branch, Kolkata are secured by way of :
(a) Primary Security : On the current assets and fixed assets purchased / created out of the credit facilities so extended and Pari Passu charge on the entire current assets of the
Company and extension of second pari passu charge on fixed assets of the Company situated at Village Yavluj and Talandage both at Kolhapur.
(b) Collateral Security: No fresh collateral security. GECL 2.0 shall rank second charge with the existing credit facility in terms of cash flow and securities.
iv) Guaranteed Emergency Credit Line (GECL 2.0 Extn) Loan from Canara Bank, Specialised Mid Corporate Branch, Kolkata, Punjab National Bank, Mid Corporate Branch, Kolkata, Indian
Bank, MCB Mission Row Branch, Kolkata are secured by way of :
(a) Primary Security : On the current assets and fixed assets purchased / created out of the credit facilities so extended and Pari Passu charge on the entire current assets of the
Company and extension of second pari passu charge on fixed assets of the Company situated at Village Yavluj and talandage both at Kolhapur.
(b) Collateral Security: No fresh collateral security. GECL 2.0 Extn shall rank second charge with the existing credit facility in terms of cash flow and securities.
Facilities are also covered under emergency Credit Line Guarantee Scheme (ECLGS) administered by National Credit Guarantee Trustee Company (NCGTC) Ltd.
b) Defined Benefit Plan - Gratuity
The Gratuity scheme is a final salary defined benefit plan, that provides for lumpsum payment at the time of separation; based on scheme rules, the benefits are calculated on the basis
of last drawn salary and the period of service at the time of separation and paid as lumpsum. There is a vesting period of 5 years.
Associated Risks :
The design entitles the following risks that affect the liabilities and cash flows:
i) Interest Rates Risk:
The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yield fall, the defined benefit obligation will tend to increase. Thus the plan exposes
the company to the risk of fall in interest rates. Some times, the fall can be permanent, due to a paradigm shift in interest rate scenarios because of economic or fiscal reasons. A fall in
interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability (as shown in financial
statements). Even for funded schemes, a paradigm down word shift in bond yields may affect the reinvestment yields and may increase ultimate costs.
Salary Inflation Risk:
The present value of the defined benefit plan is calculated with the assumption of salary escalation rate(SER), which is applied to find the salary of plan participants in future, at the
ii) time of separation Higher than expected increase in salary will increase the defined benefit obligation and will have an exponential effect.
Demographic risks:
This is the risk of volatility of results due to unexpected nature of documents that include mortality attrition, disability and retirement. The effects of these decrement on the DBO
iii) depends upon the combination salary increase discount rate, and vesting criteria and therefore not very straight forward. It is important and not to overstate withdrawal rate
because the cost of retirement benefit of a short caring employees will be less compares to long service employees.
__
Fair value hierarchy:
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three
levels:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
The investments included in Level 2 of fair value hierarchy have been valued using quotes available for similar assets and liabilities in the active market. The investments included in
Level 3 of fair value hierarchy have been valued using the cost approach to arrive at their fair value. The cost of unquoted investments approximate the fair value because there is a
range of possible fair value measurements and the cost represents estimate of fair value within that range
37 FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES
The Company has exposure to the following risks from financial instruments.
i) Market Risk
ii) Liquidity Risk
iii) Credit Risk
Market risk:
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates & prices such as interest rates, foreign currency
exchange rates or in the price of market risk-sensitive financial instruments. The Company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and
the market value of its investments. Thus the company's exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in
foreign currencies.
Interest Rate Risk :
Interest rate risk refers that the fair value of future cashflows of a financial instrument will fluctuate because of changes in market interest rates. The objective of the Company's interest
rate risk management processes are to lessen the impact of adverse interest rate movement on its earning and cash flows and to minimise counter party risks.
CREDIT RISK:
Credit risk is the of financial loss to the Company if a customer or counter party to a financial instrument fails to meet its contractual obligations, and arises principally from the
Company receivables from customers and investments in debt securities, cash and cash equivalents, mutual funds, bonds etc.
The carrying amount of financial assets represents the maximum credit exposure.
Trade & Other receivables:
In case of sales, for major part of the sales, customer credit risk is managed by requiring domestic and export customers to open Letters of Credit before transfer of ownership,
therefore substantially eliminating the Company's credit risk in this respect.
Based on prior experience and an assessment of the current economic environment, management believes that no provision is required for credit risk where credit is extended to
customers.
44 DETAILS OF LOANS AND GUARANTEES GIVEN COVERED UNDER SECTION 186(4) OF THE COMPANIES ACT, 2013:
The Company has made investments in the shares of different companies and given loans and advances to different parties which are general in nature. The loans given
are interest bearing which are not lower than the prevailing yield of related government security close to the tenure of the respective loans. Further, the company has
not given any guarantee or provided any security.
45 The Company does not have any Benami Property. Further there are no proceedings initiated or are pending against the Company for holding any Benami Property under
the prohibition of Benami Property Transaction Act., 1988 and rules made there under.
46 The Company does not have transactions with any Struck off Company's during the year.
47 The Company has not traded or invested in Crypto Currency or virtual Currency during the financial year.
48 The Company has not advanced or loaned or invested funds to any other person(s) or entity(s) including foreing entities (intermediaries) with the understanding that the
intermediaries shall:
a. Directly or indirectly lend or invest in other persons or entities in any manner what so ever 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.
49 The Company has not received any fund from any person(s) or entity(s), including foreign entities ( funding party) with understanding ( whether recorded in writing or
otherwise) that the Company will:
a. Directly or indirectly lend or invest in other persons or entities identified in any manner what so ever 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.
50 The Company has not done any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the
Tax assessments under the Income Tax Act.,1961
51 The Company has not been declared as a willful defaulter by any Bank of Financial Institution or Government or any Government Authority.
52 The Company has not filed any scheme of arrangements in terms of Section 230 to 237 of the Company's Act., 2013 with any competent Authority.
53 Statement of Financial Ratio's as per Schedule III Requirements has been separately enclosed.
54 As part of long-term cost reduction plan Operations of Spinning Mills at Yavluj, has been temporarily suspended since 21th February, 2025, agreement has been signed
with the recognized union and efforts are on to implement the same.
55 The Previous Years Figures has been regrouped /rearranged whenever necessary to confirm to the current year presentation.
56 The financial statements are approved by the audit committee at its meeting held on 29th May, 2025 and by the Board of Directors on 29th May, 2025.
As per our separate report attached of even date For and on Behalf of the Board of Directors
For B Nath & Co.
Chartered Accountants Sd/- Sd/-
Firm Regn No. 307057E Sushil Patwari Sunil Ishwarlal Patwari
(DIN:00023980) (DIN: 00024007)
Chairman Managing Director
Sd/-
CA Gaurav More
Partner Sd/- Sd/-
M. No. 306466 Manoj Agarwal Monika Kedia
Place : Kolkata Chief Financial Officer Mem No.: A26726
Date: May 29, 2025 Company Secretary
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