2.21 Provisions and Contingent Liabilities:

Provisions: Provisions are recognized when there is a present legal or constructive obligation 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 there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value.These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

Contingent Liabilities:

Contingent liabilities is a possible obligation in the normal course of business arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is termed as a contingent liability.

The Company does not recognise a contingent liability but disclose its existence in the financial statemnets.

2.22 Cash Flow Statement:

Cash flows are reported using the indirect method, whereby profit / loss before extraordinary items and tax 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. Cash flows from operating, investing and financing activities of the Company are segregated.

2.23 Cash and Cash equivalents Policy:

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.

2.24 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 is adjusted for the effects of all dilutive potential equity shares.

2.25 Exceptional Items:

When an item of income or expense within profit or loss from ordinary is of such size, nature or incidence that their disclosure is relevant to explain the performance of the company for the year, the nature and amount of such items is disclosed as exceptional items..

36 CONTINGENT LIABILITY AND COMMITMENTS:

Disputed amounts of Taxes and duties and other claims not acknowledged as debts :

a) Excise duty : Rs. 72.99 lacs (Previous year Rs. 72.99 lacs). Deposits against litigation Rs 7.31 lacs

b) TANGEDCO has been charging electricity tax @ 5% on Demand Charges through their bills. This was challenged by a consumer in Hon'ble Supreme Court and Hon'ble SC has accepted the appeal on records. Liability towards the same Rs 74.67 lacs (Previous year Rs 74.67 lacs). Deposits against litigation Rs Nil lacs

c) TANGEDCO has denied deemed demand benefit available for use of self generated thermal power received through group captive arrangement. This was challenged in Hon'ble Chennai High Court and the Hon'ble Hight court has given injuction with a condition to TANGEDCO to Charge only 50% till the matter is decided. Liabilty towards the same was Rs 308.42 lacs .(Previous year Rs 308.42 lacs). Deposits against litigation Rs Nil lacs

d) Asst Commissioner of GST & Cent Ex Audit , Coimbatore Audit Circle II has raised additional demand on Ocean Freight based on Bills of Entry filed. Liability towards the same is Rs 29.22 lacs. (Previous year Rs 29.22 lacs). Deposits against litigation Rs Nil lacs

e) GST on Canteen Service : Rs 6.44 lacs (Previous year Rs 6.44 lac). Deposits against litigation Rs 0.64 lacs

37 Liquidity stress on account of delayed implementation of Restructuring / Resolution Plan (RP) by the Lenders and challenging market conditions for the Indian Textiles Industry, especially for Spinning segment, due to geo political situation and other external factors continued to impact Company's performance. In view of this, the Company continues to engage in Job work activities even post implementation of Resolution Proposal resulting in recovery of only variable expenses.

Major markets (USA & EU) are now showing signs of improvement due to moderate inflation and improved disposable income. Country's cotton yarn exports also improved by 37% during the second half of FY 2023-24 over the same period in the previous year. Further, with the various measures initiated by the government to revive the Indian Textile Industry, company envisage improved business opportunity from second half of FY 2024-25 onwards. The company expect to restart its own manufacturing operations from the second of FY 2024-25 and with the significant reduction in the debt level as well as rationalization of labour cost through VRS measures, and reducing cotton prices it could generate cash inflows to service the debts.

For the aforesaid reason, the company had already requested its lenders to consider deep restructuring of its working capital term loan by extending moratorium for debt servicing, reduction of rate of interest etc, which is pending with lenders. In view of the genuine grounds of request, the management is hopeful for a positive response from the lenders.

38 FINANCIAL RISKS MANAGEMENT

In the course of business, amongst others, the Company is exposed to several financial risks such as Credit Risk, Liquidity Risk, Interest Rate Risk, Exchange Risk and Commodity Price Risk. These risks may be caused by the internal and external factors resulting into impairment of the assets of the Company causing adverse influence on the achievement of Company's strategies, operational and financial objectives, earning capacity and financial position. The Company has formulated an appropriate policy and established a risk management framework which encompass the following process.

- identify the major financial risks which may cause financial losses to the company

- assess the probability of occurrence and severity of financial losses

- mitigate and control them by formulation of appropriate policies, strategies, structures, systems and procedures

- Monitor and review periodically the adherence, adequacy and efficacy of the financial risk management system. The Company enterprise risk management system is monitored and reviewed at all levels of management, Internal Auditors, Audit Committee and the Board of Directors from time to time.

Credit Risk

Credit Risk refers to the risks that arise on default by the counterparty on its contractual obligation resulting into financial loss to the company. The company may carry this Risk on Trade and other receivables, liquid assets and some of the non current financial assets.

In case of Trade receivables, the company has framed appropriate policy for extending credits period & limit to each customer based on their profile, financial position etc. The collections of trade dues are strictly monitored . In case of Export customers, even credit guarantee insurance is also obtained wherever required.

Company's exposure to Credit Risk is also influenced by the concentration of risk from top five customers. The details in respect of the % of sales generated from the top customer and top five customers are given hereunder.

Interest Rate Risk

Generally market linked financial instruments are subject to interest rate risk. The company does not have any market linked financial instruments both on the asset side as well liability side. Hence there no interest rate risk linked to market rates.

However the interest rate in respect of major portion of borrowings by the Company from the banks and others are linked with the MCLR / Base Prime lending rate of the respective lender. Any fluctuation in the same either on higher side or lower side will result into financial loss or gain to the company.

The amount which is subjected to the change in the interest rate is of Rs. 6334.90 lacs out of the total debt of Rs. 11225.95 Lacs

Based on the Structure of the debt as at year end, a half percentage point increase in the interest rate would cause an additional expense in the net financing cost of Rs. 31.67 Lacs on annual basis.

Foreign Currency Risk

The company is not exposed to the foreign currency risk from transactions & translation.

Since company was operating on contract manufacturing during FY 2023-24 and FY 2022-23 there were no foreign currency exposure either on Exports of Yarn or on Imports of Raw materials.

39 Capital risk management

The Company's objectives when managing capital are to :

♦ create value for its shareholders and other stake holders, and

♦ maintain an optimal capital structure to reduce the cost of capital through a fair mix of equity with combination of short term/long term debt as may be appropriate.

The Company sets the amount of capital required on the basis of annual business and long-term operating plans which includes capital and other strategic investments. The Company's intention is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business.

41 Other Statutory Information

a) All title deeds of Immovable Property are held in the name of the Company and the Company does not have any immovable property without Title in its name.

b) The Company has not availed any Working capital facilities from Banks or Financial institution and hence filing of quarterly statements not applicable.

c) Disclosure on PPE & Intangible Assets

(1) There is no restriction on the title of Property, Plant and Equipment and Property, which was mortgaged to Lenders for the credit facilities sanctioned to Company.

(2) Company has not constructed any item in Property, Plant & equipment.

(3) Company has no contractual commitments for the acquisition of Property, Plant & Equipment.

(4) Company has no Impairment loss during the year for Property, Plant & Equipment.

(5) Company has not revalued any items of Property, Plant & Equipments during the Year

(6) Carrying amount of Property, Plant & Equipment are not retired from active use and not held for disposal.

(7) The existence and carrying amounts of intangible assets whose title is not restricted and the carrying amounts of intangible assets are not pledged as security for liabilities.

d) Company does not hold any benami property and no proceeding were initiated or pending against the company under the Benami Transaction (Prohibition) Act 1988 and rules thereon.

e) The Company is not a declared as wilful defaulter by any bank or financial institution or other lenders.

f) The Company has not entered into any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.

g) The Company does not have any charges or satisfaction of charges which is yet to be registerd with ROC beyond the statutory period.

h) The Company has complied with the number of layers prescribed under clause(87) of section 2 of the Act read with Companies ( Restriction on number of Layers) Rules, 2017.

i) Utilisation of Borrowed funds and share Premium:

A. The Company has not advanced or loaned to 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

(i) 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

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

B. The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding that the Company shall

(i) 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

(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

j) 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.

k) Company shall not be required to comply with Corporate Social Responsibility (CSR) as provisions of section 135 of the Companies Act, 2013 due to its losses.

l) The Company has not traded or invested in Crypto Currency or Virtual Currency during the financial year.

42 Previous year's figures have been regrouped/reclassified wherever necessary to conform the current year's presentation.

Signature to Note 1 to 42

As per our report of even date attached For and on behalf of the Board of Directors

For L.U. KRISHNAN & Co. B. K. PATODIA UMANG PATODIA

Chartered Accountants Chairman Managing Director

(ICAI FRN 001527S ) DIN No. 00003516 DIN No. 00003588

Place : Mumbai Place : Kochi

Date : 21.05.2024 Date : 21.05.2024

P. K. MANOJ T. RAVINDRAN VEENA VISHWANATH BHANDARY

Partner General Manager (Finance) Company Secretary

(M. No. 207550) & Chief Finance Officer

Place : Kochi Place : Kochi Place : Kochi

Date : 21.05.2024 Date : 21.05.2024 Date : 21.05.2024