m) PROVISIONS, CONTINGENT LIABILITIES AND
CONTINGENT ASSETS
Provisions are recognised when there is a present
obligation as a result of past event, it is probable that the
company will be required to settle the obligation and a
reliable estimate of the amount of obligation can be made.
Where the effect of time value of money is material, the
amount of provision is the present value of the expenditure
to be required to settle the obligation. These estimates are
reviewed at each reporting date and adjusted to reflect
the current best estimates.
Contingent liability is disclosed for (i) Possible obligation
which will be confirmed only by future events not
wholly within the control of the Company or (ii) Present
obligations arising from past events where it is not
probable that an outflow of resources will be required to
settle the obligation or a reliable estimate of the amount
of the obligation cannot be made. The company does not
recognise contingent liabilities but the same are disclosed
in the notes.
Contingent assets are not recognized in the financial
statements since this may result in the recognition of
income that may never be realized.
n) FINANCIAL INSTRUMENTS
Initial recognition:
The company recognizes financial assets and liabilities
when it becomes a party to the contractual provisions
of the instruments. All financial assets and liabilities are
recognized at fair value on initial recognition. Transaction
costs that are directly attributable to the acquisition or issue
of financial assets and liabilities (other than the financial
assets and liabilities at fair value through profit and loss)
are added to or deducted from the fair value of financial
assets and liabilities, as appropriate, on initial recognition.
Transaction costs that are directly attributable to the
acquisition or issue of financial assets and liabilities at fair
value through profit or loss are recognized immediately in
profit or loss.
Subsequent measurement:
i) Financial assets carried at amortized cost:
A financial asset is subsequently measured at
amortized 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.
(ii) Financial assets at fair value through other
comprehensive income.
A financial asset is subsequently measured at fair
value through other comprehensive income 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. Further, in cases
where the Company has made an irrevocable election
based on its business model, for its investments which
are classified as equity instruments, the subsequent
changes in fair value are recognized in other
comprehensive income.
(iii) Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the
above categories is subsequently fair valued through
profit or loss.
De-recognition of financial asset
The company de-recognises financial assets when
the contractual right to the cash flows from the asset
expires or when it transfers the financial asset and
substantially all the risks and rewards of ownership of
the asset to another party.
(iv) Financial liabilities
Financial liabilities are subsequently carried at
amortized cost using the effective interest method.
The effective method is a method of calculating
the amortization cost of a financial liability and of
allocating interest expense over the relevant period.
The effective interest is the rate that exactly discounts
estimated future cash payments through the expected
life of the financial liability to the net carrying amount
on initial recognition.
De-recoanition of financial liability
The company de-recognises financial liabilities when
the company’s obligations are discharged, cancelled
or expired. The difference between the initial carrying
amount of the financial liabilities and their redemption
value is recognized in the statement of profit and loss
over the contractual terms using the effective interest
method.
o) EARNING PER EQUITY SHARE
Basic earning per equity share is computed by dividing
the net profit attributable to the equity shareholders of
the company by the weighted average number of equity
shares during the period. The company did not have any
potentially dilutive securities in any of the years presented.
The number of equity shares are adjusted retrospectively
for all periods presented for any share splits and bonus
shares issues including for changes effected prior to the
approval of financial statements by the board of directors.
p) CASH FLOW STATEMENT
Cash flows are reported using indirect method whereby
the profit for the period is adjusted for the effects of
transactions of a non-cash nature, any deferrals or
accruals of past or future operating cash receipts or
payments and items of income or expenses associated
with investing or financing cash flows. The cash flows
from operating, investing and financial activities of the
company are segregated.
q) DIVIDENDS
Final dividends on shares are recorded as a liability on
the date of approval by the shareholders i.e the year in
which the dividends are approved and interim dividends
are recorded as a liability on the date of declaration by the
company’s board of directors.
r) RECENT ACCOUNTING PRONOUNCEMENTS
Ministry of Corporate Affairs ("MCA”) notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards) Rules
as issued from time to time. During the year ended
March 31, 2025, MCA has notified Ind AS 117 - Insurance
Contracts and amendments to Ind AS 116 - Leases,
relating to sale and lease back transactions, applicable
from April 1, 2024. The Company has assessed that there
is no significant impact on its financial statements.
On May 9, 2025, MCA notifies the amendments to
Ind AS 21 - Effects of Changes in Foreign Exchange
Rates. These amendments aim to provide clearer
guidance on assessing currency exchangeability and
estimating exchange rates when currencies are not
readily exchangeable. The amendments are affective for
annual periods beginning on or after April 1, 2025. The
Company is currently assessing the probable impact of
these amendments on its financial statements.
Nature and purpose of Reserves:
Retained earnings : Retained earnings are the profits that the Company has earned till date, less any transfers to
general reserve, dividends or other distributions paid to shareholders.
Securities premium : Securities Premium represents the surplus of proceeds received over the face value of shares,
at the time of issue of shares. This reserve can be utilised only for limited purposes such as issuance of bonus shares
in accordance with the provisions of the Companies Act, 2013.
General reserve : General Reserve is used from time to time to transfer profits from retained earnings for appropriation
purposes. As the General Reserve is created by a transfer from one component of equity to another and is not an
item of other comprehensive income, items included in the General Reserve will not be reclassified subsequently to
statement of profit and loss.
Revaluation Surplus : Revaluation surplus represents revaluation of its immovable properties being land and
buildings at its fair market value and the resultant excess of its fair value over its book value is transferred to other
equity as Revaluation surplus.
1) The term loans from banks are secured by way of hypothecation of assets funded under the said facility.
Further, the loans are guaranteed by two directors in their personal capacities.
2) The above loans carries interest varies from 7.8% to 13.65%
3) The above loans are repayable in monthly/quarterly instalments.
4) The non-current portion of above term loans are repayable in following manner.
Banks : 2026-27 Rs.1401 lakhs: 2027-28 Rs.976 lakhs
2028-29 Rs.345 lakhs and 2029-30 Rs.334 lakhs
5) The company made defaults in repayment of instalments in respect of term loans and the following amounts were
due as on 31.3.2025.
Union bank of India - Principal Rs. 3481 lakhs and Interest Rs.1454 lakhs.
Indian bank - Principal Rs. 4664 lakhs and Interest Rs. 1691 lakhs.
6) The company availed term loans and working capital loans from Union bank of India and Indian bank and as at
31.12.2023, the company has defaulted in repayment of term loan instalments (Incl. interest). The banks have
classified these loans as NPA and issued notices on 10.1.2024 for recovery of these dues u/s 13(2) r.w.s 13(3) of
SARFAESI Act, 2002. Further, the banks also taken possession of the properties offered as security u/s 13(4) of
the said Act. The lenders are also applied for recovery of debts before Debt Recovery Tribunal, Visakhapatnam
and proceedings are pending before DRT. Auction notices were also issued by the banks for sale of immovable
properties offered as security and proceedings are pending. The company applied for restructure of these loans
and same is pending with the lender banks. Meanwhile, the Advocate-Commissioners, as appointed by Court of
the Chief Judicial Magistrate-Cum-Senior Civil Judge, Ongole, in response to the petition filed by Indian bank and
the Chief Manager and Authorised officer of Indian bank issued notice for taking physical possession of properties
located in Weaving division and Spinning divisions respectively and on request from company, the possession of
the properties are kept pending. The total outstanding dues pending for remittance to banks as on 31.3.2025 was
Rs. 28048.88 lakhs (Includes Interest on term loans Rs.3022.59 lakhs and working capital loans Rs.1795.84 lakhs
and term loan instalments Rs.8145.68 lakhs and Working capital loans which are repayable on demand Rs.15084.75
lakhs).
EMPLOYEE BENEFITS
a. Defined contribution plans
The Company makes Provident Fund and Employees’ State Insurance Scheme contributions which are defined contribution
plans, for qualifying employees. The Company recognised Rs. 27.31 lakhs (Year ended March 31, 2024: Rs. 33.19 lakhs)
for provident fund contributions, and Rs. 6.08 lakhs (Year ended March 31, 2024: Rs. 7.40 lakhs) towards Employees’ State
Insurance Scheme contributions in the Statement of Profit and Loss.
b. Defined benefit plans
The Company provides to the eligible employees defined benefit plans in the form of gratuity.The gratuity plan provides for
a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an
amount equivalent to 15 days’ salary payable for each completed year of service. Vesting occurs upon completion of five
continuous years of service. The measurement date used for determining retirement benefits for gratuity is March 31.
(i) Balance Sheet
The assets, liabilities and surplus / (deficit) position of the defined benefit plans at the Balance Sheet date were:
The sensitivity analysis above have been determined based on reasonably possible changes of the respective assumptions
occurring at the end of the year and may not be representative of the actual change. It is based on a change in the key
assumption while holding all other assumptions constant. When calculating the sensitivity to the assumption, the same
method used to calculate the liability recognised in the Balance Sheet has been applied. The methods and types of
assumptions used in preparing the sensitivity analysis did not change compared with the previous year.
vi) Discontinuance of liability
Amount payable upon discontinuance of all employees is Rs. 87.47 lakhs (Pr. Year Rs. 95.15 lakhs)
vii) Best estimate of contribution during the year
The best estimate contribution of the company during the year would be Rs. Nil since the company is not contributing to any fund.
(vii) Maturity analysis
Maturity profile of defined benefit obligation :
Fair value hierarchy Note No.44
The fair value of financial instruments as referred to above note 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 identified 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 for identified instruments in an active market.
Level 2: Directly or indirectly observable market inputs, other than Level 1 inputs; and
Level 3: Inputs which are not based on observable market data.
This note provides information about how the Company determines fair values of various financial assets and financial
liabilities.
Fair value of the Company’s financial assets and financial liabilities are measured at fair value on a recurring basis.
Some of the Company’s financial assets are measured at the fair value at the end of each reporting period.
The Company has disclosed financial instruments such as cash and cash equivalents, other bank balances, trade
receivables, trade payables and Short Term Borrowings at carrying value because their carrying amounts approximate
the fair value because of their short term nature. Difference between carrying amounts and fair values of bank borrowings,
other financial assets and financial liabilities subsequently measured at amortised cost is not significant in each of the
years presented.
Note No.45
The Company financial liabilities comprise mainly of borrowings, trade payables and other payables. The Company
financial assets comprise mainly of cash and cash equivalents, trade and other receivables.
The Company’s business activities are exposed to a variety of financial risks namely credit risk, liquidity risk and foreign
currency risk. The Company’s senior management has the overall responsibility for establishing and governing the
Company’s risk management framework. The Company’s risk management policies are established to identify and
analyse 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 Board of Directors of the Company.
A. Credit Risk
Credit risk is the risk of financial loss to the Company if a customer fails to meet its contractual obligation. To manage
this, the company periodically assesses the financial reliability of customers, taking into account the financial condition,
current economic trends and analysis of historical bad debts and ageing of the account receivables. Individual risk limits
are set accordingly.
Receivables from customers
Concentration of credit risk with respect to trade receivables are limited, due to Company’s customer base being large
and diverse. All trade receivables are reviewed and assessed for default on a monthly basis.
On historical experience of collecting receivables is that credit risk is low. Hence, trade receivables are considered to
be a single class of financial assets.
Other financial assets
The Company maintains exposure in cash and cash equivalents and margin money deposits with banks.
The Company’s maximum exposure of credit risk as at March 31, 2025 and March 31, 2024 is the carrying value of each
class of financial assets.
B. Foreign currency risk management
"Foreign currency risk is the risk that the Fair value or Future cashflows of an exposure will fluctuate due to changes in
foreign currency rates. Exposures can arise on account of various assets and liabilities which are denominated in
currencies other than indian rupee. The Company has not entered into any forward exchange contract to hedge against
currency risk.”
The Company manages currency exposures within prescribed limits. The aim of the Company’s approach to management
of currency risk is to leave the Company with no material residual risk.
Foreign currency sensitivity analysis
A 5% strengthening of the INR against key currencies to which the Company is exposed would have led to approximately an
additional Rs. 0.29/- gain in the Statement of Profit and Loss. A 5% weakening of the INR against these currencies would have
led to an equal but opposite effect.
C. Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The objective of
liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The
Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities
when due. Also, the Company has availed credit limits with banks. The Company maintained a cautious liquidity strategy, with
a positive cash balance throughout the year ended March 31, 2025 and March 31, 2024 . Cash flow from operating activities
provides the funds to service the financial liabilities on a day to day basis. Due to unfavourable market conditions, the company
is incurring continous losses and is unable to meet its financial committments to banks as and when due and an amount of Rs.
12934.12 lakhs is pending due to the banks as on 31.3.2025. The company is taking necessary steps to repay the said debt
and is in the process of negoitiations with the banks for restructure of its debt obligations.
The Company regularly maintains the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational
needs. Any short-term surplus cash generated, over and above the amount required for working capital management and other
operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess if any, is invested
in interest bearing term deposits.
The company is repaying its borrowings as per the schedule of repayment and no amount was pending for remittance beyond
its due date. Except of some normal delays.
All the amounts due to trade payables falls due within one year and the company is able to meet its obligations within the due
dates.
In case of borrowings from banks, the maturity pattern and status on overdues has been given under Note no. 14 and 19.
The table summarises the maturity pattern of the company’s financial liabilities based on contractual undiscounted payments.
D. Interest risk
Interest rate risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of
changes in market interest rates. In order to optimize the Company’s position with regards to interest income and interest
expenses and to manage the interest rate risk, the managment performs a comprehensive corporate interest rate risk
management by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.
According to the Company, interest rate risk exposure is only for floating rate borrowings. For floating rate liabilities, the
analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding
for the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key
management personnel and represents management’s assessment of the reasonably possible change in interest rates.
E. 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 judgment of its strategic 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 monitors the return on capital as well as the level of dividends to shareholders.
The Company may take appropriate steps in order to maintain, or is necessary, adjust its capital structure. The funding
requirement is met through a mixture of equity, internal fund generation and other non current borrowings. The company
monitors capital using geraing ratio which is debt divided by total capital.
47. Other disclosures
Additional regulatory and other information as required by the Schedule III to the Companies Act 2013
(a) Relationship with Struck off Companies
The Company did not have any transactions with Companies struck off under Section 248 of Companies Act, 2013
or Section 560 of Companies Act,1956 considering the information available with the Company.
(b) Compliance with number of layers of companies
The Company do not have any parent company and accordingly, compliance with the number of layers prescribed
under clause (87) of section 2 ofthe Act read with Companies (Restriction on number of Layers) Rules, 2017 is not
applicable for the year under consideration.
(c) Scheme of arrangements
There are no Scheme of Arrangements approved by the Competent Authority in terms of sections 230 to 237 of the
Companies Act, 2013 during theyear.
(d) Advance or loan or investment to intermediaries and receipt of funds from intermediaries
The company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other
sources or kind of funds) to anyother person(s) or entity(ies), including foreign entities (Intermediaries) with the
understanding (whether recorded in writing or otherwise) that theIntermediary shall (i) directly or indirectly lend
or invest in other persons or entities identified in any manner whatsoever by or on behalf of thecompany (Ultimate
Beneficiaries) or (ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
The company has also 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 (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 theUltimate Beneficiaries.
(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 thetax assessments under the Income Tax Act, 1961 during any of the years.
(f) Details of Crypto Currency or Virtual
The company has not traded or invested in Crypto currency or vitrual currency during the financial year.
(g) The company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory
period
48. The term loans and working capital loans borrowed by the company from the banks were classified as Non¬
performing assets (NPA’s) by Union bank of India and Indian bank and an amount of Rs. 12934.12 lakhs was overdue
for payment as on 31.3.2025 towards instalments in respect of term loans borrowed. The banks have classified these
loans as NPA and issued notices on 10.1.2024 for recovery of these dues u/s 13(2) r.w.s 13(3) of SARFAESI Act,
2002. Further, the banks also taken possession of the properties offered as security u/s 13(4) of the said Act. The
company applied for restructure of these loans and same is pending with the lender banks.
49. The Board of directors has not recommended any dividend for the financial year ended 31.3.2025.
50. Previous year figures have been regrouped where ever necessary.
As per our report of even date
For BRAHMAYYA & CO
Firm Registration Number : 000513S
Chartered Accountants
For and on behalf of the Board
Sd/- Sd/-
(Karumanchi Rajaj) P Venkateswara Reddy
Managing Director
Partner
Membership No: 202 309 Sd/-
G.V. Krishna Reddy
Place : Guntur Joint Managing Director
Date : 30-05-2025 Sd/-
M.V. Subba Reddy
UDIN : 25202309BMIMDB7635 Whole Time Director & CFO
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