q. Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) 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 a reliable estimate can be made of the amount of the obligation.

The amount recognized 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 (when the effect of the
time value of money is material) discounted using a current pre-tax rate that reflects, when appropriate,
the risks specific to the liability. When discounting is used, the increase in the provision due to the
passage of time is recognised as a finance cost.

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 recognized as an asset if it is virtually certain that reimbursement will
be received and the amount of the receivable can be measured reliably.

Trade receivables above ninety days and against whom any legal cases filed/to be filed are treated as
doubtful in nature and accordingly provision has been made.

The expense relating to a provision is presented in the statement of profit and loss net of any
reimbursement.

Onerous contracts

Present obligations arising under onerous contracts are recognized and measured as provisions. An
onerous contract is considered to exist where the Company has a contract under which the unavoidable
costs of meeting the obligations under the contract exceed the economic benefits expected to be
received from the contract. The unavoidable costs under a contract reflect the least net cost of exiting
from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising
from failure to fulfill it. The cost of fulfilling a contract comprises the costs that relate directly to the
contract (i.e., both incremental costs and an allocation of costs directly related to contract activities).

Show cause notices issued by various government authorities are not considered as obligation. When the
demand notices are raised against such show cause notices and are disputed by the Company then
these are classified as possible obligations.

r. Contingent Liabilities

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. A contingent liability also arises in
extremely rare cases where there is a liability that cannot be recognized because it cannot be
measured reliably. The Company does not recognize such contingent liability but discloses its existence
in the financial statements.

s. Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short term
deposits with an original maturity of less than three months or less that are readily convertible to a
known amount of cash which are subject to an insignificant risk of changes in value.

1. B) Recent 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. For
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 leaseback transactions, applicable to the
Company w.e.f. April 1, 2024. The Company has reviewed the new pronouncements and based on
its evaluation has determined that it does not have any significant impact in its financial statements.

2. C) Significant accounting judgments, estimates and assumptions

The preparation of the Company’s financial statements requires management to make judgments,
estimates and assumptions that affect the reported amounts of revenues, expenses, assets and
liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty
about these assumptions and estimates could result in outcomes that require a material adjustment to
the carrying amount of assets or liabilities affected in future periods.

In the process of applying the Company’s accounting policies, management has made the following
judgment, estimates and assumptions which have the most significant effect on the amounts recognized
in the financial statement

a) Useful lives of property, plant and equipment

Management reviews the useful lives of property, plant and equipment at least once a year. Such
lives are dependent upon an assessment of both the technical lives of the assets and also their
likely economic lives based on various internal and external factors including relative efficiency
and operating costs. This reassessment may result in change in depreciation and amortisation
expected in future periods.

b) Contingent Liabilities

Contingent liabilities may arise from the ordinary course of business in relation to claims against
the Company, including legal, contractor, land access and other claims. By their nature,
contingencies will be resolved only when one or more uncertain future events occur or fail to
occur. The assessment of the existence, and potential quantum, of contingencies inherently
involves the exercise of significant judgment and the use of estimates regarding the outcome of
future events.

Rights, preferences and restrictions

The Company has only one class of equity shares having a par value of Re. 1 Per Share. Each holder of equity share is entitled to one vote per share.

In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution
will be in proportion to the no. of equity shares held by shareholder.

No class of shares have been issued as bonus shares or for consideration other than cash by the Company during the period of five years immediately preceding the current period/ year end.

B. Defined Benefit Obligation:

The Company provides for gratuity for employees as per the Payment of Gratuity Act, 1972/ Company policy.
Employees who are in continuous service for a period of 5 years or more are eligible for gratuity. The amount of
gratuity payable on retirement/ termination is the employee’s last drawn salary per month computed
proportionately as per the Payment of Gratuity Act, 1972/ Company policy multiplied for the number of years of
service.

37 Fair Value Measurement

Financial instruments

The details of significant accounting policies, including criteria for recognition, the basis of measurement and
the basis on which income and expenditure are recognised, in respect of each class of financial asset, financial
liability and equity instrument are disclosed in Note 1.

A Calculation of fair values

The fair values of the financial assets and liabilities are defined as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. The following methods and assumptions were used to estimate the fair values of financial instruments:

i. The fair value of the long-term borrowings carrying floating-rate of interest is not impacted due to
interest rate changes and will not be significantly different from their carrying amounts as there is no
significant change in the under-lying credit risk of the Company (since the date of inception of the
loans).

ii. Cash and cash equivalents, trade receivables, other financial assets, trade payables, and other
financial liabilities have fair values that approximate to their carrying amounts due to their short-term
nature.

c. Fair value hierarchy

The Company uses the following hirerarchy for determining and/or disclosing the fair value of financial
instruments by valuation techniques:

The categories used are as follows:

• Level 1: It includes financial instruments measured using quoted prices and the mutual funds are measured
using the closing Net Asset Value (NAV).

• Level 2: The fair value of financial instruments that are not traded in an active market is determined using
valuation techniques which maximise the use of observable market data and rely as little as possible on entity
specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is
included in level 2.

• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

To manage credit risks from trade receivables other than Related Party, the credit managers from Order to
Cash department of the Company regularly analyse customer’s receivables, overdue and payment behaviours.
Some of these receivables are collateralised and the same is used according to conditions. These could
include advance payments, security deposits, post-dated cheques etc. Credit limits for this trade receivables
are evaluated and set in line with Company’s internal guidelines. There is no significant concentration of
default risk.

Credit risks from financial transactions are managed independently by Finance department. For banks and
financial institutions, the Company has policies and operating guidelines in place to ensure that financial
instrument transactions are only entered into with high quality banks and financial institutions. The Company
had no other financial instrument that represents a significant concentration of credit risk.

The Company considers the probability of default upon initial recognition of asset and whether there has been
a significant increase in credit risk on an ongoing basis through out each reporting period. To assess whether
there is a significant increase in credit risk the Company compares the risk of default occurring on asset as at
the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and
supportive forwarding-looking information such as:

i) Actual or expected significant adverse changes in business,

ii) Actual or expected significant changes in the operating results of the counterparty,

iii) Financial or economic conditions that are expected to cause a significant change to the counterparty’s
ability to meet its obligations,

iv) Significant changes in the value of the collateral supporting the obligation or in the quality of the third-party
guarantees or credit enhancements.

Financial assets are written off when there is no reasonable expectations of recovery. Where loans or
receivables have been written off, the Company continues engage in enforcement activity to attempt to recover
the receivable due. Where recoveries are made, these are recognized in statement of profit & loss.

Credit risk is managed at Company level.

For other financial assets, the Company assesses and manages credit risk based on internal control and credit
management system. The finance function consists of a separate team who assess and maintain an internal
credit management system. Internal credit control and management is performed on a Company basis for each
class of financial instruments with different characteristics.

The Company considers whether there has been a significant increase in credit risk on an ongoing basis
throughout each reporting period. It considers available reasonable and supportive forward-looking
information.

Macroeconomic information (such as regulatory changes, market interest rate or growth rates) are also
considered as part of the internal credit management system.

A default on a financial asset is when the counterparty fails to make payments as per contract. This definition
of default is determined by considering the business environment in which entity operates and other macro¬
economic factors.

The Company measures the expected credit loss of trade receivables from individual customers based on
historical trend, industry practices and the business environment in which the entity operates. Loss rates are
based on actual credit loss experience and past trends. Based on the historical data, no additional provision
has been considered necessary in respect of trade receivables more than 90 days for the 31st March 2025,
since the management has taken suitable measures to recover the said dues and is hopeful of recovery in due
course of time.

"The Company maintains exposure in cash and cash equivalents, deposits with banks, investments, and other
financial assets. Individual risk limits are set for each counter-party based on financial position, credit rating
and past experience. Credit limits and concentration of exposures are actively monitored by the Management
of the Company. The maximum exposure to credit risk at the reporting date is the carrying value of each class
of financial assets. The Company believes that the current value of trade receivables reflects the fair value/
recoverable values.

(B) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its
financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to
managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when
they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Company’s reputation. Due to the dynamic nature of underlying businesses, the Company
maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecast of Company’s liquidity position (comprising the undrawn borrowing
facilities below) and cash and cash equivalents on the basis of expected cash flows. In addition, the company’s
liquidity management policy involves projecting cash flows in major currencies and considering the level of
liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external
regulatory requirements and maintaining debt financing plans. "

Maturities of financial liabilities

The tables below analyse the company’s financial liabilities into relevant maturity groupings based on their
contractual maturities for:

all non-derivative financial liabilities, and the amounts disclosed in the table are the contractual undiscounted
cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not
significant.

(C) Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity
prices - will affect the Company’s income or the value of its holdings of financial instruments. The objective of
market risk management is to manage and control market risk exposures within acceptable parameters while
optimising the return.

The Company is exposed to market risk primarily related to foreign exchange rate risk (currency risk), interest
rate risk and 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. "

Sensitivity analysis

The following table details the Company’s sensitsivity to a 25 basis points increase and decrease in the Rupee
against the relevant foreign currencies is the sensitivity rate used when reporting foreign currency risk
internally to key management personnel and represents management’s assessment of the reasonably possible
change in foreign exchange rates. This is mainly attributable to the net exposure outstanding on receivables or
payables in the Company at the end of the reporting period. The sensitivity analysis includes only outstanding
foreign currency denominated monetary items and adjusts their translation at the period end for a 0.25%
change in foreign currency rate. This analysis assumes that all other variables, in particular interest rates,
remain constant and ignores any impact of forecast sales and purchases. In cases where the related foreign
exchange fluctuation is capitalised to fixed assets or recognised directly in reserves, the impact indicated
below may affect the Company's income statement over the remaining life of the related fixed assets or the
remaining tenure of the borrowing respectively.

The Company’s approach to managing interest rate risk is to have a judicious mix of borrowed funds with fixed
and floating interest rate obligation. Moreover, the short-term borrowings of the Company do not have a
significant fair value or cash flow interest rate risk due to their short tenure.

The Company is also exposed to interest rate risk on its financial assets that includes fixed deposits, since the
same are generally for short duration, the Company believes it has manageable risk and achieving satisfactory
returns. The Company also has long - term fixed interest bearing assets. However the Company has in place an
effective system to manage risk and maximise return.

- Interest rate sensitivity
Interest rate sensitivity

A reasonably possible change of 25 basis poisnts in interest rates at the reporting date would have increased
(decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables remain
constant. In cases where the related interest rate risk is capitalised to fixed assets, the impact indicated below
may affect the Company's income statement over the remaining life of the related fixed assets.

(iii) Price Risk

The Company’s exposure to price risk arises from investment in mutual funds and classified in the balance
sheet as fair value through profit and loss. Mutual fund investments are susceptible to market price risk,
mainly arising from changes in the interest rates or market yields which may impact the return and value of
such investments. However, due to very short tenor of the underlying portfolio in the liquid schemes, these do
not pose any significant price risk.

Additional Regulatory Information pursuant to Clause 6L of General Instructions for preparation of Balance
Sheet as given in Part I of Division II of Schedule III to the Companies Act, 2013, are given hereunder to the
extent relevant and other than those given elsewhere in any other notes to the Financial Statements.

a. The Company does not have any benami property, where any proceeding has been initiated or pending
against the Company for holding any benami property.

b. The Company does not have any transactions with companies which are struck off

c. The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the

statutory period.

d. The Company has not traded or invested in crypto currency or virtual currency during the financial year.

e. 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)

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

f. 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:

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.

g. The Company does not have any 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 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.

h. The Company is not declared wilful defaulter by any bank or financial institution or lender during the year.

i. The Company has Fund-based and Non-fund-based limits of Working Capital from a Bank. For the said
facility, the revised submissions made by the Company to its banker based on closure of books of account
at the year end, the revised quarterly returns or statements comprising stock statements, book debt
statements, credit monitoring arrangement reports, statements on ageing analysis of the debtors/other
receivables, and other stipulated financial information filed by the Company with such bank are in
agreement with the unaudited books of account of the Company of the respective quarters and no material
discrepancies have been observed.

j. The Company has used the borrowings from banks and financial institutions for the specific purpose for
which it was taken as at Balance sheet date.

With effect from April 1, 2023, the Ministry of Corporate Affairs (MCA) has made it mandatory for every
company incorporated in India, which uses accounting software for maintaining its books of account, to use
only such accounting software which has a feature of recording audit trail of each and every transaction,
creating an edit log of each change made in books of account along with the date when such changes were
made and ensuring that the audit trail cannot be disabled.

The Company has been maintaining its books of accounts in the SAP which has feature of recording audit trail
of each and every transaction, creating an edit log of each change made in books of account along with the
date when such changes were made and ensuring that the audit trail cannot be disabled, throughout the year
as required by proviso to sub rule (1) of rule 3 of The Companies (Accounts) Rules, 2014 known as the
Companies (Accounts) Amendment Rules, 2021. However, the audit trail feature is not enabled for direct
changes to data in the underlying database. The Company as per its policy has not granted privilege access for
change to data in the underlying database as evident from the manual log being maintained in this regard and

further privilege access rights to application are restricted only to specific authorised users for which audit trail
exists.

Further, we did not come across any instance for the periods where audit trail (edit log) facility was enabled
and operated for the respective accounting software, we did not come across any instance of the audit trail
feature being tampered with and the audit trail has been preserved by the Company as per the statutory
requirements for record retention.

The Company evaluates events and transactions that occur subsequent to the balance sheet date but prior to
the approval of financial statements to determine the necessity for recognition and/or reporting of subsequent
events and transactions in the financial statements.

44 Certain financial assets and financial liabilities are subject to formal confirmations and reconciliations, if
any. The management, however, is confident that the impact whereof for the year on the financial statements
will not be material.

45 Previous year figures have been re-grouped /re-classified wherever necessary to conform current years'
classification.

For Bagaria & Co. LLP For and on behalf of Board of Directors of

Chartered Accountants Raj Rayon Industries Limited

ICAI Firm Registration Number: 113447W/W-
100019

Rajkumar Agarwal Sandiip Agarwwal

Managing Director WTD & CFO

DIN: 00395370 DIN: 00395348

Mohak Goel May 29, 2025 May 29, 2025

Partner Mumbai Mumbai

Mem. No. 159883
Mumbai

May 29, 2025 Chintan Dharod

Company Secretary
May 29, 2025
Mumbai