3.20 Provisions and contingent liabilities
Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event and
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. Provisions are measured at the best estimate of the expenditure
required to settle the present obligation at the Balance Sheet date.
Contingencies
Contingent liabilities are disclosed when there is a possible obligation 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 the obligation or a reliable estimate of the amount cannot be made.
3.21 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 but do not have material impact on the financial statements of the Company.
On May 7, 2025, MCA notified 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 effective for annual periods beginning on or after April 1,2025
but do not have probable impact of these amendments on its financial statements.
Claims against the Company not acknowledged as debts:
The GST department has raised demand vide Show Cause Notice dated 7th March, 2025 on the Company for an amount
of Rs. 19.44 lakhs plus interest and penalty, as maybe applicable and this demand pertains to the period from 01-07-2017
to 31-03-2023.
On the basis of legal advice obtained, the Company does not foresee the demand to materialize into an order/judgment
against the Company and therefore, the same should not have any impact on the Company’s financial position.
36.1.2 Contingent Assets
Insurance Claim
The Company’s Wind Turbine’s Generator suffered a breakdown on 13th September, 2024 and was required to be repaired
and refurbished. The same was carried out and the WTG operations were restored w.e.f. 1st March, 2025. The Company
had taken MBD policy cover against such possible expense/losses and accordingly, the Company has filed a claim with
the Insurance Company in relation to the expenses incurred i.e. for an amount of Rs.185 lakhs. However, as the recovery
of such amount is not virtually certain as of the reporting date, no asset has been recognized in the financial statements.
COMMITMENTS
Capital commitments
Capital expenditure contracted for at the end of the reporting period but not recognized as liabilities is Rs. Nil (Previous
year: Rs. Nil).
36.1.3 Accrued Expenses
The Company as at 31st March, 2025, has accrued expenses amounting to Rs.185 lakhs in relation to repair services
of Wind Turbine rendered during the present year for which Final Invoice has not been received. These have been
recognized considering the present legal obligation as a result of past event taking account of all available evidences as
per Ind AS-37.
36.1.4 Proposed Dividend
The Board of Directors in their meeting held on May 27, 2025 recommended dividend of Rs. 1.00 at the rate of 10%
(Previous year: Rs. 1.00 at the rate of 10%) per equity share for the financial year ended 31st March, 2025. This payment
is subject to the approval of shareholders in the Annual General Meeting (AGM) of the company and approved would
result in a net cash outflow of approximately Rs. 39.44 lakhs (Previous year: Rs. 39.44 lakhs).
The company declares and pays dividends in Indian rupees. Companies are required to pay / distribute dividend after
deducting applicable withholding income taxes wherever applicable.
36.1.5 Trade Payables
On the basis of intimation received from the vendors, the company has identified micro and small enterprise. The principle
amounts due to suppliers under MSMED Act, 2006 as on 31st March, 2025 are Rs. 33.59 lakhs (Previous year Rs. 28.62
lakhs). There are no overdue amounts payable to these Micro and Small Enterprises registered under Micro, Small and
Medium Enterprises Development Act; 2006 (‘MSMED Act’) as at 31st March, 2025. There is no interest payable under
MSMED Act for the year ended 31st March, 2025.
For trade receivables and trade payables and other assets and payables maturing within one year from the Balance Sheet
date, the carrying amounts approximate the fair value due to the short maturity of these instruments.
Fair valuation techniques used to determine fair value
The following assumptions were used to estimate the fair values:
1. The fair value of the financial assets and liabilities is included at the amount at which the instrument is exchanged in
a current transaction between willing parties, other than in a forced or liquidation sale.
2. Fair value of quoted financial instruments are derived from quoted market prices in active market.
3. Investment in Equity and Bonds are measured at amortized cost.
Fair value hierarchy
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by
valuation technique
1. Level 1 - Quoted prices in active markets / published NAV for financial instruments like mutual funds for which net
assets value (NAV) is published by mutual fund operator at the balance sheet date.
2. Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
3. Company has financial instruments that falls in the category of Level 1 and Level 3 hence categorization for Level 2
is not applicable.
36.6 Financial Risk Management
The Financial risk management is practices and procedures that a Company uses to optimize the amount of risk it handles
with financial interest. The Risk management is done to identify how risks associated with the Company will be identified,
analyzed, and managed. It outlines how risk management activities will be performed, recorded, and monitored by the
Company. The basic objective of risk management plan is to implement an integrated risk management approach to
ensure all significant areas of risks are identified, understood and effectively managed, to promote a shared vision of
risk management and encourage discussion on risks at all levels of the organization to provide a clear understanding of
risk/benefit trade-offs, to deploy appropriate risk management methodologies and tools for use in identifying, assessing,
managing and reporting on risks.
Credit Risk
Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual
terms or obligations. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of credit
worthiness as well as concentration of risks. Credit risk is controlled by analyzing credit limits and credit worthiness of
customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit.
Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, loans,
investments, derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets.
Inter-corporate deposits are primarily with financial institutions having high credit-rating assigned by credit-rating agencies
and short-term loans to companies also with sound ratings. Bank deposits are held with different banks.
The other exposure to the credit risk at the reporting date is primarily from trade receivables. Trade receivables are
typically unsecured. Credit risk has always been managed by the Company through credit approvals, establishing credit
limits and continuously monitoring the credit worthiness of the customers to which the Company grants credit terms in the
normal course of business. Credit is normally extended to very limited number of domestic customers having dealings of
over two decades with the company and huge conglomerates in the international market.
The Company’s credit period generally ranges from 0-45 days. Counterparty credit limits are reviewed by the Company’s
Directors handling operations. The limits are set to minimize the concentration of risks and therefore mitigate financial loss
through counterparty’s potential failure to make payments or repay the deposits.
Commodity risk
The company is partly impacted by the price volatility of commodities towards contracts already entered into and delivery
is pending. Company manufacture PP (Polypropylene) Fibre for which PP (Polypropylene) Resin is the key raw material
for its manufacture. Due to significant volatility of the price of PP (Polypropylene) Resin, the company has developed
and enacted risk management strategy of procuring the materials from domestic market as well as international market.
Generally, the company has pending deliveries of up to one month. The company has also entered into MOU with the
designated vendor for supply of materials to mitigate commodity price risk.
Market Risk
PP (Polypropylene) Fibre is used primarily in India for three applications - in the manufacture of Filter Fabrics used for
almost all kinds of liquid filtration, in the manufacture of automotive and exhibition carpets and for the construction and
geo-textile sector.
Due to its inherent properties, PP fibre is the primary requirement for the filtration application and is more or less
irreplaceable by any other synthetic fibre. Additionally, as long as automotive vehicles will be produced and as long
as marriages and exhibitions will take place, there will always be the requirement of carpets thought their quantitative
requirements will always fluctuate depending upon various market criterion. There is varied demand for PP Fibre in
the construction and geo-textile sector. Depending upon technical requirements, PP Fibre is applied but wherever the
specifications are not very stringent, some other synthetic fibres are also used.
The Company has experienced some pressure on profit margins due to increase in operational costs, market competition
and other industry related factors given it is operating in a highly competitive industry with numerous organized and
unorganized players both domestically and overseas. However, given the Company has a long-established brand, trust
with customers in varied applications and its reputable excellent product quality and timely customer services; it shall
utilize these strategies to enhance its position in the market. The Company is also focusing on diversifying its product-
range into additional niche products and also simultaneously increase its customer base so as to not only introduce value-
added products in its product-basket but reduce dependency from its current long standing customer base.
Foreign Currency Exchange Rate Risk
The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the trade receivables and
derivative assets/liabilities. The risks primarily relate to fluctuations in US Dollar against the functional currencies of the
Company.
The fluctuation in foreign currency exchange rates does not have significant potential adverse impact on the statement
of profit and loss and other comprehensive income and equity, accordingly does not hedge foreign currency risks
using derivative financial instruments.
Liquidity Risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time.
The Company’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated
from operations. The Company has no outstanding borrowings. The Company believes that the working capital is
sufficient to meet its current requirements.
As at 31st March, 2025, the Company had a cash and cash equivalent of Rs. 1860.96 lakhs and as at 31st March,
2024 Rs. 1502.45 lakhs.
The details regarding the contractual maturities of significant financial liabilities as at 31st March, 2025 are as follows:
Capital Management
For the purpose of the Company’s capital management, capital includes issued equity capital, security premium and
all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company’s
capital management is to maximize the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and
the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the
dividend payment to shareholders, return capital to shareholders or issue new shares. The Company does not have
any debt, interest bearing loans and borrowings.
36.7 Employee Benefits
As per Ind AS 19 ‘Employee Benefits’, the disclosure of Employee benefits as defined in the Ind AS are given below:
(a) Defined Contribution Plan - Provident Fund
During the year, the company has recognized the Company’s Contribution to Employees Provident Fund amounting
to Rs. 14.28 lakhs (Previous year: Rs. 13.35 lakhs) as part of Remuneration and other benefits to the employees.
(b) Defined Benefit Plan
The benefit of gratuity is Funded Defined Benefit Plan. For this purpose, the company has obtained qualifying
insurance policy from Life Insurance Corporation of India.
Management expects that the entire transaction price allotted to the unsatisfied contract as at the end of the reporting
period will be recognized as revenue during the next financial year.
36.10 Additional Regulatory Information:
(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 did not have any transactions with companies struck off under Section 248 of the Companies Act,
2013 or Section 560 of Companies Act, 1956 during the financial years 2024-25 and 2023-24.
(c) The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies
(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:
(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.
(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:
(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.
(g) The Company has not 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 (such as, search or
survey or any other relevant provisions of the Income Tax Act, 1961)
36.13 Segment Reporting
The Company has identified the following business segments as reportable segments based on nature of products, risks,
returns and the internal business reporting system.
(1) Manufacturing of ‘Manmade Fibre’(2) Power Generation - Wind Turbine
Revenue and expenses directly attributable to segments are reported under each reportable segment. Exceptional
items and other expenses which are not attributable or allocable to segments are separately disclosed. Assets and
liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other
assets and liabilities are disclosed as un-allocable assets and liabilities. Common costs attributable to Wind Mill are
insignificant and hence not allocated to this unit.
Power generated through the Wind Mill is transferred to the Madhya Gujarat Vij Company Limited which sells the
power units and gives credit for such units either in the power bills for units consumed by the Manmade Fibre Unit or
make the payment for unutilized units sold in the market.
36.14 Figures for the comparative periods have been regrouped wherever necessary in conformity with present classification.
As per our report of even date For and on behalf of Board of Directors
FOR SURENDRA MODIANI & ASSOCIATES Aman Rungta Sanjeev Rungta
Chartered Accountants (F.R.N. 126307W) Whole Time Director Finance Executive Chairman
DIN : 03585306 DIN : 00053602
Surendra Modiani Dharati Bhavsar Vikram Somani
Partner Company Secretary Independent Director
(Membership No. 047966) DIN : 00054310
Date : 27-05-2025
Place : Vadodara
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