2.16 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, 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. Expected future
operating losses are not provided for.

If the effect of the time value of money is material, provisions are discounted to reflect its present value using a
current pre-tax rate that reflects the current market assessments of the time value of money and the risks specific
to the obligation. When discounting is used, the increase in the provision due to the passage of time is recognised
as a finance cost.

Contingent liabilities

A contingent liability is a possible obligation that arises from a past event, with the resolution of the contingency
dependent on uncertain future events, or a present obligation where no outflow is probable. Major contingent
liabilities are disclosed in the financial statements unless the possibility of an outflow of economic resources
is remote.

2.17 Measurement of fair value

a Financial instruments

The estimated fair value of the Company's financial instruments is based on market prices and valuation
techniques. Fair values are determined with the objective to include relevant factors that market participants
would consider in setting a price, and to apply accepted economic and financial methodologies for the
pricing of financial instruments. References for less active markets are carefully reviewed to establish relevant
and comparable data.

b Marketable and non-marketable equity securities

Fair value for listed shares is based on quoted market prices as of the reporting date. Fair value for unlisted
shares is calculated based on market comparison techniques utilizing significant unobservable data, primarily
cash flow based models.

The valuation model is based on market multiples derived from quoted prices of companies comparable to
the investee and the expected revenue and Earnings before tax, interest and depreciation (EBITDA) of the
investee. The estimate is adjusted for the effect of the non-marketability of the relevant equity securities.

If fair value cannot be measured reliably unlisted shares are recognized at cost.
c Derivatives

The Company uses derivative financial instruments, such as forward currency contracts to hedge its foreign
currency risks and interest rate risk respectively. Such derivative financial instruments are initially recognised
at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at
fair value provided by the respective banks. Derivatives are carried as financial assets when the fair value is
positive and as financial liabilities when the fair value is negative.

Any gains or losses arising from changes in the fair value of derivatives are recorded directly to statement of
profit and loss.

2.18 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.

Initial Recognition and measurement

Trade receivables and debt securities issued are initially recognised when they are originated.

All other financial assets and financial liabilities are initially recognised when the Company becomes a party to the
contractual provisions of the instrument.

A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is
initially measured at fair value plus or minus, for an item not at FVTPL, transaction costs that are directly attributable
to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the
transaction price.

A) Financial Assets

Classification and Subsequent measurement

For purposes of subsequent measurement, financial assets of the Company are classified in three categories:

a) At amortised cost

b) At fair value through profit and loss (FVTPL)

c) At fair value through other comprehensive income (FVTOCI)

Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its
business model for managing financial assets, in which case all affected financial assets are reclassified on the first
day of the first reporting period following the change in the business model.

Financial asset is measured at amortised cost if both the following conditions are met:

a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash
flows, and

b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal
and interest (SPPI) on the principal amount outstanding.

After initial measurement, such financial assets are subsequently measured at amortised cost using the effective
interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in other income
in the statement of profit and loss. The losses arising from impairment are recognised in the standalone statement
of profit and loss. This category generally applies to trade and other receivables.

A debt investment is measured at FVTOCI if it meets both of the following conditions and is not designated
at FVTPL:

? it is held within a business model whose objective is achieved by both collecting contractual cash flows and
selling financial assets; and

its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on
the principal amount outstanding.

Financial assets not classified as measured at amortised cost or FVTOCI are measured at FVTPL. Financial assets
included within the FVTPL category are measured at fair value with all changes recognised in the statement of
profit and loss.

Equity Instruments

All equity instruments in the scope of Ind AS 109 are measured at fair value. Equity instruments which are held for
trading are measured at fair value through profit and loss.

For all other equity instruments, the Company may make an irrevocable election to present subsequent changes
in the fair value in other comprehensive income.

The Company makes such election on an instrument by instrument basis. The classification is made on initial
recognition and is irrevocable.

If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the
instrument, excluding dividends, are recognised in other comprehensive income. This cumulative gain or loss is
not reclassified to statement of profit and loss on disposal of such instruments.

Investments in Subsidiaries which meet the definition of an equity instrument or provide access to returns
associated with an underlying ownership interest are carried at cost less accumulated impairment losses.
Where an indication of impairment exists, the carrying amount of the investment is assessed and written down
immediately to its recoverable amount. On disposal of investments in subsidiaries, the difference between net
disposal proceeds and the carrying amounts are recognised in the Standalone Statement of Profit and Loss.

Investments in Subsidiaries which do not meet the definition of an equity instrument or provide access to returns
associated with an underlying ownership interest in subsidiaries are accounted as financial instruments and
initially recognised at its fair value. The difference, if any, between the fair value and the consideration given is
recognised as an additional investment (deemed contribution) by the Company.

Derecognition

A financial asset (or, where applicable, a part of a financial asset) is primarily derecognised (i.e. removed from the
balance sheet) when:

a) The rights to receive cash flows from the asset have expired, or

b) The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to
pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement;
and either (i) the Company has transferred substantially all the risks and rewards of the asset, or (ii) the
Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass¬
through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When
it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control
of the asset, the Company continues to recognise the transferred asset to the extent of the Company's continuing
involvement. In that case, the Company also recognises an associated liability. The transferred asset and the
associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of
the original carrying amount of the asset and the maximum amount of consideration that the Company could be
required to repay. Any gain or loss on derecognition is recognised in profit or loss.

When the Company has retained substantially all the risks and rewards of ownership of the transferred asset, the
Company continues to recognise the transferred asset in its entirety and recognises a financial liability for the
consideration received.

Impairment of financial assets

The Company recognizes loss allowance using the expected credit loss (ECL) model for the financial assets
which are not fair valued through profit or loss. Loss allowance for trade receivables and contract assets with no
significant financing component is measured at an amount equal to lifetime ECL. For all financial assets with
contractual cash flows other than trade receivable and contract assets, ECLs are measured at an amount equal to
the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case
those are measured at lifetime ECL. The amount of ECL (or reversal) that is required to adjust the loss allowance at
the reporting date is recognised as an impairment gain or loss in the Statement of Profit and Loss.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition
and when estimating ECLs, the Company considers reasonable and supportable information that is relevant and
available without undue cost or effort. This includes both quantitative and qualitative information and analysis,
based on the Company's historical experience and informed credit assessment, that includes forward-looking
information. The Company considers a financial asset to be in default when the asset is unlikely to be realised
in full.

Credit Impaired Financial Assets

At each reporting date, the Company assesses whether financial assets carried at amortised cost and debt
securities at FVTOCI are credit-impaired. A financial asset is 'credit-impaired' when one or more events that have
a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Evidence that a financial asset is credit-impaired includes observable data:

- significant financial difficulty of the debtor;

- breach of contract such as default, or;

- it is probable that the debtor will enter bankruptcy or other financial reorganisation.

Presentation of allowance for ECL in the balance sheet

Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of
the assets.

Write Off

The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations
of recovering a financial asset in its entirety or a portion thereof. However, financial assets that are written off
could still be subject to enforcement activities in order to comply with the Company's procedures for recovery of
amounts due.

B) Financial liabilities and Equity instruments
Initial recognition and measurement

All financial liabilities are recognised initially at fair value, net of directly attributable transaction costs, if any.

Subsequent measurement

(i) Borrowings

Borrowings are subsequently measured at amortised cost. Any differences between the proceeds (net
of transaction costs) and the redemption/repayment amount is recognised in profit and loss over the
period of the borrowings using the effective interest rate method.

(ii) Trade and other payables

Trade and other payables represent liabilities for goods and services provided to the Company prior to
the end of the financial year and which are unpaid.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there
is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a
net basis, to realise the assets and settle the liabilities simultaneously.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is
treated as the derecognition of the original liability and the recognition of a new liability. The difference in
the respective carrying amounts is recognised in the statement of profit and loss.

2.19 Income tax

Income tax expense comprises current and deferred tax. It is recognised in Statement of Profit and Loss except to
the extent that it relates to items recognised directly in equity or in other comprehensive Income.

i. Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year
and any adjustment to the tax payable or receivable in respect of previous years. The amount of current
tax payable or receivable reflects the best estimates of the tax amount expected to be paid on received. It is
measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.

Current tax assets and liabilities are offset only if, the Company:

a) Has a legally enforceable right to set off the recognised amounts; and

b) Intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

ii. Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities
for financial reporting purpose in the balance sheet and the corresponding tax bases used for taxation
purpose. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax
assets are generally recognised for all deductible temporary differences to the extent that it is probable that
taxable profits will be available against which those deductible temporary differences can be utilised. Such
assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other
than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit and does not give rise to equal taxable and deductible temporary difference.

The carrying amount of deferred tax assets is reviewed at each balance sheet date 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.

Unrecognized deferred tax assets are reassessed at each reporting date and recognised to the extent that it
has become probable that future taxable profits will be available against which they can be used.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in
which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted
or substantively enacted by the balance sheet date. 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
reporting date, to recover or settle the carrying amount of its assets and liabilities or their tax assets and
liabilities will be realised simultaneously.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and
the Company intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax are recognised in the Statement of Profit and Loss, except when they relate to items
that are recognised in Other Comprehensive Income or directly in equity, in which case, the current and
deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where
current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is
included in the accounting for the business combination.

2.20 Leases

The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. The
Company uses significant judgement in assessing the lease term (including anticipated renewals) and the
applicable discount rate.

The Company determines the lease term as the non-cancellable period of a lease, together with both periods
covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and periods
covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option. In
assessing whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an
option to terminate a lease, it considers all relevant facts and circumstances that create an economic incentive for
the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The
Company revises the lease term if there is a change in the non-cancellable period of a lease.

The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for
a portfolio of leases with similar characteristics.

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a
period of time in exchange for consideration.

Company as a lessee

The Company accounts for each lease component within the contract as a lease separately from non-lease
components of the contract and allocates the consideration in the contract to each lease component on the
basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non¬
lease components.

The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term
and a lease liability at the lease commencement date. The cost of the right-of-use asset is initially measured at cost
which comprise of the amount of the initial amount of the lease liability adjusted for any lease payments made
at or before the commencement date less any lease incentives received, plus any initial direct costs incurred and
an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring
the underlying asset or site on which it is located. The right-of-use assets is subsequently measured at cost less
any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of
the lease liability. The right-of-use assets is depreciated using the straight-line method from the commencement
date over the shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of-use
assets are determined on the same basis as those of property, plant and equipment. Right-of-use assets are tested
for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment
loss, if any, is recognised in the Statement of Profit and Loss.

The Company measures the lease liability initially at the present value of the lease payments that are not paid
at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in
the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses
incremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease by lease
basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate
for the portfolio as a whole. The lease payments shall include fixed payments, variable lease payments, residual
value guarantees, exercise price of a purchase option where the Company is reasonably certain to exercise that
option and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an
option to terminate the lease. The lease liability is subsequently remeasured by increasing the carrying amount
to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and
remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in¬
substance fixed lease payments. The company recognises the amount of the re-measurement of lease liability
due to modification as an adjustment to the right-of-use asset and Statement of Profit and Loss depending upon
the nature of modification. Where the carrying amount of the right-of-use asset is reduced to zero and there is a
further reduction in the measurement of the lease liability, the Company recognises any remaining amount of the
re-measurement in statement of profit and loss.

The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets
that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease
payments associated with these leases are recognized as an expense in Statement of Profit & Loss on a straight¬
line basis over the lease term.

2.21 Segment reporting

"An operating segment is a component of the company that engages in business activities from which it may earn
revenues and incur expenses, including revenue and expenses that relate to transaction with any of the company's
other component, and for which discrete financial information is available. All operating segments, operating
results are reviewed regularly by CODM to make decisions about resource to be allocated to the segments and
assess their performance."

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief
Operating Decision Maker (CODM).

The Board of Directors of the Company have been identified as being the Chief Operating Decision Maker by the
management of the Company.

The Company's board examines the Company's performance both from a product and geographic perspective
and has identified two reportable segments of its business:

a) Yarn: It comprises of recycle polyester staple fibre, cotton and man made fibres yarn;

b) Home textiles : It comprises of home furnishing and fabric processing
Refer note 41 for segment information presented.

2.22 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity
of three months or less and highly liquid investments that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of change in value.

For the purposes of the cash flow statement, cash and cash equivalents is as defined above, net of outstanding
bank overdrafts.

2.23 Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity
shareholders (after deducting preference dividends and attributable taxes) 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.

2.24 Dividend

The Company recognises a liability to make distributions to equity holders when the distribution is authorised and
the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution
is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.

2.25 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.

In May 2025, MCA notified amendments to Ind AS 21 - The Effects of Changes in Foreign Exchange Rates, applicable
w.e.f. April 1, 2025. The Company has reviewed the amendment and based on its evaluation has determined that
it does not have any impact in its financial statements.

In August 2025, MCA notified the following amendments to:

1. Ind AS 1, Presentation of Financial Statements, applicable w.e.f. April 1, 2025 - The amendment relates to
classification of liabilities as current or non-current and non-current liabilities with covenants. In the context
of classifying a liability as current, it removes the requirement of existence of a right to defer settlement
for at least 12 months after the reporting date and instead requires that the said right should exist on the
reporting date and have substance. The amendment also introduces guidance on classification of liabilities
with covenants. The Company has no impact of these amendments in its classification criteria of current
and non-current liabilities.

2 Ind AS 7, Statement of Cash Flows and Ind AS 107, Financial Instruments: Disclosures, applicable w.e.f. April
1, 2025 - The amendment in Ind AS 7 requires to inform users of financial statements of the existence of
supplier finance arrangements and explain the nature of the arrangements, the carrying amount of liabilities
and the range of payment due dates. Ind AS 107 has been amended to add supplier finance arrangements
as a factor that may cause concentration of liquidity risk. The Company has reviewed the amendment and
based on its evaluation has determined that it does not have any impact in its financial statements.

3 Ind AS 12, International Tax Reform - Pillar Two Model Rules applicable immediately - The amendments
provide a temporary mandatory relief from deferred tax accounting for top-up tax and disclose that they have
applied the relief. The Company has reviewed the amendment and based on its evaluation has determined
that it does not have any impact in its financial statements.

Amendment issued but not effective:

The Ministry of Corporate Affairs (MCA) amended the Companies (Indian Accounting Standards) Rules, 2015,
introduced changes to Ind AS 1 - Presentation of Financial Statements, effective from 01 April 2026. These
amendments provide guidance when an entity breaches any covenant of a long-term loan arrangement on or
before the end of the reporting period with the effect that the liability becomes payable on demand, it classifies
the liability as current, even if the lender agreed, after the reporting period and before the approval of the financial
statements for issue, not to demand payment as a consequence of the breach. An entity classifies the liability as
current because, at the end of the reporting period, it does not have the right to defer its settlement for at least 12
months after that date. However, an entity classifies the liability as non-current if the lender agreed by the end
of the reporting period to provide a period of grace ending at least 12 months after the reporting period, within
which the entity can rectify the breach and during which the lender cannot demand immediate repayment. This
amendment is to be applied retrospectively for annual reporting periods beginning on or after 1 April 2026, in
accordance with Ind AS 8, Accounting Policies, accounting Estimates and Errors.

The Company has considered these amendments and expects that there will be no impact on the
financial statements.

Notes:

1. Building, includes share of the company in a premises at Haridwar (jointly owned with others) having carrying
value as at 31 March 2026 Rs. 0.53 crores and 31 March 2025 Rs.0.53 crores respectively (Original Cost Rs. 1.23 crores
as at 31 March 2026 and Rs.1.23 crores as at 31 March 2025)

2. Borrowing cost capitalised amounting to Rs. 0.09 crores (31 March 2025 Rs. 0.09 crores) under the head plant and
equipment (refer note 42)

3. Property, plant and equipment given as security for borrowings refer note 20 (a)

4. Refer note no. 17A for Asset held for sale

5. Refer note no. 40 (B) for Capital Commitment

6. Immovable Property not held in name of the Company: In case of Kathua leasehold land having carrying value as
at 31 March 2026 and 31 March 2025 Rs. 1.26 crores and Rs.1.19 crores respectively (Original cost Rs.1.53 crores as at
31 March 2026 and 31 March 2025 : Rs 1.53 crores) and in case of Baddi units freehold land having carrying value as
at 31 March 2026 and 31 March 2025 Rs 0.08 crores (Original cost Rs 0.08.crores) are pending for registration in the
name of the company. Details for the current and previous year are as follows:

5. Non current investments (Contd.)

Notes:

a. The Company held investments in its wholly owned subsidiary in the United States of America (USA) which has
further invested in a step-down subsidiary in USA. The Company assesses at each reporting date if there is an
indication, based on either internal or external sources of information, that investments in the subsidiary (including
step down subsidiary) may be impaired in accordance with Ind AS 36 ""Impairment of Assets"". Where such
indicators exist, management performs impairment testing.

Year ended 31 March 2025

In performing such impairment assessment, the Company compares the carrying value of each of the identifiable
cash-generating units ("CGUs") to which investments in the subsidiary (including step-down subsidiary) have
been allocated with their respective recoverable amounts. The recoverable amount of the CGUs, which is based on
the value in use derived from discounted forecast cash flow models to determine if any impairment loss should
be recognised.

The step-down subsidiary of the company has incurred losses during the current year and previous years, resulting
in erosion of its net worth. Accordingly, impairment assessments of the aforesaid CGU were carried out in earlier
years using the value-in-use model, and impairment loss aggregating to Rs.60.39 crore was recognised under
exceptional item up to 31 March 2025 (Refer Note 38(a)).

Year ended 31 March 2026

During the current year, the step-down subsidiary made a strategic decision to significantly curtail its business
operations due to adverse market conditions and continued financial underperformance. Accordingly, management
concluded that the carrying value of investment is not recoverable. Accordingly, the balance carrying amount of
the investment of Rs. 20.74 crores has been written off and recognised as an 'Exceptional item' in the Statement of
Profit and Loss. (refer Note 38(a))."

b. The Company has invested in Continuum Green Energy Limited (the "CGEL") in accordance with the Share
Purchase and Shareholders' Agreement, which provides the Company with the right to draw power from the wind-
solar hybrid plant operated and maintained by the CGEL.

The investment has been accounted for in accordance with Ind AS 109 - Financial Instruments and is measured
at fair value on initial recognition with interest being accreted at each reporting date. Subsequent measurement is
carried out in line with the applicable classification under Ind AS 109.

(a) Refer note 38(b).

(b) The Company decided to sell other obsolete plant & equipment of Rs. 0.13 crores (31 March 2025 0.44 crores),
which were originally purchased for production and manufacturing. The Company is actively searching for
buyers to sell these assets. No liability is attached to these assets.

Non - current fair value measurements :

Assets classified as held for sale are measured at lower of their carrying amount and fair value less cost to
sell at the time of reclassification. Fair value of the assets was determined using expected market realisable
value using past trend and management assessment. Fair value measurement of assets held for sale is a level
3 measurement and key inputs under this approach are price per asset comparable for the machine in similar
business and technology.

a. Terms and rights attached to equity shares

Each holder of equity shares 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 number of equity shares held by the shareholders. There
is no restriction on distribution of dividend. However, distribution of dividend is subject to the approval of the
shareholders in the Annual General Meeting.

Nature and purpose of reserves/ other equity

General reserve

The Company appropriates a portion to general reserves out of the profits voluntarily to meet future contingencies. The
said reserve is available for payment of dividend to the shareholders as per the provisions of the Companies Act, 2013.

Retained earnings:

Retained earnings are the profits that the Company has earned to date, less any transfers to general reserve, dividends
or other distributions paid to investors.

Other comprehensive income

Remeasurements of defined benefit plans represents the following as per Ind AS 19-Employee Benefits:

(a) actuarial gains and losses;

(b) the return on plan assets, excluding amounts included in net interest on the net defined benefit liability (asset); and

(c) any change in the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit
liability (asset)

Dividend

No dividend was declared and paid during the current or previous year. After the reporting date no dividend is proposed
by the Board of Director of the company.

20. Non - Current Borrowings (Contd.)
a. Securities

Term loans are secured by first equitable mortgage ranking pari-passu over the Company's immovable properties
situated at Bhawanimandi (Rajasthan), Kathua (Jammu & Kashmir), Baddi (Himachal Pradesh) and Daheli-Gujarat
(excluding the immovable property situated in Gujarat) and moveable assets (save and except book debts) both
present and future, subject to prior charges created/to be created, in favour of bankers, on moveable assets including
book debts to secure working capital borrowings.

c. Terms of Unsecured loan

The loan is repayable either on demand or at the end of contractual term of 60 months from the date of disbursement
whichever is earlier. The tenure of the loan may be extended by a further period of up to 24 months subject to
mutual written agreement between the parties, whichever is earlier. The loan is unsecured and carries interest at
the rate of 8.5% per annum. Refer note 44 for related party transaction.

d. The Company's exposure to interest rate, foreign currency and liquidity risk is included in note 45.

e. Fixed deposit less than 1 year of Rs 6.51 Crores at 31 March, 2026 is under lien with Indusind bank against term loan
[Rs. 5.70 Crores at 31 March 2025] (refer note no 13).

f. During the year ended 31 March 2026, the Company breached certain financial covenants under its loan
arrangements with banks. These included covenants relating to Debt Service Coverage Ratio (DSCR), Current Ratio,
EBITDA to Revenue from Operations ratio, and Interest Coverage Ratio with HDFC Bank, and Total Debt to EBITDA
ratio and Debt Service Coverage Ratio (DSCR) with IndusInd Bank.

The Company obtained waivers from the respective banks for these covenant breaches. Such waivers are valid
up to 31 March 2026. Accordingly, these borrowings have not been classified as payable on demand as at the
reporting date.

23 Deferred tax Assets (net) (Contd.)

1. As of date, the Company has recognised deferred tax assets amounting to Rs. 98.53 crores (31 March 2025
Rs 77.09 crore) , arising from unabsorbed depreciation and carried-forward tax losses. In accordance with the
provisions of the Income Tax Act, 1961, tax losses can be carried forward as per below table. Based on the
Company's business plans and projected profitability, management is confident in the recoverability of these
deferred tax assets within the prescribed timeframe.

Disaggregation of revenue from contract with customers

Type of service: The Company earns revenue primarily from selling of textile products and job work processing.
Recognition:

a. Revenue from sale of goods is recognised when the performance obligation is satisfied. Revenue is recognised at
point in time.

b. Revenue from sale of services is recognised over point of time.

c. Revenue from other operating revenue is recognised when the performance obligation is satisfied.

In the following table, revenue from contracts with customers is disaggregated by primary geographical market, major
products and service lines and timing of revenue recognition.

D Performance obligation

Revenue is measured at the transaction price of the consideration received or receivable. Sales are recognised
towards satisfaction of performance obligation. Amounts disclosed as revenue are excluding taxes and net of
returns, trade allowances, rebates and amounts collected on behalf of third parties.

The company recognises revenue when the amount of revenue can be reliably measured, it is probable that future
economic benefits will flow to the entity and specific criteria have been met for each of the company's activities as
described. The company bases its estimates on historical results, taking into consideration the type of customer, the
type of transaction and the specifics of each arrangement.

Details of corporate social responsibility expenses

As per Section 135 of ompanies Act, 2013, a Company needs to spend at least 2% of its average net profit for the immediately
preceding three financial years on Corporate Social Responsibility (CSR) activities. A CSR Committee has been formed
by the Company as per Companies Act, 2013. The CSR Committee and Board had approved the projects with specific
outlay on the activities as specified in Schedule VII of the Companies Act, 2013 in pursuant of the CSR policy.

(a) The Company assessed the recoverability of its investment in its wholly owned subsidiary (including step-down
subsidiary) in accordance with Ind AS 36. During the year ended 31 March 2026, the step-down subsidiary made a
strategic decision to significantly curtail its business operations in the concerned segment due to adverse market
conditions and continued financial underperformance. Accordingly, management concluded that the investment
has suffered permanent diminution in value, and the balance carrying amount of Rs. 20.74 crores has been written
off and recognised as an 'Exceptional Item' in the Statement of Profit and Loss.

38. Exceptional items (Contd.)

During the previous year ended 31 March 2025, the Company had carried out impairment assessment of its
investment in wholly owned subsidiary (including step down subsidiary) in accordance with Ind AS 36 by comparing
the carrying value of the investment with its recoverable amount. The recoverable amount was determined based
on value in use derived from discounted forecast cash flow model performed by an independent valuer. As the
carrying amount of the investment was determined to be higher than its recoverable amount, an impairment loss
of Rs.22.70 crores was recognised as an 'Exceptional item' in the Statement of Profit and Loss.

(b) During the year ended 31 March 2023, the plant and equipment of the Captive Co-Generation Power Plant (CGPP)
were decommissioned and classified as "Assets Held for Sale," and an impairment loss of Rs. 20.51 crores was
recognised. The earlier sale agreement was subsequently cancelled due to the buyer's non-fulfilment of contractual
obligations, and the excess advance received was forfeited.

During the current year, the remaining CGPP assets were sold for Rs. 3.57 crores (excluding GST), resulting in an
additional loss of Rs. 1.29 crores recognised under 'Exceptional Item' under Statement of Profit and Loss.

(c) Effective 21 November 2025, the Government of India has consolidated multiple existing labour legislations into a
unified framework comprising four labour Codes collectively referred to as the 'New Labour Codes'. Under Ind AS
19, changes to employee benefit plans arising from legislative amendments constitute a plan amendment, requiring
recognition of past service cost immediately in the Statement of Profit and Loss.

The New Labour Codes have resulted in one time increase in provision for employee benefit of the Company. The
estimated incremental impact of the same amounting to Rs. 0.48 crores (including gratuity impact of Rs.0.23 crore)
has been recognised and presented under 'Exceptional Item' in the Statement of Profit and Loss for the year ended
31 March 2026. The Company continues to monitor the finalisation of Central/ State Rules and any clarifications
from the Government on other aspects of the New Labour Codes and would provide appropriate accounting effect
in the relevant period on the basis of such developments as needed.

41. Segment information

A. Description of segments and principal activities

Segment information is presented in respect of the Company's key operating segments. The operating segments
are based on the Company's internal reporting structure. The Board of Directors has been identified as the chief
operating decision maker ('CODM'), since Board of Directors is responsible for all major decision with respect to
the preparation and execution of business plan, preparation of budget, planning, expansion, alliance, joint venture,
merger and acquisition, and expansion of any facility, etc. The Company's board examines the Company's
performance both from a product and geographic perspective and has identified two reportable segments of
its business:

a) Yarn: It comprises of recycled polyester staple fibre, cotton and man made fibres yarn;

b) Home textiles : It comprises home furnishing and fabric processing

41. Segment information (Contd.)

The Company's board reviews the results of each segment on a quarterly basis. The Company's board of
directors uses segment result to assess the performance of the operating segments.

B. Information about reportable segments

Information related to each reportable segment is set out below. Segment's earnings before interest and tax (EBIT)
is used to measure the segment's performance because management believes that this information is the most
relevant to evaluate the results of the respective segments for comparing it with other entities that operate in the
same industries.

C. Geographic information

The Yarn and Home Textile segments are managed on a worldwide basis, but operate manufacturing facilities and
sales offices, primarily, in India. The geographic information analyses the Company's revenue by the Company's
country of domicile and other countries. In presenting the geographic information, segment revenue has been
based on the geographic location of customers and segment assets were based on the geographic location of
the assets.

42. Borrowing cost

During the year, the Company has capitalised borrowing cost amounting to Rs. 0.09 crores (31 March 2025: Rs. 0.09
crores) under head plant and equipment. The capitalisation rate used to determine the amount of borrowing costs
for capitalisation purpose is weighted average interest rate to the company i.e. 8.15% ( 31 March 2025 8.20%).

43 Employee benefits

The Company contributes to the following post-employment defined benefit plans in India.

(i) Defined contribution plans:

The Company makes contributions towards provident fund to a defined contribution benefit plan for qualifying
employees. Under the plan, the Company is required to contribute a specified percentage of specified employment
benefit expenses to the benefit plans.

(ii) Defined benefit plan:

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972 (as amended).
Employees in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on
retirement/termination is the employee's last drawn basic salary per month computed proportionately for 15 days
salary multiplied for the number of completed years of service. Gratuity liability (other than for Baddi units) is being
contributed to the gratuity fund formed by the Company and in case of Baddi units, company makes contributions
to Group Gratuity cum Life Assurance Schemes administered by the LIC of India.

The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity
were carried out at 31 March 2026. The present value of the defined benefit obligations and the related current
service cost and past service cost, were measured using the Projected Unit Credit Method.

A. Movement in net defined benefit (asset) liability

The following table shows a reconciliation from the opening balances to the closing balances for net defined
benefit (asset) liability and its components:

*The total amount of investments in absolute value is Rs. 5,000 ( 31 March 2025: Rs. 5,000), for reporting purpose
rounded up to Rs. 0.0 Crores.

The carrying amounts of trade receivables, trade payables, capital creditors and cash and cash equivalents and
other bank balances are considered to be the same as their fair values, due to their short-term nature.

The fair values of non-current borrowings are based on discounted cash flows using a current borrowing
rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs,
including own credit risk.

For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.
There are no transfers made between level 1 and level 2 during the year.

45 Financial instruments - Fair values and risk management (Contd.)

Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

- the use of quoted market prices or dealer quotes for similar instruments

- the fair value of forward foreign exchange contracts is determined as per values provided by banks

- the fair value of the remaining financial instruments is determined using discounted cash flow analysis.

All of the resulting fair value estimates are included in level 2 except for unlisted equity securities, where the
fair values have been determined based on present values and the discount rates used were adjusted for
counterparty or own credit risk.

B. Fair value hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial
instruments that are:

(a) recognised and measured at fair value, and

(b) measured at amortised cost and for which fair values are disclosed in the financial statements.

To provide an indication about the reliability of the inputs used in determining fair value, the Company
has classified its financial instruments into the three levels prescribed under the accounting standard. An
explanation of each level follows underneath the table.

*The total amount of investments in absolute value is Rs. 5,000, but for reporting purposes rounded up to
Rs. 0.0 crores

Level 1: Hierarchy includes financial instruments measured using quoted prices. The fair value of all equity
instruments which are traded in the stock exchanges is valued using the closing price as at the reporting date.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-
counter derivatives) is determined using valuation techniques which maximise the use of observable market

45 Financial instruments - Fair values and risk management (Contd.)

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: If one or more of the significant inputs is not based on observable market data, the instrument is
included in level 3. This is the case for unlisted securities.

There are no transfers made between level 1 and level 2 during the year.

Cash and cash equivalents and other bank balances

The Company held cash and cash equivalents and other bank balances of Rs. 10.91 crores at 31 March 2026 (31
March 2025: Rs.11.36 crores). The cash and cash equivalents and other bank balances are held with bank and
financial institution counterparties, which are rated A1, based on India ratings. Impairment on cash and cash
equivalents and other bank balances has been measured on a 12-month expected loss basis and reflects the
short maturities of the exposures. The Company considers that its cash and cash equivalents have low credit
risk based on the external credit ratings of the counterparties. There is no impairment allowance at 31 March
2026 and 31 March 2025.

Derivatives

The derivatives are entered into with bank and financial institution counterparties, which are rated A1, based
on India ratings.

II. Financial risk management

The Company has exposure to the following risks arising from financial instruments:

- Credit risk;

- Liquidity risk and

- Market risk

i. Risk management framework

The Company's board of directors has overall responsibility for the establishment and oversight of the Company's
risk management framework. The board of directors has established the processes to ensure that executive
management controls risks through the mechanism of properly defined risk management framework.

The Company's risk management policies are established to identify and analyse the risks faced by the
Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed by the board annually to reflect changes in market conditions
and the Company's activities. The Company, through its training and management standards and procedures,
aims to maintain a disciplined and constructive control environment in which all employees understand their
roles and responsibilities.

ii. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument
fails to meet its contractual obligations, and arises principally from the Company's receivables from customers
and investments in debt securities. The carrying amount of financial assets represents the maximum credit
exposure. The Company monitor credit risk very closely both in domestic and export market. The Management
impact analysis shows credit risk and impact assessment as low. The carrying amount of financial assets
represent maximum credit risk exposure . The Company assess the credit quality of counter parties, taking into
account their financial position, past experience and other factors.

Trade and other receivables

The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer.
However, management also considers the factors that may influence the credit risk of its customer base,
including the default risk of the industry and country in which customers operate.

The Company's management has established a credit policy under which each new customer is analyzed
individually for creditworthiness before the Company's standard payment and delivery terms and conditions
are offered. The Company's review includes market check, industry feedback, past financials and external
ratings, if such information is available, and in some cases bank references. Credit limits are established for each
customer and reviewed quarterly. Any credit exceeding those limits require approval from the Chief financial
officer of the Company.

To monitor customer credit risk, customers are reviewed in terms of their credit characteristics, including
whether they are an individual or a legal entity, their geographic location, industry and existence of previous
financial difficulties

The Company establishes an allowance for impairment that represents its expected credit losses in respect of
trade and other receivables. The management uses a simplified approach for the purpose of computation of
expected credit loss for trade receivables

During the previous year, the Company has made write-offs of trade receivables, it does not expect to receive
future cash flows or recoveries from collection of cash flows previously written off. The Company management
also pursue all legal options for recovery of dues wherever necessary based on its internal assessment

iii. 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
manage liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when
liabilities are fallen due, under both normal and stressed conditions, without incurring unacceptable losses or
risking damage to the Company's reputation

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the
availability of fund through an adequate amount of committed credit facilities to meet obligations when due
and to close out market positions. Due to the dynamic nature of the underlying businesses, the Company
treasury maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecasts of the Company's liquidity position (comprising the undrawn
borrowing facilities) and cash and cash equivalents on the basis of expected future cash flows. This is generally
carried out at unit level and monitored through corporate office of the Company in accordance with practice
and limits set by the Company. These limits vary at units level to take into account requirement, future cash
flow and the liquidity in which the entity operates. In addition, the Company's liquidity management strategy
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.

The interest payments on variable interest rate loans in the table above reflect market forward interest rates at
the reporting date and these amounts may change as market interest rates change.

iv. Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates and interest rates - 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 uses derivatives such as forward contracts to manage market risks on account of foreign
exchange and various debt instruments on account of interest rates. All such transactions are carried out as per
guidelines of the Management.

a. Foreign currency risk

The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily
with respect to the USD, EUR and GBP. Foreign exchange risk arises from future commercial transactions
and recognised assets and liabilities denominated in a currency that is not the Company's functional
currency (Rupees). The risk is measured through a forecast of highly probable foreign currency cash flows.
The objective of the hedges is to minimise the volatility of the Rupees cash flows of highly probable forecast
transactions by hedging the foreign exchange inflows on regular basis. The Company also consults external
experts for their views on the currency rates in volatile foreign exchange markets.

Currency risks related to payables and receivables denominated in foreign currencies have been partially
hedged using forward contracts taken by the Company.

In respect of other monetary assets and liabilities denominated in foreign currencies, the Company's policy
is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot
rates whenever necessary to address short-term imbalances."

b. Interest rate risk

The Company's main interest rate risk arises from long-term borrowings with variable rates, which exposes
the Company to cash flow interest rate risk. During financial year 2025-26 and financial year 2024-25, the
Company's borrowings at variable rates were denominated in Rupees.

Currently, the Company's borrowings are within acceptable risk levels, as determined by the management,
hence the Company has not taken any swaps to hedge the interest rate risk.

Fair value sensitivity analysis for fixed-rate instruments

The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through
profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

c. Commodity price risks

The Company is exposed to the risk of price fluctuations of raw materials, dyes and chemicals, work-in¬
progress and finished goods. The Company manages its commodity price risk by maintaining adequate
inventory of raw materials, dyes and chemicals, work-in-progress and finished goods considering
anticipated movement in prices. To counter raw materials price fluctuation risk, the Company works
with varieties of fibers (natural and manmade) with the objective to moderate raw material cost, enhance
application flexibility and increase product functionality and also invests in product development
and innovation.

47 In respect of Okara Mills, Pakistan, (which remained with the Company as a result of transfer of textiles division
of Sutlej Industries Limited with the Company ) no returns have been received after 31 March 1965. Against net
assets, amounting to Rs 2.32 crores of Okara Mills, Pakistan, the demerged /transferor Company received ad hoc
compensation of Rs. 0.25 crores from Government of India in the year 1972-73. These assets now vest with the
Custodian of Enemy Property, Pakistan for which claim has been filed with the Custodian of Enemy Property in
India. The Company shall continue to pursue its claim for compensation/ restoration of assets. Hence, further
compensation, if any received, will be recorded in the year of receipt. In the financial year 2003-04, net assets of
Rs. 2.07 crores (net of compensation received) as at 31 March 1965 was provided for.

* The investment has been made in a wholly owned subsidiary with the objective of expanding the Company's
home textile business in the United States of America.

** The Company has invested in Continuum Green Energy Limited (the "CGEL") in accordance with the Share
Purchase and Shareholders' Agreement, which provides the Company with the right to draw power from the wind-
solar hybrid plant operated and maintained by CGEL.

49 Capital management

The primary objective of the management of the Company's capital structure is to maintain an efficient mix of
debt and equity in order to achieve a low cost of capital, while taking into account the desirability of retaining
financial flexibility. The Board of directors regularly review the Company's capital structure in light of the economic
conditions, business strategies and future commitments. For the purpose of the Company's capital management,
capital includes issued share capital and all other equity reserves. Debt includes short term and long term borrowings.
During the financial year ended 31 March 2026, no significant changes were made in the objectives, policies or
processes relating to the management of the Company's capital structure.

(iii) The Company's policy is to maintain a strong capital base so as to maintain investors, creditors and market
confidence and to sustain future development of the business. Management monitors the return on capital as
well as the level of dividends to ordinary shareholders. The weighted-average interest expense on interest-bearing
borrowings (excluding liabilities with imputed interest) was 8.15 % (31 March 2025: 8.20 %).

50 Regulatory information:

(i) The Company does not have any benami property where any proceedings have been initiated or pending
against the Company for holding such benami property.

(ii) The Company does not have any transactions with companies that have been struck off.

(iii) The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible
assets or both during the current or previous year.

(iv) The Company does not have any charges or satisfaction which are yet to be registered with ROC beyond the
statutory period.

(v) The Company has not traded or invested in cryptocurrency or virtual currency during the financial year.

(vi) During the year, 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 Group (Ultimate Beneficiaries); or

b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

(vii) 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

(viii) The Company has not entered into any scheme of arrangement which has an accounting impact on current
or previous financial year.

50 Regulatory information: (Contd.)

(ix) The Company does not have 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)

(x) The Company (as per the provisions of the Core Investment Companies (Reserve Bank) Directions, 2016) has
two Core Investment Company ("CIC") as part of the Company i.e. Ganges Securities Limited and New India
Retailing & Investment Ltd (unregistered CIC).

(xi) The Company has compiled with the number of layers prescribed under the Companies Act 2013

(xii) The Company has not been declared wilful defaulter by any bank or financial institution or Government or any
Government Authority.

51 The Company has used accounting software for maintaining its books of account, which has the feature of
recording audit trail (edit log) facility, and the same has been operational throughout the year for all relevant
transactions recorded in the respective software, except in respect of payroll processing for workers, the previously
used software had limitations in validating audit trail configurations at both the application and database levels. To
address this, the Company has implemented a new payroll software solution. The staff payroll module has been
implemented and is operational during the current financial year, with the audit trail (edit log) feature enabled and
functioning. The implementation of the workers' payroll module is in progress and is expected to be completed in
the subsequent financial year.