Note 2.2 Notes on Accounts

i) Contingent Liability;

a) Guarantees by banks on behalf of the company:

- The company has given Bank Guarantee in favor of MSEB against the electricity consumption is Rs. 222.74 Lacs.

- The company has given Bank Guarantee in favor of Director of Agriculture Produce Marketing Committee State Pune Rs. 3 Lacs.

- The company has given Bank Guarantee in favour of Dy. Commissioner of Customs against Imported Spare Clearance of Rs. 5.04 Lacs.

- The company has given Bank guarantee in favour of DGFT for export obligation is Rs. 9.66 Lacs.

b) Claims against the company not acknowledged as debt:

- In respect of Income Tax appeals filed:

The Income Tax Department have raised a demand of Rs. 89.20 lacs against which the company has filed appeals for respective assessment years

i.e. AY 2020-21 and AY 2022-23.

- In respect of TDS returns filed:

There is an outstanding demand of 1.62 lacs reflected on the traces website.

ii) Sundry creditors, Sundry debtors and advance are subject to confirmation. Further in the opinion of the management the current assets, loans and advances have the value for realization in the ordinary course of business at least equal to the amount at which it's stated in the accounts.

iii) The company is in the process of compiling the information about the status of their suppliers or creditors those falls under small-scale industrial undertaking as defined The Micro Small and Medium Enterprises Developments Act 2006 (MSMED Act).

The management assessed that the fair value of cash and cash equivalent, trade receivables, trade payables, and other current financial assets and liabilities approximate their carrying amounts largely due to the short term maturities of these instruments.

The carrying amount of financial assets and financial liabilities measured at amortised cost in the financial statements are a reasonable approximation of their fair values since the Company does not anticipate that the carrying amounts would be significantly different from the values that would eventually be received or settled.

Level 1 - Level 1 hierarchy includes financial instruments measured using quoted prices.

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 - If one or more of the significant inputs are not based on observable market data, the instrument is included in level 3.

iii. 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 interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves

- the fair value of forward foreign exchange contracts and principal swap is

5. determined using forward exchange rates at the balance sheet date ,

the fair value of foreign currency option contracts is determined usinzE^fs ut jj discounted cash flow analysis

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

iv. Valuation processes

The accounts and finance department of the company includes a team that performs the valuations of financial assets and liabilities required for financial reporting purposes, including level 3 fair values. This team reports directly to the chief financial officer (CFO) and the audit committee. Discussions of valuation processes and results are held between the CFO, AC and the valuation team regularly in line with the company's reporting requirements.

xi) Risk Management Framework

1. Market risk

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including loans and borrowings, foreign currency receivables and payables.

The Company manages market risk through treasury department, which evaluates and exercises independent control over the entire process of market risk management. The treasury department recommends risk management objectives and policies, which are approved by Senior Management and the Audit Committee. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures and borrowing strategies."

2. Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to significant interest rate risk as at the respective reporting dates.

3. Foreign Currency Risk

The Company's exposure to exchange fluctuation risk is very limited for its purchase from overseas suppliers in various foreign currencies. Foreign Currency Risk is risk that fair value or future cash flows of an exposure will fluctuate due to changes in foreign exchanges rates. The Company entered into forward exchanges contract average maturity of 90-180 days to hedge against its foreign currency exposures relating to underlying liabilities firm commitments.

^ The Company has not entered into any Derivatives instruments for trading and speculative purposes.

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4. Credit Risk

Credit risk refers to the risk of default on its obligation by the counter party resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to Rs. 383.47 lakhs and Rs. 623.68 lakhs as of March 31, 2024 and March 31, 2023 respectively. Trade receivables are typically unsecured and are derived from revenue earned from customers. Credit risk has always been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available external and internal credit risk factors and the Company's historical experience for customers.

5. Liquidity Risk

The Company's principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.

As of 31st March 2024, The Company had a working capital of Rs. 2843.44 Lakhs including cash and cash equivalent of Rs. 84.04 Lakhs.

As of 31st March 2023, The Company had a working capital of Rs. 2751.82 Lakhs including cash and cash equivalent of Rs. 16.70 Lakhs."

6. Maturities of Financial Liabilities

The table below analyse the Company's financial liabilities into relevant maturity grouping based on their contractual maturities. The amounts disclosed in the tables are contractual undisclosed cash flow.

The Company manages its capital to ensure that Company will be able to continue as going concern while maximizing the return to shareholders by striking a balance between debt and equity. The capital structure of the Company consists of net debts (offset by cash and bank balances) and equity of the Company (Comprising issued capital, reserves, retained earnings). The Company is not subject to any externally imposed capital requirements except financial covenants agreed with lenders.

In order to optimize capital allocation, the review of capital employed is done considering the amount of capital required to fund capacity expansion, increased working capital commensurate with increase in size of business and also fund investments in new ventures which will drive future growth. The Chief Financial Officer ("CFO") reviews the capital structure of the Company on a regular basis. As part of this review, the CFO considers the cost of capital and the risks associated with each class of capital."

xii) Security of current assets against borrowings from banks or financial institutions on the basis of security of current assets:

The Company has been sanctioned working capital limit in excess of five crore rupees, in aggregate from banks or financial institutions on the basis of security of current assets. Quarterly returns or statements filed by the company with such banks/financial institutions are in agreement with the books of the account of the Company.

3) Additional Regulatory Information

a. Details of benami property held:

No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act,

1988 (45 of 1988) and Rules made thereunder.

b. Willful Defaulter:

The Company has not been declared as willful defaulter by any bank or^— financial institution or government or any government authority. ~

c. Relationship with struck off companies:

During the year, company has made not made any transaction with struck off companies under section 248 of the Companies act 2013 or section 560 of the Companies act 1956.

d. Compliance with number of layers of companies:

The Company has complied with the number of layers prescribed under the Companies Act, 2013.

e. Compliance with approved scheme(s) of arrangements:

The Company has not entered into any scheme of arrangement which has an accounting impact for the years ended March 31, 2024 and March 31,2023.

f. Utilization of borrowed funds and share premium:

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 ultimate beneficiaries.

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. Undisclosed income:

There is no income surrendered or disclosed as income during the current year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

h. Details of crypto currency or virtual currency :

The Company has not traded or invested in crypto currency or virtual currency during the years ended March 31, 2024.

i. Valuation of PP&E, intangible asset and investment property :

The Company has revalued its property, plant and equipment during the year =5^. March 31, 2024 at market valuation.

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^Y£,| Registration of charges or satisfaction with Registrar of Companies : jW

There are no charges or satisfactions which are yet to be registered with the Registrar of Companies beyond the statutory period.

k. Utilisation of borrowings availed from banks:

During the year, the company has availed borrowing facility from existing banks, (ref note 12 and 14 of the Notes accompanying Financial Statements as at 31st March 2024).

l. Title deeds of immovable properties not held in name of the company

All the title deeds (Lease Deed) of immovable properties are held in the name of the company excluding the land situated at Gut no 394 which is on the name of one of the director of the company. However, the company has constructed the Factory building on said land, the amount of construction is unascertainable. The said fact came to light after technical verification by Bank and their survey team.

m. 'Corporate Social Responsibility (CSR)

'As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief, COVID-19 relief and rural development projects.

CSR amount required to be spent as per Section 135 of the Companies Act, 2013 read with Schedule VII thereof by the Company during the year is \ 1.62 Lakhs

The Board is of the opinion that remaining amount shall spent in the coming year on good projects as per the approved policy.

Policy of the Company to send CSR amount under following activities

- Preventive Health Care and Sanitation under the slogan of "techno Run, Rakt Samarpan"

- Promoting education of Girl Child under the slogan of "Beti Bachao Beti Padhao"

- Promoting education of Children under the slogan of "School Chale Hum"

- Ensuring environmental sustainability

- Protection of national heritage, art and culture

- Rural development projects & Slum area development

n. Details of dues to micro and small enterprises as defined under the MSMED Act, 2006

The information as required to be disclosed under Micro, Small and Medium Enterprises Development Act, 2006 ('MSMED Act') has been determined to the extent such parties have been identified on the basis of information available with the company. The amount of principal and Interest outstanding during the year is given below:

The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Company's accounting policies. The areas involving critical estimates or judgements are:

'The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company's past history and existing market conditions as well as forwardlooking estimates at the end of each reporting period. Details of the key assumptions and inputs used are disclosed in note 29.

In terms of our report of even For & on behalf of the

date Board of Directors

For DMKH & Co.

Chartered Accountants FRN116886W

CA Manish Kankani Sanjay Rathi Ramesh Mundada

(Partner) (Managing Director) (Director)

M. No. 158020 DIN 00182739 DIN 00153255

UDIN: Ani^I^^K^Indodiya

Date: 17/05/2024 (Company

Place: Mumbai (^CFO) Secretary)

M No. A69381

Date: 17/05/2024 Place: Jalna