2. Material Accounting Policy Information
The Company has consistently applied the following accounting policies to all periods presented in
the financial statements.
2.1 Statement of Compliance
The financial statements of the Company comply with all material aspects with Indian Accounting
Standards ("Ind AS") as prescribed under section 133 of the Companies Act, 2013 ("the Act"), as notified
under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting
Standards) Amendment Rules, 2016, as amended and other accounting principles generally accepted in
India.
Accounting Policies have been consistently applied except where a newly issued accounting standards is initially
adopted or a revision to an existing accounting standard required a change in the accounting policy hitherto in
use.
2.2 Basis of measurement
The financial statements have been prepared under the historical cost convention on accrual basis except
in case of claims lodged with insurance company but not settled, interest on overdue debts from
customers due to uncertainty in realisation, export and other benefits doubtful of recovery are accounted
for on receipt/settlement and the following items, which are measured on following basis on each
reporting date:
- Certain financial assets and liabilities (including derivative instruments) that is measured at fair value
- Defined benefit liability (assets): present value of defined benefit obligation less fair value of plan assets.
- Financial instrument - measured at fair value;
However, trade receivables that do not contain a significant financing component are measured at
transaction price.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date, regardless of whether that price is
directly observable or estimated using another valuation technique. In estimating the fair value of an asset
or a liability, the Company takes into account the characteristics of the asset or liability if market
participants would take those characteristics into account when pricing the asset or liability at the
measurement date.
In addition, for financial reporting purposes fair value measurements are categorised into Level 1, 2 or 3
based on the degree to which the inputs to the fair value measurements are observable and the
significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the
company can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the
asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
2.3 Functional and presentation currency
These financial statements are presented in Indian National Rupee ('INR'), which is the Company's
functional currency. All amounts have been rounded to the nearest Lakhs, unless otherwise indicated.
2.4 Use of judgements and estimates
In preparing these financial statements, management has made judgements, estimates and assumptions
that affect the application of the company's accounting policies and the reported amounts of assets,
liabilities, income and expenses. Management believes that the estimates used in the preparation of the
financial statements are prudent and reasonable. Actual results may differ from these estimates. Estimates
and underlying assumptions are reviewed on an on-going basis. Revisions to estimates are recognised
prospectively.
A. Judgements
Information about the judgements made in applying accounting policies that have the most significant
effects on the amounts recognised in the financial statements have been given below:
- Classification of financial assets: assessment of business model within which the assets are held and
assessment of whether the contractual terms of the financial asset are solely payments of principal
and interest on the principal amount outstanding.
B. Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a
material adjustment in the financial statements for every period ended is included below:
- Measurement of defined benefit obligations: key actuarial assumptions;
- Recognition of deferred tax assets: availability of future taxable profit against which carry-forward tax
losses can be used;
- Impairment test: key assumptions underlying recoverable amounts.
- Useful life and residual value of Property, Plant & Equipment, Intangible Assets and Right of Use assets;
- Recognition and measurement of provisions and contingencies: key assumptions about the likelihood
and magnitude of an outflow of resources
- Impairment of financial assets: key assumptions used in estimating recoverable cash flows
- Assessment of recoverability of receivables and advances and such assessment requires significant
management judgement based on financial position of the counter-parties, market information and
other relevant factors.
2.5. Classification of Assets and Liabilities as Current and Non-Current
The Company presents assets and liabilities in the balance sheet based on current/non-current
classification.
An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle.
- Held primarily for the purpose of trading
- Expected to be realised within twelve months after the reporting period, or
- Cash and cash equivalent unless restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting period.
A liability is treated as current when it is:
- Expected to be settled in normal operating cycle.
- Held primarily for the purpose of trading
- Expected to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after
the reporting period.
All other assets/liabilities are classified as non-current. Deferred tax assets and liabilities are classified
as non-current assets/liabilities.
The operating cycle is the time between the acquisition of the assets for processing and their
realisation in cash and cash equivalents.
The Company has ascertained the operating cycle as 12 months for the purpose of current and non¬
current classification of assets and liabilities.
2.6. Non-current assets (or disposal groups) held for sale
Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for sale if it is
highly probable that they will be recovered primarily through sale rather than through continuing use. Such
assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less
costs to sell. Once classified as held-for-sale, intangible assets and property, plant and equipment are no
longer amortised or depreciated.
2.7. Impairment of non-financial assets
At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than
inventories and deferred tax assets) to determine whether there is any indication on impairment. If any such
indication exists, then the asset's recoverable amount is estimated.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. The
recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell.
Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset or CGU. An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its
recoverable amount.
Impairment loss in respect of assets other than goodwill is reversed only to the extent that the asset's
carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised in prior years. A reversal of
impairment loss is recognised immediately in the Statement of Profit & Loss.
2.8. Borrowing Cost
Borrowing costs directly attributable to the acquisition construction or production of qualifying assets are
capitalised as part of the cost of such assets up to the assets are substantially ready for their intended use
or sale. Exchange differences on foreign currency borrowings included in the borrowing cost when they
are regarded as an adjustment to interest costs on those foreign currency borrowings. All other borrowing
costs are recognised in the statement of profit and loss in the period in which they are incurred.
The loan origination costs directly attributable to the acquisition of borrowings (e.g. loan processing fee,
upfront fee) are amortised on the basis of the Effective Interest Rate (EIR) method over the term of the
loan.
2.9. Foreign currency transactions
Transactions in foreign currencies are recorded by the Company entities at their respective functional
currency at the exchange rates prevailing at the date of the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currency are translated to the functional
currency at the exchange rates prevailing at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in the
statement of profit and loss with the exception of the following:
- exchange differences on foreign currency borrowings included in the borrowing cost when they are
regarded as an adjustment to interest costs on those foreign currency borrowings;
Non-monetary items that are measured at historical cost in a foreign currency are translated using the
exchange rates at the date of initial transactions. Non-monetary items measure at fair value in a foreign
currency is translated using the exchange rates at the date when the fair value is determined.
2.10. Employee benefits
a. Short term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised
for the amount expected to be paid if the Company has a present legal or constructive obligation to pay
this amount as a result of past service provided by the employee and the obligation can be estimated
reliably.
b. Defined contribution plans
Obligations for contributions to defined contribution plans are expensed as the related service is
provided. The company has Provident Fund as defined contribution plan.
c. Defined benefit plans
For defined benefit plan, the cost of providing benefits is determined using the projected unit credit
method, with actuarial valuations being carried out at the end of each annual reporting period. The
present value of the defined benefit obligation is determined by discounting the estimated future cash
outflows using yield of government bonds.
Re-measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if
applicable) and the return on plan assets (excluding interest), is reflected in the balance sheet with a
charge or credit recognised in other comprehensive income in the period in which they occur. Re¬
measurement recognised in other comprehensive income is reflected immediately in retained earnings
and will not be reclassified to the statement of profit and loss. Past service cost is recognised in the
statement of profit and loss in the period of a plan amendment or curtailment. Net interest is calculated
by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.
Defined benefit costs are categorised as follows:
• service cost (including current service cost, past service cost, as well as gains and losses on
curtailments and settlements);
• net interest expense or income; and
• re-measurement
The Company presents the first two components of defined benefit costs in the statement of profit and
loss in the line-item employee benefits expense.
The retirement benefit obligation recognised in the balance sheet represents the actual deficit or surplus
in the Company's defined benefit plans. Any surplus resulting from this calculation is limited to the
present value of any economic benefits available in the form of refunds from the plans or reductions in
future contributions to the plans.
d. Other long-term employee benefits
The company has long term employment benefit plans i.e. accumulated leave up to maximum 90 days.
Accumulated leave is encashed to eligible employees at the time of retirement. The liability for
accumulated leave, which is a defined benefit scheme, is provided based on actuarial valuation as at the
Balance Sheet date, based on Projected Unit Credit Method, carried out by an independent actuary.
2.11. Government Grants and Subsidies
Grants from the government are recognised at their fair value where there is a reasonable assurance that the
grant will be received and the Company will comply with all attached conditions. Government grants that
compensate the Company for expenses incurred are recognised in the statement of profit and loss, as income
or deduction from the relevant expense, on a systematic basis in the periods in which the expense is recognised.
Government grants relating to the purchase of property, plant and equipment are included in non-current
liabilities as deferred income and are credited to Statement of Profit and Loss on a straight-line basis over the
expected lives of the related assets to match them with the costs for which they are intended to compensate
and presented within other income.
2.12 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. Valuations are made 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. Derivatives
The Company uses derivative financial instruments, such as forward currency contracts to hedge its
foreign currency risks. 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 taken directly to statement of profit and loss.
2.13 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. Financial instruments also include derivative contracts such as
foreign currency foreign exchange forward contracts.
a. Financial Assets
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded
at fair value through profit or loss, transaction costs that are attributable to the acquisition of the
financial asset. However, trade receivables that do not contain a significant financing component are
measured at transaction price.
Classifications
The company classifies its financial assets as subsequently measured at either amortised cost or fair
value depending on the company's business model for managing the financial assets and the contractual
cash flow characteristics of the financial assets.
Financial Assets measured at amortised cost
A financial asset is measured at amortised cost only if both of the following conditions are met:
- it is held within a business model whose objective is to hold assets in order to collect contractual
cash flows.
- the contractual terms of the financial assets represent contractual cash flows that are solely
payments of principal and interest.
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 as finance income in the Statement of Profit & Loss. The losses arising from
impairment are recognised in the Statement of Profit & Loss.
Impairment of financial assets
The Company assesses on a forward-looking basis the expected credit loss associated with its assets
carried at amortised cost and FVTOCI debt instruments. The impairment methodology applied
depends on whether there has been a significant increase in credit risk.
With regard to trade receivable, the Company applies the simplified approach as permitted by Ind
AS 109, Financial Instruments, which requires expected lifetime losses to be recognised from the
initial recognition of the trade receivables.
De-recognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is primarily derecognised (i.e. removed from the Company's balance sheet) when:
- The rights to receive cash flows from the asset have expired, or
- 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 (a) the Company has transferred substantially all the risks and
rewards of the asset, or (b) 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 recognize the transferred
asset to the extent of the Company's continuing involvement. In that case, the Company also
recognizes 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.
On de-recognition of a financial asset, the difference between the carrying amount of the asset (or
the carrying amount allocated to the portion of the asset derecognised) and the sum of (i) the
consideration received (including any new asset obtained less any new liability assumed) and (ii) any
cumulative gain or loss that had been recognised in OCI is recognised in the Statement of Profit &
Loss.
b. Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit
or loss, amortised cost, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of amortised cost, net
of directly attributable transaction costs.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial Liabilities measured at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the
liabilities are derecognised as well as through the EIR amortisation process. 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 as finance costs in the statement
of profit and loss.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities designated upon
initial recognition as at fair value through profit or loss. Gains or losses on liabilities held for
trading are recognised in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are
designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are
satisfied. For liabilities designated as FVTPL, fair value gains/losses attributable to changes in own
credit risks are recognized in OCI. These gains/losses are not subsequently transferred to Profit &Loss.
However, the Company may transfer the cumulative gain or loss within equity. All other changes
in fair value of such liability are recognised in the statement of profit or loss.
De-recognition of financial liabilities
The company derecognises a financial liability when its contractual obligations are discharged or
cancelled or expired.
2.14. Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker. The board of directors of the Company has been identified as being the chief
operating decision maker by the Management of the company. The Business activity of the company falls
within one business segment viz "Textile".
3. Property, Plant and Equipment
Accounting Policy:
Recognition and measurement
On transition to Ind AS, the Company has elected to continue with the carrying value of all its property plant
and equipment recognized as at 1st April, 2016 measured as per the previous GAAP and use that carrying
value as the deemed cost of the property, plant and equipment.
Items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated
impairment loss, if any. The cost of assets comprises of purchase price and directly attributable cost of
bringing the assets to working condition for its intended use including borrowing cost and incidental
expenditure during construction incurred up to the date when the assets are ready for intended use.
If significant parts of an item of property, plant and equipment have different useful lives, then they are
accounted for as a separate item (major components) of property, plant and equipment. As per the
assessment made by the management, property plant & equipment (other than building and captive power
plant) does not comprise any significant components with different useful life. Any gain on disposal of
property, plant and equipment is recognised in Statement of Profit and loss.
Subsequent Measurement
Subsequent expenditure is capitalised only if it is probable that there is a future economic benefit associated
with the expenditure will flow to the Company and the cost can be measured reliably.
Depreciation
Depreciation on property, plant & equipment is calculated on Straight Line Method using the rates arrived
at based on the estimated useful lives given in Schedule II of the Companies Act, 2013 except for the following
which has been determined on the basis of technical evaluation.
Depreciation on additions to or on disposal of assets is calculated on pro-rata basis. Right of use assets is
amortised over the lease period or estimated useful life whichever is less. Additions on rented premises are
being amortised over the period of rent agreement.
Depreciation methods, useful lives and residual values are reviewed in each financial year end and changes,
if any, are accounted for prospectively. The management believes that these estimated useful lives are
realistic and reflect fair approximation of the period over which the assets are likely to be used. Individual
assets costing below Rs.5000 are fully depreciated in the year of purchase as these assets have no significant
useful life.
De-recognition
An item of property, plant and equipment is de-recognised upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or
(b) Includes gross carrying value of Building Rs. 625.49 Lakhs for which possession held by the company w.e.f
22nd October, 2022 for which registration of Title deed is pending due to statutory compliance of the Real
Estate Developer.
(c) Property, Plant & Equipment given as security for borrowings refer note 21
During the financial year ended March 31, 2025, a fire occurred at the Company's Guna Unit resulting in
damage to certain items of Plant and Equipment. As a result, net carrying value of Rs. 6.13 Lakhs werewritten
off in the books of accounts and charged as loss in the Statement of Profit and Loss under the head Profit
(Loss) on Sale/Discard of Property, Plant and Equipment.
The Power generation of Power Project (Husk) at Guna for the use of Captive consumption of the factory is
suspended due to economic unfavorability. As a result, the company has provided Impairment Loss during
the Previous Year of Rs. 220.59 Lakhs after recognizing the carrying amount of the impaired asset i.e. lower
of Written down value as at 31.03.24 Rs.339.12 Lakhs and fair value less cost of disposal Rs.118.53 Lakhs as
value in use is estimated to be NIL.
3A' 1. Accounting Policy:
Capital work-in-progress comprises of assets in the course of construction for production or/and supply of
goods or services or administrative purposes, are carried at cost, less any recognised impairment loss. At the
point when an asset is operating at management's intended use, the cost of construction is transferred to
the appropriate category of property, plant and equipment. Costs associated with the commissioning of an
asset are capitalised where the asset is available for use and commissioning has been completed.
Accounting Policy:
A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards
incidental to ownership of an underlying asset.
The company as lessor
Leases for which the Company is a lessor is classified as finance or operating leases. Whenever the terms of
the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified
as finance lease.
Rental income from operating leases is recognised on a straight - line basis over the term of the relevant
lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying
amount of the leased asset and recognised on a straight-line basis over the lease term.
The Company as lessee
The Company assesses whether a contract is or contains a lease, at inception of the contract. The Company
recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in
which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less)
and leases of low value assets. For these leases, the Company recognises the lease payments as an operating
expense on a straight-line basis over the lease term, unless another systematic basis is more representative
of the time pattern in which economic benefits from the leased assets are consumed. Contingent and
variable rentals are recognized as expense in the periods in which they are incurred.
Right of Use (ROU) Assets
The ROU assets comprise the initial measurement of the corresponding lease liability, lease payments made
at or before the commencement day and any initial direct costs. They are subsequently measured at cost
less accumulated depreciation and impairment losses.
Whenever the company incurs an obligation for costs to dismantle and remove a leased asset, restore the
site on which it is located or restore the underlying asset to the condition required by the terms and
conditions of the lease, a provision is recognised and measured under Ind AS 37- Provisions, Contingent
Liabilities and Contingent Assets. The costs are included in the related right-of-use asset.
ROU assets are depreciated over the shorter period of the lease term and useful life of the underlying asset.
If the company is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over
the underlying asset's useful life. The depreciation starts at the commencement date of the lease.
The Company applies Ind AS 36- Impairment of Assets to determine whether a right-of-use asset is impaired
and accounts for any identified impairment loss as per its accounting policy on 'property, plant and
equipment'.
As a practical expedient, Ind AS 116 permits a lessee not to separate non-lease components when bifurcation
of the payments is not available between the two components, and instead account for any lease and
associated non-lease components as a single arrangement. The Company has used this practical expedient.
Extension and termination options are included in many of the leases. In determining the lease term, the
management considers all facts and circumstances that create an economic incentive to exercise an
extension option, or not exercise a termination option.
5. Intangible Assets
Accounting Policy:
Intangible assets have a finite useful life and are stated of cost less accumulated amortisation and
accumulated impairment losses, if any. Intangible assets are amortized on straight line method basis over
the estimated useful life. Estimated useful life of the Software is considered as 5 years. Amortisation
methods, useful lives and residual values are reviewed in each financial year end and changes, if any, are
accounted for prospectively.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use
or disposal. Gains or losses arising from de-recognition of an intangible asset, measured as the difference
between the net disposal proceeds and the carrying amount of the asset are recognised in the statement of
profit and loss when the asset is derecognised. Intangible assets with indefinite useful lives and intangible
assets not yet available for use are tested for impairment annually, and whenever there is an indication that
the asset may be impaired, impairment loss is recognised in the statement of profit & loss.
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