1. Material Accounting Policies

1.1 Basis of Accounting and Preparation of Standalone
Financial Statements

(i) Statement of compliance

The Standalone financial statements which comprise
the Balance Sheet, the Statement of Profit and Loss
(including Other Comprehensive Income), the Cash
Flow Statement, and the Statement of Changes in
Equity ("financial statements”) have been prepared
in accordance with Indian Accounting Standards (Ind
AS) notified under the Section 133 of the Companies
Act, 2013 ("the Act”), Companies (Indian Accounting
Standards) Rules, 2015, along with relevant
amendment rules issued thereafter and other relevant
provisions of the Act, as applicable.

(ii) Basis of measurement

The standalone financial statements have been
prepared on a historical cost basis on the accrual
basis of accounting, except for the following -

(a) Certain financial assets and liabilities

(including derivative instruments) that is
measured at fair value;

Historical cost is generally based on the fair value of
the consideration given in exchange for goods and
services. 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.

(iii) Rounding off amounts

All amounts disclosed in standalone financial
statements and notes have been rounded off to the
nearest lakhs as per requirement of Schedule III of the
Act, unless otherwise stated.

(iv) Use of estimates and judgement

In the preparation of standalone financial statements,
the management makes estimates and assumptions
in conformity with the Generally Accepted Accounting
Principles in India. Such estimates and assumptions
are made on reasonable and prudent basis taking
into account all available information. However,
actual results could differ from these estimates and
assumptions and such differences are recognised
in the period in which results are ascertained. The
estimates and underlying assumptions are reviewed
on an ongoing basis.

The areas involving a higher degree of judgement
or complexity, or areas where assumptions and
estimates are significant to the standalone financial
statements are disclosed in Note 1.20.

1.2 Current versus Non-Current Classification

All assets and liabilities have been classified as current
or non-current as per the Company’s normal operating
cycle and other criteria set out in the Schedule III to the
Companies Act, 2013. Based on the nature of products and
the time between the acquisition of assets for processing
and their realization in cash and cash equivalents, the
Company has ascertained its operating cycle as 12 months
for the purpose of current - noncurrent classification of
assets and liabilities.

1.3 Property, Plant & Equipment

Property, plant and equipment (except freehold land) are
stated at cost of acquisition less accumulated depreciation
and impairment if any. Freehold land is carried at historical
cost. The Company is adopting the cost model for determining
gross carrying amount. Cost comprises of purchase price,
inward freight, duties and taxes that are not refundable net of
duty credits and any attributable cost of bringing the assets to
its working condition for its intended use.

When parts of an item of property, plant and equipment
have different useful lives, they are accounted for
as separate items (major components). The cost of
replacement spares/ major inspection relating to property,
plant and equipment is capitalised only when it is probable
that future economic benefits associated with these
will flow to the company and the cost of the item can be
measured reliably.

Capital work-in-progress comprises of the cost of property,
plant and equipment that are not yet ready for their intended
use at the reporting date.

Depreciation methods, estimated useful lives

Depreciation on property, plant and equipment is provided
on straight line method based on the useful lives as under:

(a) Assets (other than capital spares) - based on
useful lives prescribed under Schedule II of the
Companies Act, 2013.

(b) Capital spares - based on useful life of each replaced
part (2 - 5 years).

Depreciation on addition to property plant and equipment
is provided on pro-rata basis from the date of acquisition.
Depreciation on sale/deduction from property plant and
equipment is provided up to the date preceding the date
of sale, deduction as the case may be. Gains and losses
on disposals are determined by comparing proceeds with
carrying amount. These are included in Statement of Profit
and Loss under 'Other Income' or 'Other expenses’.

1.4 Intangible Assets

Cost of software is capitalised as intangible asset
consisting of direct cost incurred for acquisition of
intangible asset comprising of purchase cost, non
refundable duties and taxes and any professional charges
and amortised on a straight-line basis over the economic
useful life of three years.

The residual values, useful lives and methods of
depreciation of intangible assets are reviewed by
the management at each financial year and adjusted
prospectively, if appropriate.

1.5 Investment in Subsidiaries and Associates

Investment in subsidiaries and associate is measured at
cost less provision for impairment.

1.6 Inventories

Inventories are valued at lower of cost or net realisable
value. For this purpose, the cost of bought-out inventories
comprises of the purchase cost of the items, net of
applicable tax/duty credits and cost of bringing such items
into the factory on First-In, First-Out (FIFO) basis. Cost of
Inventory comprises Cost of Purchase, Cost of Conversion
and other Costs incurred to bring them to their respective
present location and condition. The net realisable
value of bought-out inventories is taken at their current
replacement value. The cost of manufactured inventories
comprises of the direct cost of production plus appropriate
fixed and variable production overheads using the Specific
Identification Method to assign costs.

1.7 Foreign Currency Transactions

(a) Functional and presentation currency

Items included in the standalone financial statements
of the entity are measured using the currency of the
primary economic environment in which the entity
operates ("functional currency”). The standalone

financial statements are presented in Indian
Rupees ("INR”), which is the functional currency and
presentation currency of the Company.

(b) Transactions and balances

Foreign exchange transactions are recorded at the
functional currency adopting the exchange rate
prevailing on the dates of respective transactions.
Monetary assets and liabilities denominated in foreign
currencies existing as on the Balance Sheet date are
translated at the functional currency exchange rate
prevailing as at the Balance Sheet date. The exchange
difference arising from the settlement of transactions
during the period and effect of translations of
assets and liabilities at the Balance Sheet date are
recognised in the Statement of Profit and Loss.

Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated
using the exchange rates at the dates of the initial
transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the
exchange rates at the date when the fair value is
determined. The gain or loss arising on translation of
non-monetary items measured at fair value is treated
in line with the recognition of the gain or loss on
the change in fair value of the item (i.e., translation
differences on items whose fair value gain or loss is
recognised in Other Comprehensive Income or profit
and loss are also recognised in Other Comprehensive
Income or profit and loss, respectively).

1.8 Leases

The Company has elected not to recognise right-of-use
assets and lease liabilities for short-term leases that
have a lease term of 12 months or less and leases of
low-value assets. The Company recognises the lease
payments associated with these leases as an expense over
the lease term.

1.9 Borrowing Costs

Borrowing costs that are directly attributable to the
acquisition, construction or production of an asset that
takes a substantial period of time to get ready for its
intended use are added to the cost of those assets, until
such time as the assets are substantially ready for their
intended use or sale. Other borrowing costs are recognised
as expenditure in the period in which they are incurred.

1.10 Government Grants

Government grants shall be recognised in profit and loss
on a systematic basis over the periods in which the entity
recognises as expenses the related costs for which the
grants are intended to compensate. Government grants are
not recognised until there is reasonable assurance that the
Company will comply with the conditions attaching to them
and that the grants will be received.

Government grants related to depreciable assets are
presented in the Balance Sheet by setting up the grant as
deferred income and are recognised in profit and loss over
the periods and in the proportions in which depreciation
expense on those assets is recognised and are presented
under Other Income.

A government grant that becomes receivable as
compensation for expenses or losses already incurred or
for the purpose of giving immediate financial support to
the entity with no future related costs are recognised in
profit and loss of the period in which it becomes receivable
and are presented under Other Income/deducted from the
related heads of expenditure.

1.11Financial Instruments
(a) Financial asset

(i) Initial recognition and measurement

At initial recognition, financial asset is measured
at its fair value Transaction costs of financial
assets carried at fair value through profit or loss
are expensed in profit or loss.

(ii) Subsequent measurement

For purposes of subsequent measurement,
financial assets are measured at amortised cost
or fair value through profit or loss account.For
purposes of subsequent measurement, financial
assets are classified in following categories:

(a) at amortized cost; or

(b) at fair value through other comprehensive
income; or at fair value through
profit or loss.

Amortized cost: Assets that are held for
collection of contractual cash flows where
those cash flows represent solely payments of
principal and interest are measured at amortized
cost. Interest income from these financial
assets is included in finance income using the
effective interest rate method (EIR).

Fair value through other comprehensive income
(FVOCI): Assets that are held for collection
of contractual cash flows and for selling the
financial assets, where the assets’ cash flows
represent solely payments of principal and
interest, are measured at fair value through
other comprehensive income (FVOCI).

Movements in the carrying amount are taken
through OCI, except for the recognition of
impairment gains or losses, interest revenue
and foreign exchange gains and losses which
are recognized in Statement of Profit and Loss.
When the financial asset is derecognized, the
cumulative gain or loss previously recognized in
OCI is reclassified from equity to Statement of
Profit and Loss and recognized in other gains/
(losses). Interest income from these financial
assets is included in other income using the
effective interest rate method.

Fair value through profit or loss (FVTPL): Assets
that do not meet the criteria for amortized cost
or FVOCI are measured at fair value through
profit or loss. Interest income from these
financial assets is included in other income.

(iii) Derecognition of financial assets

The Company derecognises a financial asset
when the contractual rights to the cash flows from
the asset expire, or when it transfers the financial
asset and substantially all the risks and rewards
of ownership of the asset to another party.

(b) Financial liabilities

All financial liabilities are recognised initially at fair
value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs.
Financial guarantees are recognised at fair value.

After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised
cost using the Effective interest rate method. Gains
and losses are recognised in profit and loss when the
liabilities are de-recognised as well as through the
amortisation of effective interest.

A financial liability is de-recognised when the
obligation under the liability is discharged or
cancelled or expires.

1.12 Revenue Recognition

The Company derives revenues primarily from sale of
manufactured fabric and readymade garments.

Revenue is recognized at point in time on satisfaction
of performance obligation upon transfer of control of
promised products to customers in an amount that reflects
the consideration the Company expects to receive in
exchange for those products.

Other operating revenue - Export incentives: Export
Incentives under various schemes are accounted
upon fulfilling the conditions established by respective

regulations as applicable to the Company and as amended
from time to time.

Income is recognised at the value or rate prescribed by
respective regulations.

Interest income is recognised on accrual basis.

1.13 Taxes

Current tax is determined as the amount of tax payable
in respect of taxable income for the year computed in
accordance with the provisions of the Income Tax Act,
1961. The Company's current tax is calculated using tax
rates that have been enacted or substantively enacted by
the end of the reporting period on taxable profits computed
in accordance with Income Tax Acr, 1961.

Deferred tax is recognised on temporary differences
between the carrying amounts of assets and liabilities in
the standalone financial statements and the corresponding
tax bases used in the computation of taxable profit

The carrying amount of deferred tax assets is reviewed
at the end of each reporting period 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. Any such reduction shall be reversed to the
extent that it becomes probable that sufficient taxable
profit will be available.

Deferred tax liabilities and assets 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 end of the reporting period.

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 items
related to equity, in which case, the current and deferred
tax are also recognised in other comprehensive income or
directly in equity respectively.

1.14 Employee Benefits

(a) Short-term obligations

Liabilities for wages and salaries, including non¬
monetary benefits that are expected to be settled
wholly within 12 months after the end of the period
in which the employees render the related service
are recognised in respect of employees' services up
to the end of the reporting period and are measured
at the amounts expected to be paid when the
liabilities are settled.

(b) Defined contribution plans

The company has defined contribution plans for
employees comprising of Provident Fund and
Employee's State Insurance. The contributions paid/
payable to these plans during the year are recognised
as employee benefit expense in the Statement of
Profit and Loss for the year.

(c) Defined benefit plans: Gratuity

The net present value of the obligation for gratuity
benefits are determined by independent actuarial
valuation, conducted annually using the projected
unit credit method.

The retirement benefit obligations recognised in the
Balance Sheet represents the present value of the
defined benefit obligations reduced by the fair value
of plan assets. All expenses represented by current
service cost, past service cost, if any, and net interest
on the defined benefits are recognised immediately
in Statement of Profit and Loss as past service
cost, if any, and net interest on the defined benefit
liability/(asset) are recognised in the Statement of
Profit and Loss.

Remeasurements of the net defined benefit liability/
(asset) comprising actuarial gains and losses and
the return on the plan assets (excluding amounts
included in net interest), are recognised in Other
Comprehensive Income. Such remeasurements are
not reclassified to the Statement of Profit and Loss in
the subsequent periods.

(d) Long-term employee benefits: Compensated
absences

The company has a scheme for compensated
absences for employees, the liability of which is
determined based on an independent actuarial
valuation carried out at the end of the year, using
the projected unit credit method. Actuarial gains and
losses are recognised in full in the Statement of Profit
and Loss for the period in which they occur.

1.15 Segment Reporting

Operating Segments are reported in a manner consistent
with the internal reporting provided to the Chief Operating
Decision Maker (CODM) of the Company. The CODM
is responsible for allocating resources and assessing
performance of the operating segments of the Company. The
Company's operations predominantly relate to one operating
segment i.e. Textile - Infant / Kids Apparel manufacturing.

1.16 Earnings Per Share

Basic/diluted earnings per share is calculated by dividing
the net profit and loss for the year attributable to equity
shareholders (after deducting attributable taxes) by
the weighted average number of equity shares/diluted
potential equity shares outstanding as at the end of the
year, as the case may be.

1.17 Impairment of Non-Financial Assets

The Company assesses at each year end whether there
is any objective evidence that a non-financial asset or
a group of non-financial assets is impaired. An asset or
a cash generating unit is treated as impaired, when the
carrying value of assets exceeds its recoverable amount.
The recoverable amount of an asset or a cash-generating
unit is the higher of its fair value less costs of disposal and
its value in use. Based on such assessment, impairment
loss if any is recognised in the Statement of Profit and Loss
for the period in which the asset is identified as impaired.

1.18 Cash and Cash Equivalents

Cash and cash equivalent in the Balance Sheet comprise cash
at banks, cash on hand and short-term deposits net of bank
overdraft with an original maturity of three months or less,
which are subject to an insignificant risk of changes in value.