(1) THE COMPANY OVERVIEW:

R & B Denims Ltd. is a Listed Public Limited Company incorporated and domiciled in India, having its registered office at Block No. 467, Palsana - Sachin Highway, Gujarat, India. The Company is engaged in the business of manufacturing and sale of quality Denim Textile products. The company caters both domestic and international markets.

(2) BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

Statement of compliance and basis of preparation

These financial statements are prepared in accordance with Indian Accounting. Standards (Ind AS)prescribed under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules as amended from time to time, the provisions of the Companies Act, 2013 ("the Companies Act¹') as applicable and guidelines issued by the Securities and Exchange Board of India ("SeBI").

Accounting policies have been applied consistently to all periods presented in these financial statements.

All amounts included in the financial statements are reported in lakhs of Indian rupees except share and per share data, unless otherwise stated. Due to rounding off, the numbers presented throughout the document may not add up precisely to the totals and percentages may not precisely reflect the absolute figures.

i Basis of measurement

These financial statements have been prepared on the going concern basis and on a historical cost convention and on an accrual basis, except for the following material items which have been measured at fair value as required by relevant Ind AS;

o The defined benefit asset(liability) is as the present value of defined benefit obligation less fair value of plan assets and ® Financial instruments classified as fair value through profit or loss (FVTPL).

Use of estimates and judgment

The preparation of the financial statements in accordance with Ind AS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from those estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to i accounting estimates are recognized in the period in which the estimates are revised i and in any future periods affected. In particular, information about significant areas of

i estimation, uncertainty and critical judgment in applying accounting policies that have the most significant effect on the amounts recognized in financial statements are ! included in the following notes:

* • Useful lives of Property, plant and equipment [Note L]

• Measurement of defined benefit obligations [Note D]

• Provision for inventories [Note J]

• Measurement and likelihood of occurrence of provisions and contingencies [Note P]

• Deferred taxes [Note E]

(3) MATERIAL ACCOUNTING POLICIES

The accounting policies, as set out in the following paragraphs of this note, have been consistently applied, to all the periods presented in these standalone financial statements except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy. The Company adopted Disclosure of Accounting Policies (Amendments to Ind AS 1) from 1 April , 2023.Although the amendments did not result in any changes in the accounting policies themselves, they impacted the accounting policy information disclosed in the standalone financial statements. The amendments require the disclosure of 'material' rather than ; 'significant' accounting policies. The amendments also provide guidance on the | application of materiality to disclosure of accounting policies, assisting entities to provide I useful, entity-specific accounting policy information that users need to understand other \ information in the financial statements. i

i (A) Current and non-current classification

The assets and liabilities reported in the balance sheet are classified on a "current/non-current basis".

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the company has ascertained its operating cycle as 12 months for the purpose of current/non-current classification of assets and liabilities.

j (B) Fair value measurement

j All assets and liabilities for which fair value is measured or disclosed in the financial | statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement asa whole:

• Level 1 - Quoted (unadjusted) prices in active market for identical assets or liabilities.

i o Level 2 (if level 1 feed is not available/appropriate) - Valuation techniques

: for which the lowest level input that is significant to the fair value-

measurement is directly or indirectly observable.

; Level 3 (if level 1 and 2 feed is not available/appropriate) - Valuation

techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For financial assets and liabilities maturing within one year from the Balance Sheet date and which are not carried at fair value, the carrying amount approximates fair value due to the short maturity of these instruments.

(C) Revenue recognition:

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services.

For allocating the transaction price, the Company has measured the revenue in respect of each performance obligation of a contract at its relative standalone selling price. The price that is regularly charged for an item when sold separately is the best evidence of its standalone selling price. In cases where the company is unable to determine the standalone selling price, the company uses the expected cost plus margin approach in estimating the standalone selling price.

The company accounts for volume discounts and pricing incentives to customers as a reduction of revenue based on the ratable allocation of the discounts/ incentives to each of the underlying performance obligation that corresponds to the progress by the customer towards earning the discount/ incentive. If it is probable that the criteria for the discount will not be met, or if the amount thereof cannot be estimated reliably, then discount is not recognized until the payment is probable and the amount can be estimated reliably. The company recognizes changes in the estimated amount of obligations for discounts in the period in which the change occurs.

Interest Income

Interest income is accrued on a time proportion basis, by reference to the principal outstanding and effective interest rate applicable.

Dividend income

Dividends are recognized in Statement of Profit and Loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.

Trade receivables and Contract Balances

The company classifies the right to consideration in exchange for deliverables as either a receivable or as unbilled revenue.

A receivable is a right to consideration that is unconditional upon passage of time. Revenues in excess of billings is recorded as unbilled revenue and is classified as a financial liability for these cases as right to consideration is unconditional upon passage of time.

j (D) Employee Benefits: i Short-term obligations

All employee benefits payable wholly within twelve months of rendering services are classified as short term employee benefits. Benefit such as salaries, wages etc. are recognized in period in which the employee renders the related services. A liability is recognized for the amount expected to be paid when there is 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.

Defined contribution plans

Contributions to defined contribution schemes such as employees' state insurance, provident fund, labour welfare fund etc. are charged as an expense based on the amount of contribution required to be made as and when services are rendered by the employees. The Company is a member of recognized Provident Fund scheme established under The Provident Fund & Miscellaneous Act, 1952 by the Government of India. The Company is contributing 12% of Salary & Wages of eligible employees under the scheme every month. The amount of contribution is being deposited each and every month. The contribution paid or payable under the scheme is recognized during the period under which the employee renders the related services. The above benefits are classified as Defined Contribution Schemes as the Company has no further defined obligations beyond the monthly contributions.

Defined Benefit Plans

In accordance with the Payment of Gratuity Act, 1972, applicable for Indian companies, the Company provides for a lump sum payment to eligible employees, at retirement or termination of employment based on the last drawn salary and years of employment with the Company. The Company's obligation in respect of the gratuity plan, which is a defined benefit plan, is provided for based on actuarial valuation using the projected unit credit method. The Company recognizes actuarial gains and losses in other comprehensive income, net of taxes.

{E) Taxes:

! Income Tax & Deferred Tax

; Tax expense for the period comprises current and deferred tax. Income tax expense

: is recognized in net profit in the Statement of Profit and Loss except to the extent

| that it relates to items recognized in other comprehensive income in which case

; the tax also recognized in other comprehensive income and except to the extent

that it relates to items recognized directly in equity. The tax currently payable is based on taxable profit for the period. Taxable profit differs from net profit as reported in the statement of profit and loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. Current income tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or

i substantively enacted by the end of the reporting period. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on deferred income tax assets and liabilities is recognized as income or expense in the period that includes the enactment or the substantive enactment date. A deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilized.

Current tax and deferred tax shall be recognised outside profit or loss if the tax relates to items that are recognised, in the same or a different period, outside profit or loss. Therefore, current tax and deferred tax that relates to items that are recognised, in the same or a different period:

a) in other comprehensive income, shall be recognised in other comprehensive | income.

' b) directly in equity, shall be recognised directly in equity.

Appendix C to Ind AS 12, Uncertainty over Income Tax Treatments:

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| Appendix C to Ind AS 12 clarifies the accounting for uncertainties in income taxes.

' The interpretation is to be applied to the determination of taxable profit (tax loss),

; tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12. The adoption of Appendix C to Ind AS 12 did not have any material impact on the standalone financial, statements of the Company.

Ý Sales/ value added taxes/ Service tax/ Goods and service tax (GST) paid on acquisition of assets or on incurring expenses

Expenses and assets are recognised net of the amount of sales/ value added taxes/ GST paid, except:

e When the tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the tax paid is recognised as part I of the cost of acquisition of the asset or as part of the expense item, as

| applicable

I o When receivables and payables are stated with the amount of tax included

! the net amount of tax recoverable from, or payable to, the taxation authority

j is included as part of receivables or payables in the balance sheet.

| (F) Leases:

i

| The Company determines that a contract is or contains a lease, if the contract ! conveys right to control the use of an identified asset for a period of time in

! exchange for a consideration. At the inception of a contract which is or contains a

: lease, the Company recognises lease liability at the present value of the future lease

payments for non-cancellable period of a lease which is not short term in nature except for lease of low value items. The future lease payments for such noncancellable period is discounted using the Company's incremental borrowing rate.

No disclosure is required considering immaterial effect on the financial statement as whole.

(G) Foreign Currency:

Functional and presentation currency

The financial statements are presented in Indian Rupees (INR), which is the functional currency of the Company and the currency of the primary economic environment in which the Company operates.

Foreign currency transactions

• Foreign-currency denominated monetary assets and liabilities are translated into the relevant functional currency at exchange rates in effect at the Balance Sheet date. The gains or losses resulting from such translations are included in net profit in the Statement of Profit and Loss. Nonmonetary assets and non-monetary liabilities denominated in a foreign currency and measured at fair value are translated at the exchange rate prevalent at the date when the fair value was determined. Nonmonetary assets and non- monetary liabilities denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of the transaction.

*

• Transaction gains or losses realized upon settlement of foreign currency

. transactions are included in determining net profit for the period in which the

_; transaction is settled. Revenue, expense and cash-flow items denominated

in foreign currencies are translated into the relevant functional currencies j using the exchange rate in effect on the date of the transaction.

(H) Cash & cash equivalents:

For the purpose of presentation in the Statement of Cash Flows, Cash and Cash Equivalents includes cash in hand, balances with the banks that are readily -: convertible into cash and which are subject fo an insignificant risk of changes in

value.

(I) Earnings Per Share:

Basic and Diluted earnings/ (loss) per share are calculated by dividing the net profit / (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. The weighted average number of equity shares outstanding during the period are adjusted for any bonus shares ; issued during the period and also after the balance sheet date but before the date

j the financial statements are approved by the board of directors.

, (J) Inventories:

j Inventories consist of raw materials, stores & spares, work-in-progress, stock-intrade and finished goods. Inventories are valued at lower of cost and net realizable ' value (NRV) except for raw materials which is valued at cost.

Cost of raw materials and stores & spares includes cost of purchases and other costs incurred in bringing the inventories to their present location and condition.

Cost of work-in-progress and finished goods includes direct materials, labor and proportion of manufacturing overheads based on the normal operating capacity, wherever applicable.

Cost of stock-in-trade includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.

. Net realizable value is the estimated selling price in the ordinary course of business,

less estimated costs of completion and estimated costs necessary to make the sale. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be used are expected to be sold at or above cost, except in case of samples, fants & cut pieces.

i (K) Financial instruments:

|

i 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 assets and liabilities are recognized when the Company becomes a party to the contractual provisions of theinstrument.

Financial assets:

Classification

The Company classifies its financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either through other

i comprehensive income, or through the Statement of Profit and Loss), and

• Those measured at amortized cost.

The classification depends on the entity's business model for managing the financial I assets and the contractual terms of the cash flows.

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i Initial recognition and measurement

! Financial assets are recognized when the Company becomes a party to the ' j contractual provisions of the instrument. Financial assets are recognized initially at

¹ fair value plus or minus, in the case of financial assets not recorded at fair value

through Profit and Loss, transaction costs that are attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through Profit and Loss are expensed in the Statement of Profit and Loss.

I Subsequent measurement

! After initial recognition, financial assets are measured at:

‘ • ^fair value (either through other comprehensive income or through Profit _and

Loss), or

• amortized cost.

Debt instruments

Debt instruments are subsequently measured at amortized cost, fair value through other comprehensive income ('FVOCI') or fair value through Profit and Loss ('FVTPL')

till de-recognition on the basis of (i) the entity's business model for managing the financial assets and (ii) the contractual cash flow characteristics of the financial asset.

Amortised 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. A gain or loss on a debt investment that is subsequently measured at amortized cost is recognized in the Statement of Profit and Loss when the asset is i derecognized or impaired. Interest income from these financial assets is included ! in other income using the effective interest rate method.

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: Fair Value Through Other Comprehensive Income (FVOCI):

i 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 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 the

: Statement of Profit and Loss. When the financial asset is derecognized, the

j 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 and Loss (FVTPL):

Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVTPL. A gain or loss on a debt investment that is subsequently measured at FVTPL Ý is recognised in Statement of Profit and Loss in the period in which it arises. Interest

i income from these financial assets is recognised in the Statement of Profit and

| Loss.

' Equity instruments

: All equity investments in scope of Ind AS 109 are measured at fair value. Equity

j instruments which are held for trading are classified as at FVTPL. For all other

' equity instruments, the Company decides to classify the same either as at FVTOCI

or FVTPL.

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

i

If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in Other Comprehensive Income (OCI). There is no recycling of the amounts from OCI to Statement of Profit and Loss, even on sale of such investments.

Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and Loss.

Financial liabilities:

Initial recognition and measurement

Financial liabilities are initially measured at its fair value plus or minus, in the case of a financial liability not at FVTPL, transaction costs that are directly attributable to the issue/origination of the financial liability.

Subsequent measurement

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held for trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in statement of profit and loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in Statement of profit and loss. Any gain or loss on de-recognition is also recognized in statement of Profit and Loss.

De-recognition

A financial liability is derecognized when the obligation specified in the contract is discharged, cancelled or expires.

(L) Property, Plant and Equipment (PPE)

Items of Property, plant and equipment are acquired or constructed are initially recognized at historical cost net of recoverable taxes, duties, trade discounts and rebates, less accumulated depreciation, amortisation and impairment loss, if any. The historical cost of Property, plant and equipment comprises of its purchase price, borrowing costs and adjustment arising for exchange rate variations attributable to -the assets, including any cost directly attributable to bringing the assets to their working condition for their intended use. The estimated useful lives and amortisation period is reviewed at the end of each reporting period. Properties held are used for business purpose only and whenever it will be probable we will recognise as an investment property.

Capital Work-in-Progress represents Property, plant and equipment that are not ready for their intended use as at the reporting date.

_ Subsequent costs are included in the asset's carrying amount or recognised as a

i separate asset, as appropriate, only when itis probable that future economic

benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.

The Company identifies and determines cost of each component/part of the plant and equipment separately, if the component/part has a cost which is significant to the total cost of the plant and equipment and has useful lives that is materially different from that of the remaining plant and equipment.

The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the Statement of Profit and Loss during the year in which they are incurred.

Gains and losses arising from de-recognition of PPE are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognized.

Depreciation methods, estimated useful lives and residual values

, Depreciation is provided on written down value basis using the rates arrived at

based on the useful lives prescribed under Schedule II to Companies Act, 2013.

; Estimated useful lives, residual values and depreciation methods are reviewed

annually, taking into account commercial and technological obsolescence as well as i normal wear and tear and adjusted prospectively, if appropriate.

; Advances paid towards the acquisition of PPE outstanding at each Balance Sheet date is classified as capital advances under 'Other non-current assets' and cost of assets not put to use before such date are disclosed under 'Capital work-in progress'.

The estimated useful lives of assets are as follows:

! (M) Intangible assets

i

j Intangible assets purchased including acquired in a business combination are

j measured at cost of acquisition as at the date of acquisition. Following initial

i recognition, intangible assets are carried at cost less accumulated amortization and

Ý impairment losses, if any.

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| (N) Government Grants

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' Government grants are initially measured at amount receivable from the : Government and are recognized on an accrual basis only if there is reasonable'

j assurance that they will be received and the company will comply with the

conditions associated with the grant and for those grants which are uncertain are not recognized unless there is reasonable assurance of the same.

i - In case of capital grants, they are then recognized in Statement of Profit and Loss on a systematic basis over the useful life of the asset.

- In case of grants that compensate the Company for expenses incurred are recognized in Statement of Profit and Loss on a systematic basis in the periods in which the expenses are recognized.

Export benefits available under prevalent schemes are accrued in the year in which the goods are exported and there is no uncertainty in receiving the same.

(O) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, is responsible for allocating resources and assessing performance of the operating segments and makes strategic decisions. Refer Note 28 for segment information presented.

(P) Provisions and Contingent Liabilities

A provision is recognised when the company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on best estimates required to settle the obligation at the balance sheet date.

; A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more . uncertain future events beyond the control of the company or a present obligation

that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably.

(Q) Borrowing Costs

Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of that asset till such time the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use.

Other borrowing costs are recognized as an expense in the period in which they are accrued / incurred.

^: (R) Cash flow statement

Cash flows are reported using the Indirect Method, as set out in Ind AS 7 'Statement of Cash Flow', whereby profit for the year is adjusted for the effects of transaction of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or

financing cash flows. The cash flows from operating, investing and financing I activities of the Company are segregated.

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(S) Investments in Subsidiaries:

Company's investment includes investment in RB Industries which is a partnership firm and having its registered office at Plot No. B-11/2 & B-11/3, Hojiwala Industrial Estate Road No.11, SUSML, Surat and company have control over the firm at the year-end 31^st March 2024. Investments are carried at cost and at the end of each reporting period any addition made and share of profit of the partnership firm is added to the cost and any withdrawal of investment by the company and share of loss of the partnership firm is deducted.

The Company has invested in a partnership firm, "Ricon Industries" on 1st September, 2023. The Company is holding 20% share of profit in partnership firm. As per the provision of Ind AS, Ricon Industries is considered as subsidiary Partnership Firm of the company. Company have control over the firm at the year-end 31^st March 2024. Investments are carried at cost and at the end of each reporting period any addition made and share of profit of the partnership firm is added to the cost and any withdrawal of investment by the company and share of loss of the partnership firm is deducted.

! (T) Adoption of new accounting principles

j

•; Deferred tax related to assets and liabilities arising from a single transaction-

(amendments to Ind AS 12 -Income Taxes). The amendments clarify that lease ^: transactions give rise to equal and offsetting temporary differences and financial

statements should reflect the future tax impacts for the year ended 31 March 2024, of these transactions through recognizing deferred tax. T

The Company has adopted this amendment effective 1 April 2023. The Company previously accounted for deferred tax on leases on a net basis. Following the amendments, the Company has recognized a separate deferred tax asset in relation to its lease liabilities and a deferred tax liability in relation to its right-of-use assets. The adoption did not have any impact on the current and comparative periods presented in the standalone financial statements.

(U) Recent Indian Accounting Standards (Ind AS)

j As on 31 March 2024, there are no new standards or amendments to the existing i standards applicable to the Company which has been notified by Ministry of | Corporate Affairs ("MCA") under Companies (Indian Accounting Standards) Rules.

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