2.17 Provisions
(i) Provision shall be recognized when:
An entity has a present obligation as a result of a past event :
(a) it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation; and
(b) a reliable estimate can be made of the amount of the obligation.
2.18 Cash and cash equivalents
Cash and cash equivalents in the statement of financial position include cash in hand and at bank and short-term
deposits with original maturity period of three months or less.
2.19 Contingent Liabilities & Contingent Assets
Contingent Liabilities
(i) Provisions are recognized for liabilities that can be determined by using a substantial degree of estimation, if:
(a) The company has a present obligation as a result of a past event;
(b) A probable outflow of resources embodying economic benefits is expected to settle the obligation; and
(c) The amount of the obligation can be reliably estimated
(ii) Contingent liability is disclosed in the case of:
(a) a present obligation arising from a past event when it is not probable that an outflow of resources
embodying economic benefits will be required to settle the obligation or
(b) a possible obligation, unless the probability of outflow of resources embodying economic benefits is remote.
Contingent Assets
(i) Where an inflow if economic benefit is probable, an entity shall disclose a brief description of the nature of the
contingent assets at the end of reporting period, and, where practicable, an estimate of their of effect, measured
using the principles set out as per provisions.
2.20 Segment Reporting
Operating segments are defined as components of an enterprise for which discrete financial information is
available that is evaluated regularly by the chief operating decision maker, in deciding how to allocate resources
and assessing performance. The Company’s chief operating decision maker is the Managing Director & CEO.
2.21 Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset
are classified as operating leases. Rental income from operating lease is generally recognised on a straight line
basis over the term of the relevant lease however ,where the rentals are structured solely to increase the in line
with the expected general inflation to compensate for the lessor’s expected inflationary cost increases, such
increases are recognised in the year in which such benefits accrue. Intial direct costs incurred in negotiating and
arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease
term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they
are earned. Rental income from Factory building given on operating lease can be renewed by the mutual concent
of the parties after the expiry date.
2.22 Significant accounting judgments, estimates and assumptions
The preparation of financial statements in conformity with Ind AS requires management to make certain critical
accounting estimates and assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period.
The principal accounting policies adopted by the Company in the financial statements are as set out above. The
application of a number of these policies requires the Company to use a variety of estimation techniques and
apply judgment to best reflect the substance of underlying transactions.
The Company has determined that a number of its accounting policies can be considered significant, in terms of
the management judgment that has been required to determine the various assumptions underpinning their
application in the financial statements presented which, under different conditions, could lead to material
differences in these statements. The actual results may differ from the judgments, estimates and assumptions
made by the management and will seldom equal the estimated results.
The Company’s financial statements have been prepared on a going concern basis. The Company has
performed an assessment of its financial position as at March 31,2023 and forecasts of the Company for a period
of eighteen months from the date of these financial statements (the ’Going Concern Assessment Period’ and the
’Foreseeable Future’).
In evaluating the forecasts, the Company has taken into consideration both the sufficiency of liquidity to meet
obligations as they fall due as well as potential impact on compliance with financial covenants during the forecast
period. These forecasts indicate that, based on cash generated from operations, the existing funding facilities
and inter corporate deposits from subsidiaries, the Company will have sufficient liquidity to operate and discharge
its liabilities as they become due, without breaching any relevant covenants and the need for any mitigating
actions.
Based on the evaluation described above, management believes that the Company has sufficient financial
resources available to it at the date of approval of these financial statements and that it will be able to continue as
a ’going concern’ in the foreseeable future and for a period up to September 30, 2024."
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and future periods.
A) Critical Judgments
The following are significant management judgments in applying the accounting policies of the Company that
have the most significant effect on the financial statements.
(i) Deferred Tax Assets:
The assessment of the probability of future taxable income in which deferred tax assets can be utilized is based
on the company’s forecast, which is adjusted for significant non-taxable income and expenses, and specific limits
to the use of any unused tax loss or credit. The tax rules in India in which the company operates are also carefully
taken into consideration. If a positive forecast of taxable income indicates the probable use of a deferred tax
asset, especially when it can be utilized without a time limit, that deferred tax asset is usually recognized in full.
The recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties is
assessed individually by management based on the specific facts and circumstances.
(ii) Contingencies and commitments:
In the normal course of business, contingent liabilities may arise from litigations and other claims against the
Company. Where the potential liabilities have a low probability of crystallizing or are very difficult to quantify
reliably, we treat them as contingent liabilities. Such liabilities are disclosed in the notes but are not provided for in
the financial statements. Although there can be no assurance regarding the final outcome of the legal
proceedings, we do not expect them to have a materially adverse impact on our financial position.
(iii) Useful lives of property, plant and equipment
The estimated useful lives of property, plant and equipment are based on a number of factors including the effects
of obsolescence, internal assessment of user experience and other economic factors (such as the stability of the
industry, and known technological advances) and the level of maintenance expenditure required to obtain the
expected future cash flows from the asset. The Company reviews the useful life of property, plant and equipment
at the end of each reporting date.
B) Estimates and assumptions
The preparation of financial statements involves estimates and assumptions that affect the reported amount of
assets, liabilities, disclosure of contingent liabilities at the date of financial statements and the reported amount of
revenues and expenses for the reporting period. Specifically, the Company estimates the uncollectability of
accounts receivable by analyzing historical payment patterns, customer concentrations, customer credit¬
worthiness and current economic trends. If the financial condition of a customer deteriorates, additional
allowances may be required. The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year, are described below. Existing circumstances and
assumptions about future developments, however, may change due to market changes or circumstances arising
that are beyond the control of the company. Such changes are reflected in the assumptions when they occur.
(i) Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the
reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year are discussed below:
a) Allowance/Impairment for uncollected accounts receivable and other advances:
Trade receivables and other advances do not carry any interest and are stated at their normal value as reduced by
appropriate allowance/impairment which is made on ECL, and the present value of the cash shortfall over the
expected life of the financial assets.
b) Recoverability of deferred tax assets:
Management judgement is required for the calculation of provision for income taxes and deferred tax assets and
liabilities. The company reviews at each balance sheet date the carrying amount of deferred tax assets. The
factors used in estimates may differ from actual outcome which could lead to signification adjustment to the
amounts reported in financial statement.
c) Estimation of fair value of financial assets and financial liabilities:
While preparing the financial statements the Company makes estimates and assumptions that affect the reported
amount of financial assets and financial liabilities.
d) Impact of Covid-19 Pandemic
In March 2020, World Health Organization (WHO) has declared the outbreak of Novel Corona virus “Covid-19” as
a pandemic. This pandemic has severely impacted businesses around the globe. In many countries, including
India, there has been severe disruption to regular business operations. The Company has made intensive efforts
to surpass the Covid challenge through an enhanced hygiene and adherence to the social distancing norms, use
of masks and sanitizers etc. The Company is committed to ensure the safety and wellbeing of its employees. The
Company is continuously monitoring the impact on the operations and financials of the company and taking
necessary steps in the best interest of its people, customers and communities and is confident that the demand
situation will resume to its normalcy gradually.
2.23 The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and post¬
employment benefits has received Presidential assent in September 2020. The Code has been published in the
Gazette of India. However, the effective date of the Code is yet to be notified and final rules for quantifying the
financial impact are also yet to be issued. In view of this, the Group will assess the impact of the Code when
relevant provisions are notified and will record related impact, if any, in the period the Code becomes effective.
Recent pronouncements
Ministry of Corporate Affairs (“MCA”) notifies new standard or amendments to the existing standards under
Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31,2024,
MCA has not notified any new standards or amendments to the existing standards applicable to the company.
28. Contingent Liabilities and Capital Commitments
The Company expect no outflow of cash related to contingent liabilities and capital commitments.
29. Segment Reporting- Business segments have been identified based on the nature and class of products and
services, assessment of differential risks and returns. Accordingly, company is a single segment company
operating in textile business and disclosure requirements as contained in Ind AS- 108 ’Operating Segments’ are
not required in the financial statements.
A. Information by Geographies
(a) Revenue from external customers
India --- —
Outside India
(b) The company has business operations only in india and does not hold any assets outside india
B. Revenue from major customers
Information about Major Customer
Number of customer contributing 10% or more to Company’s revenue — —
Revenue arising from sales to the company’s largest customer --- —
38. The summarized position of Post-Employment benefits and long term employee benefits recognized in the Profit &
Loss Account and Balance Sheet as required in accordance with Indian Accounting Standard (Ind AS 19) are as
under:
(a) Post-Employment benefits
Defined Benefit Plans (Gratuity): During the year the company has recognized an expense of Rs. 289433
(Previous Year Rs. 298580) in the Statement of Profit and Loss. The outstanding liability recognized in Balance
sheet as at year end is Rs.1473029/-
Defined Contribution Plans (Provident Fund): During the year the company has recognized an expense of
Rs. 532749/- (Previous Year Rs. 526701) as contribution to Employee Provident Fund in the Statement of Profit
and Loss.
(b) Long-term employee benefits (Leave Encashment): During the year the company has provided an expense
of Rs. 223493/- (Previous Year Rs. 202661/-) in the Statement of Profit and Loss. The outstanding liability
recognized in Balance sheet as at year end is Rs. 760468/-.
39. The balances of Trade Receivables, Loan and Advances, Deposits, Trade Advances and Trade Payables are
subject to confirmation/reconciliation and subsequent adjustments, if any. The management has requested for the
confirmation of balances & believes that no material adjustments would be required in books of account upon
receipt of these confirmations.
40. In the opinion of the Board of Directors, the financial assets & other current assets have a value on realization in the
ordinary course of business at least equal to the amount at which they are stated except as expressly stated
otherwise.
41. (a) Previous year amounts have been reclassified wherever necessary and conform to Ind AS presentation.
(b) As per IndAS-8 previous year financial statements are restated in respect of errors related to prior periods.
The prior period errors are in nature of Measurement. The amount of correction for affected items in financial
statements are:
In Other Equity
(i) OCI during the year 2023-24 is increased by Rs.17336/-
In Statement of Profit and Loss
(i) The provision for deferred tax liability for FY 2023-24 is increased by Rs. 1049220.47 As a result Loss for the
year 2023-24 is increased by Rs. 1049220.47
(ii) Now, Basic and diluted earning per share for FY 22-23 is 0.63 (earlier 0.96).
42. Financial Risk Management
The Company's principal financial liabilities comprises of loans and borrowings, trade and other payables, and
other current liabilities. The main purpose of these financial liabilities is to raise finance for the Company's
operations. The Company has loans and receivables, trade and other receivables, cash and short-term deposits
that arise directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management
oversees the management of these risks and that advises on financial risks and the appropriate financial risk
governance framework for the Company. There has been no change to the company’s exposure to the financial
risks or the manner in which it manages and measures the risk. The company has not framed formal risk
management policies; however, the risks are monitored by management on a continuous basis. The company
does not enter into or trade in financial instruments, investment in securities, including derivative financial
instruments, for speculative or risk management purposes.
This note explains the risks which the company is exposed to and policies and framework adopted by the company
to manage these risks:
Market Risk: Market risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate
because of changes in market prices. Market prices comprise three types of risk: interest rate risk, currency risk and
other price risk, such as investment/ equity risk. Financial instruments affected by market risk include loans &
borrowings.
(a) Foreign Currency Risk Management:
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because
of changes in foreign exchange rates. The Company doesn’t operate internationally & didn’t undertook any
transactions denominated in foreign currencies during the reporting period & previous year. Hence, exposures to
exchange rate fluctuations didn’t arise.
(b) 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’s exposure to the risk of changes in market interest rates does not
arise due to non existence of any debt obligations with floating interest rates. The company’s fixed rate borrowings
are carried at amortised cost. They are therefore not subject to interest rate risk, since neither the carrying amount
nor the future cash flows will fluctuate because of a change in market interest rates. As the Company has no
significant interest-bearing assets, the income and operating cash flows are substantially independent of changes
in market interest rates.
(c) Other Price Risk
The company is exposed to equity price risk arising from equity investments. The company manages equity price
risk by monitoring liquidity positions of such investments in short & long term periods. The company does not
actively trade equity investments. Equity investments are mainly held for strategic rather than trading purposes.
(c.1) Equity price sensitivity analysis
The sensitivity analysis below has been determined based on exposure to equity price risks at the end of
reporting period.
If Fair Value per share had been 1% higher/Lower, the profit for the year would have increased/decreased by
/- 0.49 lakhs (Previous Year: increased/decreased by 0.49 lakhs ) as a result of the changes in fair value of
equity shares.
Liquidity risk management
Liquidity risk refers to the probability of loss arising from a situation where there will not be enough cash and/or cash
equivalents to meet the needs of depositors and borrowers, sale of liquid assets will yield less than their fair value
and illiquid assets will not be sold at the desired time due to lack of buyers. The primary objective of liquidity
management is to provide for sufficient cash and cash equivalents at all times and any place in the world to enable
us to meet our payment obligations. The financial liabilities of the company include loans and borrowings, trade and
other payables. The company’s principal sources of liquidity are cash and cash equivalents and the cash flow that is
generated from operations. The company monitors its risk of shortage of funds to meet the financial liabilities using
a liquidity planning tool. The company plans to maintain sufficient cash and marketable securities to meet the
obligations as and when fall due. Currently the company is servicing all its obligations whether in case of borrowings
or statutory dues payable to various authorities.
The company manages liquidity risk by maintaining adequate reserves, continuously monitoring forecast and
actual cash flows and matching the maturity profiles of financial assets and liabilities.
Ultimate responsibility for liquidity risk management rest with the management which has built an appropriate
liquidity risk management framework for the management of the company’s short, medium and long term funding
and liquidity management requirements.
(vi) There are no funds which have been advanced or loaned or invested (either from borrowed funds or share
premium or any other sources or kind of funds) by the Company to or in any other persons or entities,
including foreign entities (“Intermediaries”).
(vii) a) 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
b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(viii) There are no funds which have been received by the Company from any persons or entities, including foreign
entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the
Company shall:
a) directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or
on behalf of the Funding Party (“Ultimate Beneficiaries”) or
b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(ix) The Company does not have any such transaction which is not recorded in the books of accounts that has
been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act,
1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
(x) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
E Performance obligation and remaining performance obligation
The performance obligation is satisfied upon the delivery of Goods and payment is generally due within 7 days to
60 days after delivery.
The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to
be recognized as at the end of the reporting period and an explanation as to when the Company expects to
recognize these amounts in revenue. As on 31st March, 2023, there were no remaining performance obligation
as the same is satisfied upon delivery of goods / services.
Credit Risk Management
Credit Risk
Credit risk refers to the risk that the counter party will default on its contractual obligations resulting in financial loss
to the company. Credit risk arises from financial assets such as cash and cash equivalents, loans, trade
receivables, derivative financial instruments and financial guarantees. 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. We monitor
our exposure to credit risk on an ongoing basis at various levels. On account of adoption of Ind AS 109, the
company uses expected credit loss model to assess the impairment loss or gain. Credit risk on cash and bank
balances is negligible as the company generally invests in deposits with banks and financial institutions with high
credit ratings assigned by credit rating agencies. Investments primarily include investment in equity instruments
for long term period. The Company’s credit risk in case of all other financial instruments is negligible.
Trade receivables:
The Company has exposure to credit risk majorly from trade receivable balances on sale of yarn and Trading of
unstitched Suitings, Shirtings & Dress Materials which are typically unsecured. The Company routinely assesses
the financial strength of its customers and, as a consequence, believes that its trade receivable credit risk
exposure is limited. The company also assesses the creditworthiness of the customers internally to whom goods
are sold on credit terms in the normal course of business. The credit limit of each customer is defined in
accordance with this assessment. The Company ensures concentration of credit does not significantly impair the
financial assets since the customers to whom the exposure of credit is taken are well established and reputed
industries engaged in their respective field of business. The management of the company regularly evaluates the
individual customer receivables. This evaluation takes into consideration customer’s financial condition and
credit history, as well as current economic conditions. Trade receivables are written off when deemed
uncollectible. Recoveries of trade receivables previously written off are recorded when received. The company
regularly tracks the outstanding trade receivables and proper action is taken by the company for collection of
overdue trade receivables.
The impairment analysis is performed on client to client basis for the debtors that are past due at the end of each
reporting date. The company has considered an allowance for doubtful debts on the basis of lifetime expected
credit loss model as per provision matrix in case of trade receivables that are past due but there has not been a
significant change in the credit quality and the amounts are still considered recoverable& no writing off from books
is required.
Capital risk management
The capital includes issued equity capital, share premium and all other equity reserves attributable to the equity
holders of the company. The primary objective of the company’s capital management is to maintain optimum
capital structure to reduce cost of capital and to maximize the shareholder value. The Company’s objectives when
managing capital is to safeguard the Company’s ability to continue as a going concern in order to provide returns
for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost
of capital. The director’s policy is to maintain a strong capital base so as to maintain investor, creditor and market
confidence and to sustain future development of the business. In order to maintain or adjust the capital structure,
the company may adjust the dividend payment to shareholders, return capital to shareholders or issue new
shares.
Consistent with others in the industry, the Company monitors capital on the basis of the gearing ratio. This ratio is
calculated as net debt divided by total capital plus net debt. The Company manages its capital structure and
makes adjustments to it, in light of changes in economic conditions and the requirements of the financial
covenants which otherwise would permit the banks to immediately call loans and borrowings.
Since there are no interest bearing loans & borrowings from banks, therefore, there are no breaches in the
financial covenants of interest-bearing loans and borrowings in the current year ended 31st March 2024.
No Changes were made in the objectives, policies or processes during the years ended 31st March 2024 and
31st March 2023.
For Kamboj Malhotra & Associates For and on behalf of the Board of Directors
Chartered Accountants
(CA Manik Malhotra) (Rajneesh Oswal) (Vishal Oswal) (Harpreet Kaur) (Rajesh Kumar)
Partner Chairman and Vice-Chairman and Company Secretary CFO
(M. No. 094604) Managing Director Managing Director
DIN 00002668 DIN 00002678
PLACE : LUDHIANA
DATED : 28.05.2024
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