a) Nature of Security for secured borrowings
Working Capital loans taken from bank's are secured against hypothecation of inventories, receivables & equitable mortage of immovable proerties being factory land and buildings/other structures and embedded plant & machinery, and personal guarantee of Mr. Brijgopal Bang and Mrs. Vandana Bang. Also secured by pledge of margin money by way of term deposit receipts of Rs. 309.34 (P.Y. Rs. 307.84). Loan facilities availed from NBFC 's are secured against mortage of corporate office & term deposits.
* Disputed demands in respect of income tax not acknowledged as debt by the Company of Rs. 1574.86 lakhs (P.Y. 528.45). The Company has filed appal with the National Faceless Appeal Centre, which is pending for disposal. Future cash outflows in respect of above are dependent on outcome of matter under dispute.
# The Company is a party in Company Petition (IB) before The National Company Law Tribunal Mumbai Bench, Mumbai, wherein it is contended by the Applicant/ Liquidator that an amount of Rs. 299.14 Lakhs is due by the company to one of its supplier who is respondent to this case. The Applicant/Liquidator has claimed the outstanding amount from the Company as the supplier went under liquidation.
Defined Benefits Plan Gratuity Plan
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees’ last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to recognised funds in India.
The Company has recognized Rs. 16.65 Lakhs (PY 14.27 Lakhs) in the profit & Loss Account during the year ended 31 March 2024 under defined contribution plan.
The discount rate indicated above reflects the estimated timing and currency of benefit payments. It is based on the yields / rates available on applicable bonds as on the current valuation date.
The salary growth rate indicated above is the Company’s best estimate of an increase in salary of the employees in future years, determined considering the general trend in inflation, sonority, promotions, past experience and other relevant factors such as demand and supply in employment market, etc.
(f) Sensitivity Analysis
Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below has been determined based on reasonably possible changes of assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The results of sensitivity analysis are given below:
Please note that the sensitivity analysis presented above may not be representative of actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
There is no change in the method of valuation for the prior period. For change in assumptions please refer to section 5 above, where assumptions for prior period, if applicable, are given.
33. Financial Risk Management:Financial risk management objectives and policies
The Company’s financial risk management is an integral part of how to plan and execute its business strategies. The Company’s financial risk management policy is set by the Managing Board.
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments.
Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and loans and borrowings.
Market Risk- Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of changes in market interest rates. In order to optimize the Company’s position with regards to interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.
Credit risk
Credit risk arises from the possibility that the counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses financial reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are set accordingly.
The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis through each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of default occurring on asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forward-looking information such as:
i) Actual or expected significant adverse changes in business
ii) Actual or expected significant changes in the operating results of the counterparty
iii) Financial or economic conditions that are expected to cause a significant change to the counterparty’s ability to meet its obligations
iv) Significant increase in credit risk on other financial instruments of the same counterparty
Liquidity Risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time, or at a reasonable price. The Company’s treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risk are overseen by senior management. Management monitors the Company’s net liquidity position through rolling forecasts on the basis of expected cash flows.
34. Capital Risk Management Risk Management
The Company’s objectives when managing capital are to
Ý safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders
Ý maintain an optimal capital structure to reduce the cost of capital
The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
• Fair value of cash and short-term deposits, trade and other short term receivables, trade payables, other current liabilities, short term loans repayable on demand approximate their carrying amounts largely due to short term maturities of these instruments.
Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for expected losses of these receivables. Accordingly, fair value of such instruments is not materially different from their carrying amounts.
The Financial Instruments are categorised in two level based on the inputs used to arrive at fair value measurement as described below
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.
Market Risk- Foreign currency risk.
The Company operates internationally and portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales and services in overseas markets and purchases from overseas suppliers in various foreign currencies. Foreign currency exchange rate exposure is partly balanced by purchasing of goods, commodities and services in the respective currencies
Derivative financial instruments such as foreign exchange forward contracts are used for hedging purposes and not as trading or speculative instruments.
37. Corporate Social Responsibility:
Corporate Social Responsibility as per Section 135 of the Companies Act, 2013 is not applicable to the company.
38. Segment Reporting:
Based on the “management approach” as defined in Ind AS 108 Operating Segments, the Director of the Company has been identified as Chief Operating Decision Maker (CODM). The Chief Operating Decision Maker evaluates the Company’s performance and allocate resources on the analysis of various performance indicator by business segment.
The Company is primarily engaged in single segment of manufacturing and marketing of textile and textile products and is managed as one business unit:
41. Additional regulatory Information
1) The company does not have any proceedings initiated or are pending against it, for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
2) The company has not been declared wilful defaulter by any bank or financial institutions or government or any government authority.
3) The company does not have relation with any Stuck off Companies.
4) The company has registered and satisfied charges with Registrar of Companies (ROC).
5) The Company has complied with the number of layers prescribed under the Companies Act, 2013
* Earnings for Debt Service = Earnings before finance costs, depreciation and amortisation, exceptional items and tax (EBIDTA)/ (Finance cost for the year Principal repayment of long-term debt liabilities within one year)
** Cost of Good sold = Cost of materials consumed Purchases of stock-in-trade Changes in inventories of finished goods, stock-intrade, work-in-progress Manufacturing and operating expenses
$ Working Capital = Current Assets - Current Liabilities
# Earnings before Interest and Tax = Profit after exceptional item and before tax Finance costs (recognised)
@ Capital Employed = Average of equity and total borrowings
The variations more than 25% is on account of change in Company's performance in FY2023-24 compare to FY2022-23.
7) There are no transactions to report against the disclosure requirement as notified by MCA pursuant to amended Schedule III with regards to utilisation of borrowed fund and discrepancies in utilisation of borrowed fund.
8) During the year, the Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall: (i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries); or (ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
9) During the year, the Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall: (i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries); or (ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
11) The company does not have any undisclosed income during the current or revious year.
12) The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.
42. The Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software. Further there are no instances of audit trail features being tampered with.
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