l. Provisions and contingent liabilities
i. Provisions:
Provisions are recognized when the Company has
a present obligation (legal or constructive) as a
result of a past event, it is probable that an outflow
of resources embodying economic benefits will
be required to settle the obligation and a reliable
estimate can be made of the amount of the
obligation. When the Company expects some or
all of a provision to be reimbursed, for example,
under an insurance contract, the reimbursement
is recognized as a separate asset, but only when
the reimbursement is virtually certain. The expense
relating to a provision is presented in the statement
of profit and loss net of any reimbursement.
If the effect of the time value of money is material,
provisions are discounted using a current pre-tax
rate that reflects, when appropriate, the risks
specific to the liability. When discounting is used,
the increase in the provision due to the passage of
time is recognized as a finance cost.
ii. Contingent liabilities:
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 recognised 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 recognised because it
cannot be measured reliably. The Company does
not recognise a contingent liability but discloses its
existence in the standalone financial statements.
Provisions and contingent liabilities are reviewed at
each balance sheet.
m. Retirement and other employee benefits
Retirement benefit in the form of provident fund,
employee state insurance and pension fund are
defined contribution scheme. The Company has
no obligation, other than the contribution payable
to the respective funds. The Company recognises
contribution payable to provident fund, pension
fund and employee state insurance as expenditure,
when an employee renders the related service. If
the contribution payable to the scheme for service
received before the balance sheet reporting
date exceeds the contribution already paid, the
deficit payable to the scheme is recognised as a
liability after deducting the contribution already
paid. If the contribution already paid exceeds the
contribution due for services received before the
balance sheet date, then excess is recognised as
an asset to the extent that the pre-payment will
lead to, for example, a reduction in future payment
or a cash refund.
All employee benefits payable/available within
twelve months of rendering the service are classified
as short term employee benefits. Benefits such as
salaries, allowances and bonus etc., are recognised
in the statement of profit and loss in the period in
which the employee renders the related service.
Gratuity liability is a defined benefit obligation which
is funded through policy taken from Life Insurance
Corporation of India('LIC') and liability (net of fair
value of investment in LIC) is provided for on the
basis of actuarial valuation on projected unit credit
method made at the end of each balance sheet
date. Every employee who has completed 4 years
240 days or more of the service gets a gratuity on
departure at 15 days' salary (last drawn salary) of
each completed year of service. The fair value of
the plan assets is reduced from the gross obligation
under the defined benefit plans to recognise the
obligation on a net basis.
Accumulated leave, which is expected to be utilized
within the next twelve months, is treated as short¬
term employee benefit. The Company measures the
expected cost of such absences as the additional
amount that it expects to pay as a result of the
unused entitlement that has accumulated at the
reporting date.
The Company treats accumulated leave expected
to be carried forward beyond twelve months, as
long-term employee benefit for measurement
purposes. Such long-term compensated absences
are provided for based on the actuarial valuation
using the projected unit credit method at the year-
end.
The Company presents the leave as a current
liability in the standalone balance sheet, to the
extent it does not have an unconditional right to
defer its settlement for twelve months after the
reporting date.
Re-measurements, comprising of actuaria
gains and losses, the effect of the asset ceiling
excluding amounts included in net interest on the
net defined benefit liability and the return on plan
assets (excluding amounts included in net interest
on the net defined benefit liability), are recognised
immediately in the standalone balance sheet with a
corresponding debit or credit to retained earnings
through OCI in the period in which they occur. Re¬
measurements are not reclassified to profit or loss
in subsequent periods.
Past service costs are recognised in profit or loss
on the earlier of:
a. The date of the plan amendment or curtailment
and
b. The date that the Company recognises relatec
restructuring costs.
Net interest is calculated by applying the discount
rate to the net defined benefit liability or asset
The Company recognises the following changes ir
the net defined benefit obligation as an expense in
the statement of profit and loss:
a. Service costs comprising current service
costs, past-service costs, gains and losses on
curtailments and non-routine settlements, and
b. Net interest expense or income.
n. Share- based payments
Employees of the Company receive remuneration
in the form of share-based payments, whereby
employees render services as consideration for
equity instruments (equity-settled transactions).
Equity-settled transactions:
The cost of equity-settled transactions is
determined by the fair value at the date
when the grant is made using an appropriate
valuation model.
That cost is recognised, together with a
corresponding increase in share-based payment
(SBP) reserves in equity, over the period in which
the service/performance conditions are fulfilled in
employee benefits expense. The cumulative expense
recognised for equity-settled transactions at
each reporting date until the vesting date reflects
the extent to which the vesting period has expired
and the Company's best estimate of the number
of equity instruments that will ultimately vest. The
statement of standalone profit and loss expense
or credit for a period represents the movement in
cumulative expense recognised as at the beginning
and end of that period and is recognised in
employee benefits expense.
Service and non-market performance conditions
are not taken into account when determining the
grant date fair value of awards, but the likelihood
of the conditions being met is assessed as part
of the Company's best estimate of the number of
equity instruments that will ultimately vest. Market
performance conditions are reflected within
the grant date fair value. Any other conditions
attached to an award, but without an associated
service requirement, are considered to be non¬
vesting conditions. Non-vesting conditions are
reflected in the fair value of an award and lead to
an immediate expensing of an award unless there
are also service and/or performance conditions.
No expense is recognised for awards that do not
ultimately vest because non-market performance
and/or service conditions have not been met. Where
awards include a market or non-vesting condition,
the transactions are treated as vested irrespective
of whether the market or non-vesting condition is
satisfied, provided that all other performance and/
or service conditions are satisfied.
When the terms of an equity-settled award are
modified, the minimum expense recognised is the
expense had the terms had not been modified, if the
original terms of the award are met. An additional
expense is recognised for any modification that
increases the total fair value of the share-based
payment transaction, or is otherwise beneficial
to the employee as measured at the date of
modification. Where an award is cancelled by
the entity or by the counterparty, any remaining
element of the fair value of the award is expensed
immediately through profit or loss.
The dilutive effect of outstanding options is
reflected as additional share dilution in the
computation of diluted earnings per share (except
for anti-dilution).
o. Financial instruments
Financial assets and financial liabilities are
recognised when the Company becomes a party
to the contract embodying the related financial
instruments. All financial assets, financial liabilities
and financial guarantee contracts are initially
measured at transaction cost and where such
values are different from the fair value, at fair value.
Transaction costs that are directly attributable
to the acquisition or issue of financial assets and
financial liabilities (other than financial assets
and financial liabilities at fair value through profit
and loss) are added to or deducted from the fair
value measured on initial recognition of financial
asset or financial liability. Transaction costs
directly attributable to the acquisition of financial
assets and financial liabilities at fair value through
profit and loss are immediately recognised in the
statement of profit and loss. In case of interest
free or concession loans/debentures/preference
shares given to subsidiaries, the excess of the
actual amount of the loan over initial measure at
fair value is accounted as an equity investment.
Investment in equity instruments issued by
subsidiaries, associates and joint ventures are
measured at cost less impairment.
Effective interest method
The effective interest method is a method of
calculating the amortised cost of a financial
instrument and of allocating interest income or
expense over the relevant period. The effective
interest rate is the rate that exactly discounts
future cash receipts or payments through the
expected life of the financial instrument, or where
appropriate, a shorter period.
(a) Financial assets
Financial assets at amortised cost
Financial assets are subsequently measured at
amortised cost if these financial assets are held
within a business model whose objective is to hold
these assets in order to collect contractual cash
flows and the contractual terms of the financial
asset give rise on specified dates to cash flows
that are solely payments of principal and interest
on the principal amount outstanding.
Financial assets measured at fair value
Financial assets are measured at fair value through
other comprehensive income if these financial
assets are held within a business model whose
objective is to hold these assets in order to collect
contractual cash flows or to sell these financial
assets and the contractual terms of the financial
asset give rise on specified dates to cash flows
that are solely payments of principal and interest
on the principal amount outstanding.
Financial asset not measured at amortised cost or
at fair value through other comprehensive income
is carried at fair value through the statement of
profit and loss.
For financial assets maturing within one year from
the balance sheet date, the carrying amounts
approximate fair value due to the short maturity of
these instruments.
Impairment of financial assets excluding
investments in subsidiary
Loss allowance for expected credit losses is
recognised for financial assets measured at
amortised cost and fair value through other
comprehensive income.
The company recognises impairment loss on trade
receivables using expected credit loss model,
which involves use of provision matrix constructed
on the basis of historical credit loss experience as
permitted under Ind AS 109 - Impairment loss on
investments.
For financial assets whose credit risk has not
significantly increased since initial recognition,
loss allowance equal to twelve months expected
credit losses is recognised. Loss allowance equal
to the lifetime expected credit losses is recognised
if the credit risk on the financial instruments has
significantly increased since initial recognition.
The Company de-recognises a financial asset only
when the contractual rights to the cash flows
from the financial asset expire, or it transfers the
financial asset and the transfer qualifies for de¬
recognition under Ind AS 109.
If the Company neither transfers nor retains
substantially all the risks and rewards of ownership
and continues to control the transferred asset,
the Company recognises its retained interest in
the assets and an associated liability for amounts
it may have to pay.
If the Company retains substantially all the risks
and rewards of ownership of a transferred financial
asset, the Company continues to recognise the
financial asset and also recognises a collateralised
borrowing for the proceeds received.
On de-recognition of a financial asset in its entirety,
the difference between the carrying amount
measured at the date of de-recognition and the
consideration received is recognised in statement
of profit or loss.
(b) Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued
by the Company are classified according to the
substance of the contractual arrangements
entered into and the definitions of a financial
liability and an equity instrument.
Equity Instruments
An equity instrument is any contract that
evidences a residual interest in the assets of
the Company after deducting all of its liabilities.
Equity instruments are recorded at the proceeds
received, net of direct issue costs.
Financial Liabilities
Financial liabilities are initially measured at fair value,
net of transaction costs, and are subsequently
measured at amortised cost, using the effective
interest rate method where the time value of
money is significant. Interest bearing bank loans,
overdrafts and issued debt are initially measured
at fair value and are subsequently measured at
amortised cost using the effective interest rate
method. Any difference between the proceeds
(net of transaction costs) and the settlement or
redemption of borrowings is recognised over the
term of the borrowings in the statement of profit
and loss.
For trade and other payables maturing within one
year from the balance sheet date, the carrying
amounts approximate fair value due to the short
maturity of these instruments.
i. Financial guarantee contracts
Financial guarantee contracts issued by the
Company are those contracts that require a
payment to be made to reimburse the holder for a
loss it incurs because the specified debtor fails to
make a payment when due in accordance with the
terms of a debt instrument. Financial guarantee
contracts are recognised initially as a liability at
fair value, adjusted for transaction costs that
are directly attributable to the issuance of the
guarantee. Subsequently, the liability is measured
at the higher of the amount of loss allowance
determined as per impairment requirements of Ind
AS 109 and the amount recognised less cumulative
amortisation.
ii. De-recognition
A financial liability is derecognised when the
obligation under the liability is discharged or
cancelled or expires. When an existing financial
liability is replaced by another from the same lender
on substantially different terms, or the terms
of an existing liability are substantially modified,
such an exchange or modification is treated as
the de-recognition of the original liability and the
recognition of a new liability. The difference in the
respective carrying amounts is recognised in the
statement of profit and loss.
Off-setting of financial instruments
Financial assets and financial liabilities are offset
and the net amount is reported in the standalone
balance sheet if there is a currently enforceable
legal right to offset the recognised amounts
and there is an intention to settle on a net basis,
to realise the assets and settle the liabilities
simultaneously.
The Company holds derivative financial instruments
such as foreign exchange forward put/call option
to mitigate the risk of changes in exchange rates
on foreign currency exposures.
(a) Financial assets or financial liabilities, at
fair value through profit or loss
This category has derivative financial assets or
liabilities which are not designated as hedges.
Any derivative that is either not designated a
hedge, or is so designated but is ineffective as
per Ind AS 109, is categorized as a financial asset
or financial liability, at fair value through profit or
loss. Derivatives not designated as hedges are
recognized initially at fair value and attributable
transaction costs are recognized in net profit in
the statement of profit and loss when incurred.
Subsequent to initial recognition, these derivatives
are measured at fair value through profit or loss
and the resulting gains or losses are included in the
statement of profit and loss.
(b) Cash flow hedge accounting
The Company designates certain foreign exchange
forward contracts as cash flow hedges to mitigate
the risk of foreign exchange exposure on highly
probable forecast cash transactions. When a
derivative is designated as a cash flow hedging
instrument, the effective portion of changes in the
fair value of the derivative is recognized in other
comprehensive income and accumulated in the
cash flow hedging reserve. Any ineffective portion
of changes in the fair value of the derivative is
recognized immediately in the net profit in the
statement of profit and loss. If the hedging
instrument no longer meets the criteria for hedge
accounting, then hedge accounting is discontinued
prospectively. If the hedging instrument expires or
is sold, terminated or exercised, the cumulative gain
or loss on the hedging instrument recognized in
cash flow hedging reserve till the period the hedge
was effective remains in cash flow hedging reserve
until the forecasted transaction occurs. The
cumulative gain or loss previously recognized in the
cash flow hedging reserve is transferred to the net
profit in the statement of profit and loss upon the
occurrence of the related forecasted transaction.
If the forecasted transaction is no longer expected
to occur, then the amount accumulated in cash
flow hedging reserve is reclassified to net profit in
the standalone statement of profit and loss.
q. Impairment of non-financial assets
As at the end of each accounting year, the
company reviews the carrying amounts of its
PPE, investment property, intangible assets and
investments in subsidiary companies to determine
whether there is any indication that those assets
have suffered an impairment loss. If such indication
exists, the said assets are tested for impairment
so as to determine the impairment loss, if any.
Goodwill and the intangible assets with indefinite
life are tested for impairment each year.
Impairment loss is recognised when the carrying
amount of an asset exceeds its recoverable
amount. Recoverable amount is determined:
(i) in the case of an individual asset, at the higher
of the net selling price and the value in use,
and
(ii) in the case of a cash generating unit (a
group of assets that generates identified,
independent cash flows), at the higher of the
cash generating unit's net selling price and the
value in use.
(The amount of value in use is determined as the
present value of estimated future cash flows
from the continuing use of an asset and from
its disposal at the end of its useful life. For this
purpose, the discount rate (pre-tax) is determined
based on the weighted average cost of capital of
the company suitably adjusted for risks specified
to the estimated cash flows of the asset).
For this purpose, a cash generating unit is
ascertained as the smallest identifiable group of
assets that generates cash inflows that are largely
independent of the cash inflows from other assets
or groups of assets.
If recoverable amount of an asset (or cash
generating unit) is estimated to be less than
its carrying amount, such deficit is recognised
immediately in the Statement of Profit and Loss
as impairment loss and the carrying amount of the
asset (or cash generating unit) is reduced to its
recoverable amount.
When an impairment loss subsequently reverses, the
carrying amount of the asset (or cash generating
unit) is increased to the revised estimate of its
recoverable amount, but so that the increased
carrying amount does not exceed the carrying
amount that would have been determined had
no impairment loss is recognised for the asset (or
cash generating unit) in prior years. A reversal of
an impairment loss is recognised immediately in the
Statement of Profit and Loss.
r. Cash and Cash equivalent
Cash and cash equivalent in the standalone
balance sheet comprise cash at banks and on hand
and short-term deposits with an original maturity
of three months or less, which are subject to an
insignificant risk of changes in value.
For the purpose of the statement of cash flows,
cash and cash equivalents consist of cash and
short-term deposits, as defined above, net
of outstanding bank overdrafts as they are
considered an integral part of the Company's cash
management.
The Statement of Cash Flows has been prepared
under the Indirect method as set out in IND AS
- 7 on Statement of Cash Flows notified under
section 133 of the Companies Act, 2013 (the Act)
[Companies (Indian Accounting Standards) Rules,
2015], as amended.
(b) Terms/rights attached to equity shares
The rights, powers and preferences relating to each class of share capital and the qualifications, limitations
and restrictions thereof are contained in the Memorandum and Articles of Association of the Company.
The principal rights are as below:
(i) The Company has only one class of equity shares having a par value of ' 5 per share. Each holder of
equity is entitled to one vote per share.
(ii) The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of
Directors is subject to the approval of the shareholders in ensuing Annual General Meeting, except in
case of interim dividend.
(iii) In event of liquidation of the Company, the holders of equity shares would be entitled to receive
remaining assets of the Company, after distribution of all preferential amounts. However no such
preferential amounts exist currently. The distribution will be in proportion to the number of equity
shares held by the shareholders.
Terms and conditions of the above financial liabilities:
(i) Trade payables are non interest bearing.
(ii) For explanations on the Company's credit risk management processes, Refer note 43.
(iii) Trade payables for micro and small enterprises are non interest bearing and are normally settled on 0
days to 45 days credit terms.
(iv) Trade payables other than micro and small enterprises are non interest bearing and are normally
settled on 0 days to 90 days credit terms.
(v) Trade payables due to related parties are disclosed in note no. 40.
1The information as required to be disclosed pursuant under the Micro, Small and Medium Enterprises
Development Act, 2006 (MSMED Act, 2006) has been determined to the extent such parties have been
identified on the basis of information available with the Company.
There are no disputed trade payables as at and for the years ended March 31, 2025 and March 31, 2024.
Below is the list of undisputed trade payables outstanding for following periods from the due date.
Packing credit loan (Indian rupee and USD) from banks carries interest at upto 6 months Marginal cost of
funds based lending rate ('MCLR')/Secured Overnight SOFR 0% to 1.75 % (March 31, 2024: upto 6 months
Marginal cost of funds based lending rate ('MCLR') 0% to 0.75%) and interest is payable monthly.
Packing credit loans (Indian rupee and USD) from all the banks are secured by first pari passu charge on
current assets of the Company including hypothecation of inventory including stores and spares (including
goods in transit/goods awaiting bank negotiation/goods with processors meant for export) and trade
receivables and fixed assets of the Company.
Bill discounting from banks carries interest upto 6 months MCLR/SOFR plus upto 1.75 % for indian rupee
bills discounting (March 31, 2024: upto 0.75% for Indian Rupee bills discounting) and interest is payable on
transaction basis.
Bill discounting loans from all the banks are secured
by first pari passu charge on current assets of the
Company including hypothecation of inventory
including stores and spares (including goods in
transit/goods awaiting bank negotiation/goods
with processors meant for export) and trade
receivables and fixed assets of the Company.
Working Capital demand loans from banks carries
interest ranging from: not applicable (March 31,
2024: 8.30% to 8.75%).
Bank overdraft from banks carries interest linked
to at 1 Year MCLR plus applicable spreads ranging
from 0.75% to 3.00% p.a. (March 31, 2024: at 1 year
MCLR plus applicable spreads ranging from 0.75%
to 3.00% p.a.). Interest is payable on monthly basis.
Bank overdraft is secured by pari passu
hypothecation of inventory including stores and
spares (including goods in transit/goods awaiting
bank negotiation/goods with processors meant for
export) and trade receivables of the Company and
first pari passu charge on current assets of the
Company.
The Company has provided the factory land to
certain banks as collateral for non fund based
working capital facility availed by the Company.
The Company has further provided the following as
the collateral to the Multiple Banking Arrangement
(MBA) lenders towards the borrowings availed by
the Company and as mentioned in the aforesaid
notes.
a) Pari passu charge on certain factory building
located in Bangalore and Mysore owned by the
Company
b) Pari passu charge on plant and machinery and
certain movable assets of the Company
During the year, the Company has availed the
interest subvention for 6 months i.e. from April
2024 to June 2024 (March 31, 2024: 12 months i.e.
from April 2023 to March 2024) under Interest
Equalisation Scheme for pre and post shipment
rupee export credit of Reserve Bank of India.
Repayment of current borrowings and
Interest:
During the year and as on the balance sheet date,
the Company has not defaulted in repayment of
current borrowings and interest there on.
Loans from related parties:
During the year and as on the balance sheet date,
the Company has not taken any borrowings from
related parties.
33. INCOME TAX
The Company is subject to income tax in India on
the basis of its standalone financial statements.
The Company can claim tax exemptions/deductions
under specific sections of the Income Tax Act, 1961
subject to fulfilment of prescribed conditions, as
may be applicable. As per the Income Tax Act, 1961,
the Company is liable to pay income tax based on
higher of regular income tax payable or the amount
payable based on the provisions applicable for
Minimum Alternate Tax (MAT). MAT paid in excess
of regular income tax during a year can be carried
forward for a period of fifteen years and can be
offset against future tax liabilities arising from
regular income tax.
Section 115BAA has newly been inserted in
the Income Tax Act, 1961 vide Taxation Laws
(Amendment) Ordinance, 2019 (subsequently
enacted on December 11, 2019 as The Taxation Laws
(Amendment) Act, 2019) which provides a domestic
company with an irrevocable option to pay tax at
a lower rate of 22% (effective rate of 25.168%) for
any previous year relevant to the assessment year
beginning on or after April 1, 2020. The lower rate
shall be applicable subject to certain conditions,
including that the total income should be computed
without claiming specific deduction or exemptions.
MAT would be inapplicable to companies opting to
apply the lower tax rate.
Business loss can be carried forward for a maximum
period of eight assessment years immediately
succeeding the assessment year to which the loss
pertains. Unabsorbed depreciation can be carried
forward for an indefinite period.
34. EARNINGS PER SHARE (EPS)
Basic EPS amounts are calculated by dividing the profit/(loss) for the year attributable to equity holders
of the Company by the weighted average number of equity shares outstanding during the year. Partly
paid equity shares are treated as a fraction of an equity share to the extent that they were entitled
to participate in dividends relative to a fully paid equity share during the reporting period. The weighted
average number of equity shares outstanding during the period is adjusted for events such as bonus issue,
bonus element in a rights issue, share spilt and reverse share split (consolidation of shares) that have
changed the number of equity shares outstanding, without a corresponding change in resources.
Diluted EPS amounts are calculated by dividing the loss attributable to equity holders of the Company by
the weighted average number of equity shares outstanding during the year plus the weighted average
number of equity shares that would be issued on conversion of all the dilutive potential equity shares into
equity shares.
markets, their fair value is measured using valuation
techniques including the DCF model. The inputs to
these models are taken from observable markets
where possible, but where this is not feasible, a
degree of judgement is required in establishing
fair values. Judgements include considerations of
inputs such as liquidity risk, credit risk and volatility.
Changes in assumptions about these factors
could affect the reported fair value of financial
instruments.
f. Contingencies
Contingent liabilities may arise from the ordinary
course of business in relation to claims against the
Company, including legal and contractual claims.
By their nature, contingencies will be resolved only
when one or more uncertain future events occur
or fail to occur. The assessment of the existence,
and potential quantum, of contingencies inherently
involves the exercise of significant judgement and
the use of estimates regarding the outcome of
future events.
In respect of bank guarantees provided by the
Company to third parties, the Company considers
that it is more likely than not that such an amount
will not be payable under the guarantees provided.
g. Defined benefit obligations
The cost of the defined benefit gratuity plan and
the present value of the gratuity obligation are
determined using actuarial valuations. An actuarial
valuation involves making various assumptions
that may differ from actual developments in
the future. These include the determination of
the discount rate, future salary increases and
mortality rates. Due to the complexities involved in
the valuation and its long-term nature, a defined
benefit obligation is highly sensitive to changes in
these assumptions. All assumptions are reviewed
at each reporting date.
The parameter most subject to change is the
discount rate. In determining the appropriate
discount rate for plans operated in India, the
management considers the interest rates of
government bonds.
The mortality rate is based on publicly available
mortality tables for India. Those mortality tables
tend to change only at interval in response to
demographic changes. Future salary increases and
gratuity increases are based on expected future
inflation rates.
Further details about gratuity obligations are given
in note 39.
h. Provision for obsolete inventory
Inventory write downs are accounted, considering
the nature of inventory, ageing, liquidation plan
and net realisable value. These write downs are
recognised as an expense and are included in
"(Increase)/decrease in inventories of finished
goods and work-in-progress" in the statement of
profit and loss.
i. Expected credit losses on financial assets
The impairment provisions of financial assets
and contract assets are based on assumptions
about risk of default and expected timing of
collection. The Company uses judgment in making
these assumptions and selecting the inputs
to the impairment calculation, based on the
Company's past history of collections, customer's
creditworthiness, existing market conditions as
well as forward looking estimates at the end of
each reporting period.
j. Non current assets held for sale
Non current assets held for sale are measured
at the lower of carrying amount or fair value less
costs to sell. Determination of fair value involves
management estimate. Fair value of assets held
for sale is determined using valuation technique
involving unobservable inputs. Judgement is
involved in estimating future cash flow, determining
discount rate etc.
k. Employee share based payments
Company's share based payments to employees
primarily consist of Employee Stock Option Plans
('ESOPs') and Restricted Stock Units ('RSUs').
The share-based compensation expense is
determined based on the Company's estimate
of fair value at grant date of the ESOPs/RSUs
granted. The Company estimates fair value of
ESOPs/RSUs using Black-Scholes-Merton ('BSM')
option pricing model. The BSM model is based on
various assumptions including expected volatility,
expected life, interest rate.
l. Revenue from Export incentives
For measurement of income from the export
incentives, significant estimates and judgments
are made which include, eligibility of the export
transaction for the claim, the timing of processing
such claim and its subsequent realization and also
the rate notified/to be notified by the government
authorities.
36. SEGMENT INFORMATION- DISCLOSURE
PURSUANT TO IND AS 108 'OPERATING
SEGMENT'
(a) Basis of identifying operating
segments:
Operating segments are identified as those
components of the Company (a) that engage
in business activities to earn revenues and incur
expenses (including transactions with any of the
Company's other components); (b) whose operating
results are regularly reviewed by the Company's
Chief Executive Officer to make decisions about
resource allocation and performance assessment
and (c) for which discrete financial information is
available.
The accounting policies consistently used in the
preparation of the financial statements are also
applied to record revenue and expenditure in
individual segments. Assets, liabilities, revenues
and direct expenses in relation to segments are
categorised based on items that are individually
identifiable to that segment, while other items,
wherever allocable, are apportioned to the
segments on an appropriate basis. Certain items
are not specifically allocable to individual segments
as the underlying services are used interchangeably.
(b) The Company is engaged in a single business
segment of sale of garment and hence no
additional disclosures are required.
37. COMMITMENTS AND CONTINGENCIES
I. Leases
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116.
Identification of a lease requires significant judgement. The Company uses judgement in assessing whether
a contract (or part of contract) include a lease, the lease term (including anticipated renewals), the
applicable discount rate, variable lease payments whether are in-substance fixed. The judgement involves
assessment of whether the asset included in the contract is a fully or partly identified asset based on
the facts and circumstances, whether the contract include a lease and nonlease component and if so,
separation thereof for the purpose of recognition and measurement, determination of lease term basis,
inter alia the non-cancellable period of lease and whether the lessee intends to opt for continuing with
the use of the asset upon the expiry thereof, and whether the lease payments are fixed or variable or a
combination of both. The Company records the lease liability at the present value of the lease payments
discounted at the incremental borrowing rate.
II. Contingencies
In the ordinary course of business, the Company faces claims and assertions by various parties. The
Company assesses such claims and assertions and monitors the legal environment on an ongoing basis
with the assistance of external legal counsel, wherever necessary. The Company records a liability for any
claims where a potential loss is probable and capable of being estimated and discloses such matters in
its financial statements, if material. For potential losses that are considered possible, but not probable,
the Company provides disclosure in the financial statements but does not record a liability in its accounts
unless the loss becomes probable.
The following is a description of claims and assertions where a potential loss is possible, but not probable.
The Company believes that none of the contingencies described below would have a material adverse
effect on the Company's financial condition, results of operations or cash flows.
IV. Corporate guarantee
The Company has provided corporate guarantee to the banks for the credit limits obtained by the wholly
owned subsidiaries namely, "Gokaldas Exports FZCO, United Arab Emirates" and "Nava Apparels L.L.C-FZ,
United Arab Emirates" and to step down subsidiary "Amibros S.A., Panama (operating under the name of
Atraco Industrial Enterprise, United Arab Emirates)" respectively.
Also, refer note 55 on Corporate guarantee to financial institutions on behalf of BRFL Textiles Private
Limited.
38. HEDGING ACTIVITIES
Cash flow hedges
Foreign exchange forward contracts measured at fair value through OCI are designated as hedging
instruments in cash flow hedges of forecast sales in foreign currency. These forecast transactions are
highly probable, and they comprise about 100% of the Company's total expected sales in foreign currency.
The foreign exchange forward contract balances vary with the level of expected foreign currency sales
and changes in foreign exchange forward rates.
42. SHARE- BASED PAYMENTS
The Company's employee benefit plans are as
summarised below:
In September 2010, the shareholders of the
Company approved Stock Option Plan (ESOP 2010)
in accordance with the guidelines issued by the
Securities and Exchange Board of India (SEBI) for
Employees Stock Options Plan. The plan covered
all employees of the Company including employees
of subsidiaries and directors and provided for the
issue of 1,718,800 shares of ' 5 each.
Further, the shareholders of the Company by way of
special resolution dated August 26, 2018 approved
Employee Restricted Stock Unit Plan (RSU 2018) in
accordance with the guidelines issued by the SEBI
for employees Stock Options Plan. The plan covered
all employees of the Company including employees
of subsidiaries, directors and provided for the issue
of 2,133,040 shares of ' 5 each.
Further, the shareholders of the Company by way
of special resolution dated April 03, 2022 and
February 29, 2024 approved Stock Option Plan
(ESOP 2022) in accordance with the guidelines
issued by the SEBI for employees Stock Options
Plan. The plan covered all the employees of the
Company including employees of subsidiairies,
directors and provided for the issue of 4,500,000
shares of ' 5 each.
The fair value of the stock options is estimated
at the grant date using a Black-Scholes-Merton
('BSM') option pricing model. The BSM option pricing
model incorporates various assumptions including
expected volatility, expected life and interest
rates. The Company recognises share based
compensation cost as expense over the requisite
service period.
The contractual term of each option granted is
ranging from two to three years. There are no cash
settlement alternatives. The Company does not
have a past practice of cash settlement for these
share options.
The carrying value of financial assets represents
the maximum credit risk. The maximum exposure
to credit risk was ' 135,610.82 lakhs, ' 85,024.24
lakhs, as at March 31, 2025 and March 31, 2024
respectively, being the total carrying value of trade
receivables, balances with bank, bank deposits,
investments other than investments in subsidiaries
and other financial assets.
Customer credit risk is managed by each business
unit subject to the Company's established policy,
procedures and control relating to customer
credit risk management. An impairment analysis is
performed at each reporting date on an individual
basis for major customers. The Company does not
hold collateral as security.
With respect to Trade receivables, the Company has
constituted the terms to review the receivables on
periodic basis and to take necessary mitigations,
wherever required. The Company creates allowance
for all unsecured receivables based on lifetime
expected credit loss based on a provision matrix.
The provision matrix takes into account historical
credit loss experience and is adjusted for forward
looking information. The expected credit loss
allowance is based on the ageing of the receivables
that are due and rates used in the provision matrix.
Credit risk from balances with bank and financial
institutions is managed by the Company's treasury
department in accordance with the Company's
policy. Investments of surplus funds are made
only with approved counterparties and within
credit limits assigned to each counterparty. The
limits are set to minimise the concentration of
risks and therefore mitigate financial loss through
counterparty's potential failure to make payments.
Liquidity risk
Liquidity risk refers to the risk that the Company
cannot meet its financial obligations. The objective
of liquidity risk management is to maintain sufficient
liquidity and ensure that funds are available for use
as per requirements. The Company has obtained
fund and non-fund based working capital lines
from various banks. The Company invests its
surplus funds in bank fixed deposit and government
securities, which carry no or low market risk.
The Company monitors its risk of a shortage of
funds on a regular basis. The Company's objective
is to maintain a balance between continuity of
funding and flexibility through the use of bank
overdrafts, bank borrowings etc. The Company
assessed the concentration of risk with respect to
refinancing its debt and concluded it to be low.
Equity Price risk
Equity Price Risk is related to the change in fair value of the investments in equity securities. Company's
investments in equity securities, including investments held for sale, are subject to changes in fair value
of investments. The carrying value of investments represents the maximum equity risk. The maximum
exposure to equity price risk was ' 34,808.49 lakhs and ' 34,807.65 lakhs as on March 31, 2025 and March 31,
2024 respectively, being the carrying value (net of provisions) of investments in unquoted equity shares.
The risk is arising primarily on account of the Company's investment in a foreign associate.
44. CAPITAL MANAGEMENT
The Company's capital management is intended to create value for shareholders by facilitating the
meeting of long term and short term goals of the Company.
The Company determines the amount of capital required on the basis of annual business plan coupled
with long term and short term strategic investment and expansion plans. The funding needs are met
through equity, cash generated from operations and sale of certain assets, long term and short term
bank borrowings and issue of securities.
For the purpose of the Company's capital management, capital includes issued equity capital, share
premium and all other equity reserves attributable to the equity holders of the Company.
The Company manages its capital structure and makes adjustments in light of changes in economic
conditions and the requirements of the financial covenants. To maintain or adjust the capital structure,
the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue
new shares. The Company monitors capital using a gearing ratio, which is total debt divided by total
capital plus total debt. The Company's policy is to keep the gearing ratio at an optimum level to ensure
that the debt related covenant are complied with.
45. The Company is in process of taking
necessary steps to comply with the Transfer
Pricing requirements relating to the preparation &
maintenance of the Transfer Pricing documentation
with respect to the specified domestic transactions
entered into by the Company during financial year
ended March 31, 2025. The Management is of the
opinion that the specified domestic transactions
are at arm's length and hence the aforesaid
legislation will not have any impact on the
standalone financial statements, particularly on
the amount of tax expense and that of provision
for taxation.
46. The Company assessed the fair value less cost
of sale of the investment in an associate held for
sale. Change in the regulatory environment and
the market conditions effecting the associate has
adversely affected the fair value of the Company's
investment. The Company has written down the
carrying value of the asset by recognizing an
impairment loss of ' 626.56 lakhs as an exceptional
charge during the year ended March 31, 2019. The
Company continues to make efforts to mitigate the
loss by selling such investment in the near future,
which could result in a partial or full reversal of the
impairment loss. Further to related developments
during the year on this matter, including claims filed
by the Company for the recovery, the Company
has reassessed that it is appropriate to reclassify
the Investment from 'Associate' to 'Others'.
47. The Company had filed petition with the
Company Law Board for compounding of offence
u/s. 297 of the erstwhile Companies Act, 1956 for
the transactions entered with CMS Info Systems
Private Limited between July 2009 to October 2011
and as at date, the petition is pending with the
Company Law Board.
For periods subsequent to October 2011, the
Company had filed an application with Central
Government, Ministry of Corporate Affairs, seeking
its approval u/s. 297(1) of the erstwhile Companies
Act, 1956 for entering into contract with CMS Info
Systems Private Limited which is pending approval.
48. The Board of Directors of the Company at their
meeting held on May 25, 2023 had recommended
a final dividend of '.1/- (one rupee only) per equity
share (i.e. 20% of face value of ' 5 per equity
share) for the financial year ended March 31,
2023. The dividend recommended by the Board of
Directors was approved by the shareholders at the
Annual General Meeting of the Company held on
September 20, 2023 and was subsequently paid.
49. During the year ended March 31,2024, the Holding
Company has acquired 100% shareholding in Matrix
Design and Industries Private Limited ("MDIPL”) for
a consideration of ' 32,306 lakhs settled through
a combination of cash consideration of ' 7,557
lakhs and preferential allotment of 27,31,366 equity
shares of Gokaldas Exports Limited at a price of '
906.14 per share. The acquisition resulted in transfer
of control w.e.f. March 13, 2024 and accounted for in
accordance with Ind AS 103, Business Combination.
50. For the period/days of the respective covid
lockdowns imposed by the government during FY
2020-21, the Company had evaluated the various
directions, circulars and orders issued by relevant
government authorities regarding payment
of wages to employees, accordingly had paid
certain ex-gratia amount to eligible employees.
Management evaluated further directions, orders
issued by relevant government authorities and
understand that the matter should be settled
based on mutual discussion between relevant
stakeholders. Pending conclusion of such matter,
management believes that the Company continues
to be in compliance with the directives and will
reassess this periodically.
51. During the year ended March 31, 2024, the
Company had executed certain agreements with
Clean Max Enviro Energy Solutions Private limited and
Clean Max Celeste Private Limited (SPV), including
a share purchase agreement for investment in a
renewable Captive Generating Plant. This involved
an investment in a Special Purpose Vehicle (SPV),
a private limited company through an acquisition
of 26% stake through an investment of ' 315 lakhs
(Indian Rupees Three hundred and fifteen lakhs) by
way of an equity share capital contribution in the
SPV, the arrangement also involves certain power
purchase arrangements, basis the evaluation of
the terms of the aforementioned agreements, the
Company has assessed and classified this as an
investment and is recorded at fair value.
52. On April 23, 2024, the Company had raised
money by way of Qualified Institutional Placement
('QIP') and allotted 77,41,935 equity shares of
face value ' 5/- each to the eligible qualified
institutional buyers ('QIB') at a price of ' 775/-per
share (including a premium of ' 770 per share)
aggregating to ' 60,000 lakhs. This issue was
made in accordance with SEBI (Issue of Capital
and Disclosure Requirements) Regulation, 2018. As
per the QIP placement document, the Company
has appropriately adjusted the expenses from
Securities Premium account. As of March 31, 2025,
the Company has utilised 100% of the QIP proceeds
towards the purpose for which the funds were
raised as per the QIP placement document. There
has been no deviation or variation in the utilisation
of these funds from the objects stated at the time
of the issue.
53. The Company has provided corporate
guarantees to financial institutions on behalf of its
wholly owned subsidiaries Gokaldas Exports FZCO
and Nava Apparels L.L.C. - FZ amounting to USD 23
million (March 31,2024: USD 34 million) and USD 7 million
(March 31, 2024: USD 7 million) respectively for loans
availed by them, towards the acquisition of ATRACO
Group entities. Additionally the Company has
advanced loans amounting to USD 7 million (' 5,821
lakhs) (March 31, 2024: USD 7 million (' 5,821 lakhs))
and USD 8 million (' 6,652 lakhs) (March 31, 2024: USD
8 million (' 6,652 lakhs)) to Gokaldas Exports FZCO
and Nava Apparels L.L.C. - FZ. respectively for the
said purposes.
54. As approved by the Board of Directors in their
meeting held on June 19, 2024, Company entered into
Investment Agreement and Securities Subscription
Agreement with BRFL Textiles Private Limited
(""BTPL"") for Subscription of Optionally Convertible
Debentures (OCDs). Upto the period ended March
31, 2025, the Company has subscribed to multiple
tranches aggregating to 17,50,000 OCDs (Face
value of ' 1,000 each, with a cumulative coupon
rate of 20.35% per annum compounded annually)
for a consideration of ' 17,500 lakhs. Additionally,
the terms of the agreements provide certain
rights and commitments on the Company towards
acquiring securities from existing shareholders of
BTPL subject to certain conditions. Accordingly,
the Company has recognised the investment of '
17,500 lakhs as on March 31, 2025.
The Company has also recognised derivative
financial asset and liability against the call and
put option as on March 31, 2025 based on the
investment agreement entered between the
Company and BTPL.
55. During the year ended March 31, 2025, pursuant
to approval of the board of directors of the
Company, the Company has provided corporate
guarantees to financial institutions on behalf of
BTPL amounting to ' 275 Crores for securing the
loans availed by BTPL.
56. At the meeting held on February 07, 2025,
the Board of the Directors of the Company have
approved the acquisition of 9,37,69,382 Equity
shares and 1,57,89,474 Non-Cumulative Compulsorily
Convertible Preference Shares of BTPL, constituting
13.30% shareholding of BTPL on a fully diluted basis,
pursuant to the Investment Agreement dated June
19, 2024 entered by the Company with BTPL and the
existing shareholders of BTPL. Subsequent to the
year end, in April 2025, the Company has completed
the acquisition of the aforementioned instruments
for an aggregate consideration of ' 5,567.10 Lakhs.
57. During the year, the Company has subscribed
to one equity share of USD 1,000, fully paid up, of
Gokaldas Exports Corporation, USA (a wholly owned
subsidiary of Gokaldas Exports Limited).
58. During the period ended March 31, 2025,
employees exercised stock options aggregating
to 341,666 equity shares in accordance with the
Company's stock option scheme as approved by
the Nomination and Remuneration Committee. The
Company has allotted 341,666 equity shares of ' 5
each, fully paid-up.
59. Additional regulatory information required by
Schedule III
a. No proceedings have been initiated on
or are pending against the Company for
holding benami property under the Benami
Transactions (Prohibition) Act, 1988 (45 of 1988)
and Rules made thereunder.
b. The Company has borrowings from banks on
the basis of security of current assets. The
quarterly returns or statements of current
assets filed by the Company with banks are in
agreement with the books of accounts.
c. The Company has not been declared as wilful
defaulter by any bank or financial institution or
government or any government authority.
d. The Company has no transactions with the
companies struck off under Companies Act,
2013 or Companies Act, 1956.
e. The Company has complied with the number
of layers prescribed under the Companies Act,
2013.
f. The Company has not entered into any scheme
of arrangement which has an accounting
impact on current or previous financial year.
g. During the year the Company (Ultimate
Beneficiary) provided loans (refer note 54) to
its wholly owned subsidiaries 'Gokaldas Exports
FZCO' and 'Nava Apparels LLC' (Intermediaries).
The terms of these transactions have been
documented in writing. On January 03, 2024,
the Intermediaries directly invested in other
entities identified by the Ultimate Beneficiary
for the purpose of acquiring the ATRACO
group. There has been no violation or non¬
compliance with the relevant provisions of the
Foreign Exchange Management Act, 1999 (42
of 1999), Prevention of Money-Laundering act,
2002 (15 of 2003), or the Companies Act, 2013
in relation to these transactions.
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
on behalf of the ultimate beneficiaries.
h. There is no income surrendered or disclosed
as income during the current or previous year
in the tax assessments under the Income Tax
Act, 1961, that has not been recorded in the
books of account.
i. The Company has not traded or invested in
crypto currency or virtual currency during the
current or previous year.
j. The Company has not revalued its property,
plant and equipment (including right-of-use
assets) or intangible assets or both during the
current or previous year.
k. The Company has used an accounting
software for maintaining its books of account
during the year ended March 31, 2025, which
includes a feature of recording an audit trail
(edit log). However, the audit trail feature was
not enabled throughout the year for certain
relevant transactions at the application level.
Further, the audit trail feature was not enabled
at the database level to log any direct changes
made outside the application. Wherever
enabled, the audit trail feature has operated
during the year for relevant transactions
recorded in the accounting software. No
instances of tampering with the audit trail
feature were noted for the period during which
the feature was active.
The Company has also used a payroll software
operated by a third-party software service
provider during the year. The Company does
not have an independent auditor's report
or assurance from the service organization.
As the software is externally managed, the
Company does not have direct over sight of
certain system features, including the audit
trail (edit log) functionality and does not have
visibility into whether this feature was enabled
and consistently operational for all relevant
transactions, or whether any modifications
occurred in the audit trail.
Further, the Company has used a separate
inventory software for maintaining inventory
records, which does not have a feature of
recording an audit trail (edit log). Accordingly,
the audit trail could not be enabled or
preserved or tampered with in respect of this
software.
60. UNDISCLOSED INCOME
The Company does not have any undisclosed
income which is not recorded in the books of
account that has been surrendered or disclosed as
income during the year March 31, 2024 and March
31, 2023 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.
61. The Company does not have any charges or
satisfaction which is yet to be registered with ROC
beyond the statutory period.
62. The Indian Parliament had approved the Code
on Social Security, 2020. The Ministry of Labour
and Employment has notified the draft rules under
the Code on Social Security, 2020 on November 13,
2020 inviting objections and suggestions, if any,
from the stakeholders. The draft rules provide
for operationalization of provisions in the Code
on Social Security, 2020 relating to Employees'
Provident Fund, Employees' State Insurance
Corporation, Gratuity, Maternity Benefit, Social
Security and Cess in respect of Building and
Other Construction Workers, Social Security for
Unorganised Workers, Gig Workers and Platform
Workers. The Company will assess the impact and
will give appropriate accounting treatment in its
financial statements in the period in which the
Code on Social Security, 2020 (including the related
rules framed thereunder) becomes effective.
63. The statement of audited standalone
financial statements for the year ended March 31,
2025 have been reviewed by the Audit Committee
in their meeting on May 21, 2025 and approved by
the Board of Directors in their meeting held on
May 21, 2025.
64. Certain amounts (currency value or
percentages) shown in the various tables and
paragraphs included in the standalone financial
statements have been rounded off or truncated
as deemed appropriate by the management of the
Company.
65. Previous year's figures have been regrouped/
reclassified, wherever necessary to confirm to the
current period/year's classification.
As per our report of even date
For M S K A & Associates For and on behalf of the Board of Directors of
Chartered Accountants Gokaldas Exports Limited
ICAI Firm registration number: 105047W CIN: L18101KA2004PLC033475
Pankaj S Bhauwala Mathew Cyriac Sivaramakrishnan Ganapathi
Partner Chairman Vice Chairman and Managing Director
Membership No.: 233552 DIN: 01903606 DIN: 07954560
Place: Mumbai Place: Bengaluru
Sathyamurthy A Gourish Hegde
Chief Financial Officer Company Secretary
Membership No: A44775
Place: Bengaluru Place: Bengaluru Place: Bengaluru
Date: May 21, 2025 Date: May 21, 2025 Date: May 21, 2025
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