m) Provisions and contingent liabilities
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses
Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pretax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
Contingent Liabilities are disclosed in respect of possible obligations that arise from past eventsbut their existence will be confirmed by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the Company or where any present obligation cannot be measured in terms of future outflow of resources or where a reliable estimate of the obligation cannot bemade.
(n) Revenue recognition
Revenue is measured at the value of the consideration received or receivable. Amounts disclosed as revenue are exclusive of GST and net of returns, trade allowances, rebates, discounts, and value added taxes.
The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefitswill flow to the Company and specific criteria have been met for each of the Company's activities as described below.
Sale of goods
The Company earns revenue primarily from sale of manufactured goods (fabric, home textiles and garments). Ith as applied the principles laid downinIndAS115. Incase of sale to domestic customers, sale is made on ex-factory basis and revenue is recognized when the goods are dispatched from the factory gate. In case of export sales, revenue is recognized on shipment date, when performance obligation is met.
Revenue from services
Revenue from services is recognized in the accounting period in which the services are rendered.
Export Incentive
Export incentives under various schemes notified by government are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same.
Dividend Income
Dividend income from investment is recognized when the company's right to receive is established which generally occurs when the shareholders approve the dividend.
Insurance claims
Insurance claims are accounted for to the extent the company is reasonably certain of their ultimate collection.
(0) Employee benefits
(1) Short-term obligations
Short term employee benefits (other than termination benefits) which are payable within 12 months after the end of the period in which the employees render service are accounted on accrual basis. Company's contributions paid / payable during the \year to Provident Fund and ESIC arerecognized in the statement of profit and loss account.All leave encashment dues for the year are settled within the same year.
(ii) Employmentretirement benefits
a) Contribution to Provident Fund has been made to the respective authorities.
b) Gratuity liability as per the Actuarial Valuation has been provided in the accounts as atthe year end.
(p) Foreign currency translation
1. Functional and presentation currency
The financial statements are presented in Indian rupee (INR), which is Company's functional and presentation currency.
2. Transactions and balances
Transactions in foreign currencies are recognised at the prevailing exchange rates on the transaction dates. Realised gains and losses on settlement of foreign currency transactions are recognised in the Statement of Profit and Loss.
Monetary foreign currency assets and liabilities at the year-end are translated at the year-end exchange rates and the resultant exchange differences are recognised in the Statement of Profit and Loss.
(q) Income tax
The income tax expense or credit for the period is the tax payable on the current period's taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
Deferred income tax is provided in full, using the liability method on temporary differences arising between the tax bases of assets and liabilities and their carrying amount in the financial statement. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are excepted to apply when the related deferred income tax assets is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses, only if, it is probable that future taxable amounts will beavailable toutilisethose temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the Company has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Current and deferred tax is recognised in the Statement of Profit and Loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively Minimum Alternate Taxcredit is recognised as deferred tax asset onlywhen and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.
(r) Earnings Per Share
Basic earnings per share
Basic earnings per share are calculated by dividing:
-the profit attributable to owners of the Company
-by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares.
Diluted earnings per share Diluted earnings per share adjust the figures used in the determination of basic earnings per share to take into account:
- the after-income tax effect of interest and other financing costs associated with dilutive potential equity shares, and -the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
(s) Government Grants
Grants from the government are recognized at their fair value where there is reasonable assurance that the grant will be received, and the Company will comply with all attached conditions
Government grants relating to the purchase of property, plant and equipment are included in noncurrent liabilities as deferred income and are credited to Profit and Loss on a straight - line basis over the expected lives of related assets and presented within other income.
(t) Critical estimates and judgments
The preparation of financial statements requires the use of accounting estimates which by definition will seldom equal the actual results.
Management also need to exercise judgment in applying the company’s accounting policies.
This note provides an overview of the areas that involved a higher degree of judgment or complexity, and items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
The areas involving critical estimates or judgment are:
Estimation of current tax expenses and Payable.
Estimation of defined benefit obligation.
Note:- 35 : FAIR VALUE MEASUREMENT
Financial Instrument by category and hierarchy
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:
1. Fair value of cash and short-term deposits, trade and other short-term receivables, trade payables, other current liabilities, short term loans from banks and other financial institutions approximate their carrying amounts largely due to short term maturities of these instruments.
2. 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 fair values for loans and security deposits were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counter party credit risk
The fair values of non-current borrowings are based on discounted cash flows using a current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy due to the used of unobservable inputs, including own credit risk
For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
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.
Level 3: techniques which use inputs that have significant effect on the recorded fair value that are not based on observable market data.
Note: - 35 : FINANCIAL RISK MANAGEMENT Credit risk
Credit risk is the risk that counterparty will not meet its obligation under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to creditrisk from its operation activities (primarily trade receivables) and from its financing activities, foreign exchange transactions and other financial instruments.
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 occurringon asset asat the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forwarding-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 creditrisk on other financial instruments of the same counterparty,
v. Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Company
Trade Receivables
Customer credit risk is managed subject to the Company's established policy, procedures and control relating to customer credit risk management. Trade receivables are non-interest bearing and generally on 7 days to 180 days credit term. Credit limits are established for all customers based on internal rating criteria. Outstanding customer receivables are regularly monitored. The Company has no concentration of credit risk as the customer base is widely distributed both economically and geographically.
An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on actual incurred historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company does not hold collateral security. The Company evaluated the concentration of risk with respect to trade receivables as low,as its customers are located in serveral jurisdictions and industries and operate in largely independent markets.
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 statement 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.
The Company manages market risk through a treasury department, which evaluates and exercises independent control over the entire process of market risk management. The treasury department recommends risk management objectives and policies, which are approved by Senior Management and the Audit Committee. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures like foreign exchange forward contracts, borrowing strategies and ensuring compliance with market risk limits and policies.
Liquidity Risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility in funding by maintaining availability under committed credit lines. Management monitors rolling forecasts of the Company's liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows.
Note :- 36 : CAPITAL RISK MANAGEMENT Risk Management
The Company aim to manages its capital efficiently so as to safeguard its ability to continue as a going concern and to optimise returns to our shareholders. The capital structure of the Companyis based on management's judgementof the appropriate balance of key elements in order tomeet its strategic and day-to-day needs. We consider the amount of capital in proportion to risk and manage the capital structure in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares. The Company's policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business. The Company will take appropriate steps in order to maintain, or if necessary, adjust, its capital structure.
Explanations to items included in computing the above ratios
1. Current Ratio: Current Assets over current liabilities
2. Debit-Equity Ratio: Debt(includes Borrowing and current & non-current lease liabilities) over total shareholders’ equity (including reserves & surplus)
3. Debt Service Coverage Ratio: EBIT Depreciation Profit or Loss on sale of assets/investments over lease payments (Principal & Interest) Loans repayments (Principal & Interest)
4. Return on Equity Ratio: PAT over average Equity (including Reserve & Surplus)
5. Inventory Turnover Ratio: Revenue from operations over average Inventory
6. Trade Receivables Turnover Ratio: Revenue from operations over average Trade Receivables (after impairment)
7. Trade Payables Turnover Ratio: Purchases over average Turnover Payable
8. Net Capital Turnover Ratio: Revenue from Operations
9. Net Profit Ratio: Net profit tax over Revenue from operations
10. Return on Capital Employed: PBIT over Capital Employed (Capital Employed includes total shareholders’ equity, borrowings, short term and long-term lease liabilities and Deferred Tax Liability)
11. Return on Investment: Interest Income Dividend Income Realised gain on investment over average investments after impairment and other bank deposits.
Fhe Non-GAAP Measures presented may not be comparable to similarly titled measures reported by other companies. rurther, it should be noted that EBIDTA, EDITDA Margin, Gross Margin, Net Worth, Return on Net Worth, Net Asset Value Per Equity Share), Debt Equity Ratio, Return on Capital Employed, Return on Equity is not measure of operating Derformance or liquidity defined by generally accepted accounting principles and may not be comparable to similarly titled measures presented by other companies.
ADDITIONAL REQULATORY INFORMATION MOTE:- 45: Loans and advances.
The company has not granted any loans or advances in the nature of loans, to promoters, directors, KMPs and the related Darties (as defined under Companies Act, 2013), either severally or jointly with any other person.
MOTE:- 46: Relationship with strike off companies.
Company does not have any transactions with the companies “Striken off” or in the process of strike off.
MOTE: 47: Scheme of arrangements
The company has not entered into any “Scheme of Arrangements” during the year ended 31st March 2023.
MOTE: 48: Details of Benami Property Held
The company does not hold any benami property as defined under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made there under. No proceeding has been initiated or pending against the company for holding any Denami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made there under.
NOTE:- 49 : Compliance with number of layer of companies.
The Company is in compliance with the number of layers prescribed under clause (87) of section 2 of the Companies Act read with the Companies (Restriction on number of Layers) Rules, 2017
NOTE:- 50: The Company has not traded or invested in crypto currency or virtual currency.
NOTE:-51: Registration of charges or satisfaction with Registrar of Companies. beyond the statutory period
NOTE:-52: The Company was not declared as “wilful defaulter” by any bank or financial Institution or other lender. Registration of charges or satisfaction with Registrar of Companies. beyond the statutory period
Note : 53 The company has no such transactions 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 Income Tax Act, 1961).
Note 54: The company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the intermediary shall:
i. Directly or indirectly lend or invest in other persons or entities indentified 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.
Note 55: 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 indentified 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.
NOTE:- 56: Title deeds of Properties
Titles deeds of all the immovable properties in the Financial Statements are held in the name of the company only.
NOTE:- 57: Capital-work-in progress.
There is no Capital-work-in progress as on the date of balance sheet as at 31st March 2023. There is no project which is temporarily suspended.
NOTE:- 58: Intangible Assets under development.
There are no any intangible assets under development as on the date of balance sheet as at 31st March 2023.
NOTE:-59: The Company has not done any revaluation of Property, Plant & Equipment or Intangible assets.
Note 60: Approved Financial Statements:
The Board of Directors of the company has reviewed the realizable value of all the current assets and has confirmed that the value of such assets in the ordinary course of business will not be less than the value at which these are recognized in the financial statements. In addition, theboard has also confirmed the carrying value of the non-current assets in the financial statements. The Board, duly taking into account all the relevant disclosures made, has approved these financial statements in its meeting held on 25th May 2023.
Note 61: Stock statement
The Company has borrowed from banks on the basis of security of current assets. Quarterly returns or statements of current assets filed by the Company are not in agreement with books of accounts. Summary of reconciliation and reasons for material discrepancies as at 31st March 2023 is given below.
The aforesaid difference, were due to the declaration made to the bank before financial reporting closure process. The predominant reason for trade receivables being higher in financial statement are the difference is due to the credit notes, discount and other year end provisions in financial statement. Similarly with respect to inventory being higher in financial statement is because of stock valuation as part of year end cut-off procedures.
As per our report of even date For and on behalf of the Board of Directors
For GOPALAIYER AND SUBRAMANIAN KG BAALAKRISHNAN B SRIRAMULU B SRIHARI
Chartered Accountants Executive Chairman Managing Director Managing Director
DIN :00002174 DIN : 00002560 DIN : 00002556
R MAHADEVAN P KRISHNAVENI S MANICKAM
Partner Company Secretary Chief Financial Officer
Place : Coimbatore Membership No.027497 Date : 25.05.2023
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