(J) Provisions
Provisions are recognised when the Company has a
present obligation (legal or constructive) as a result of a
past event, for which 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 obligation. The expense relating to
a provision is presented in the statement of profit and loss.
If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects
current market assessments of the time value of money
and the risks specific to the liability. When discounting is
used, the increase in the provision due to the passage of
time is recognised as a finance cost.
(K) Employee benefits
I. Short term employee benefits
Short-term employee benefit obligations such as salaries,
incentives, special awards, medical benefits are measured
on an undiscounted basis and are expensed as the related
service is provided.
II. Post-employment obligations
The Company operates the following post¬
employment schemes:
a. Defined contribution plan
Retirement benefits in the form of provident fund
is a defined contribution scheme. The Company
recognises contribution payable to the provident
fund scheme as an expenditure, when an employee
renders the related service. The Company has no
obligation, other than the contribution payable to the
provident fund.
b. Defined benefit plan
The cost of providing benefits under the defined
benefit plan is determined using the projected unit
credit method. Remeasurements of the net defined
benefit liability, which comprise actuarial gains and
losses, the return on plan assets (excluding interest)
and the effect of the asset ceiling (if any, excluding
interest), are recognised in OCI. Remeasurements are
not reclassified to profit or loss in subsequent periods.
Past service costs are recognised in the statement of
profit and loss on the earlier of:
- The date of the plan amendment or
curtailment, and
- The date that the Group recognises related
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 in
the net defined benefit obligation as an expense in
the statement of profit and loss:
- Service costs comprising current service
costs, past-service costs, gains and losses on
curtailments and non routine settlements; and
- Net interest expense or income.
A liability for a termination benefit is recognised at the
earlier of when the entity can no longer withdraw the
offer of the termination benefit and when the entity
recognises any related restructuring costs.
The liability for the defined benefit gratuity plan is
determined based on actuarial valuations carried out
by an independent actuary as at year end. 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 government bonds yield rates for the life of the
obligation. The mortality rate is based on publicly
available mortality tables. 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.
III. Other long term employee benefit
The Company has leave encashment policy for all the
employees. Liabilities for such benefits are provided on the
basis of valuation, as at the balance sheet date, carried out
by an independent actuary. The actuarial valuation method
used by an independent actuary for measuring the liability
is the projected unit credit method. Actuarial gain and loss
are recognised in the statement of profit and loss during
the year in which they occur.
The Company presents the leave as the current liability
in the balance sheet to the extent it does not have the
unconditional / legal and contractual right to defer its
settlement for twelve months after the reporting date.
Where the Company has the unconditional / legal and
contractual right to defer its settlement beyond twelve
months after the reporting date, it is presented as the non
current liability in Balance sheet.
IV. Share-based payments
Share-based compensation benefits are provided to
employees via Employee Stock Appreciation Rights Plan
whereby employees render services as consideration for
equity instruments (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 Employee stock appreciation rights ('ESAR')
reserve in equity, over the period in which the performance
and/or service 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 expense or credit in the statement of profit and loss 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. For share-based
payment awards with non-vesting conditions, the grant
date fair value of the share-based payment is measured
to reflect such conditions and there is no true-up for
differences between expected and actual outcomes.
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.
(L) Taxation
Income tax expense comprises of current tax and deferred
tax. Income tax expense is recognised in the statement of
profit and loss, except when it relates to items recognised
in the other comprehensive income or items recognised
directly in the equity. In such cases, the income tax expense
is also recognised in the other comprehensive income or
directly in the equity as applicable.
Current taxes
The current income tax charge is calculated on the basis
of the tax laws enacted or substantively enacted at the
end of the reporting period. Management periodically
evaluates positions taken in the tax returns with respect to
situations in which applicable tax regulations are subject
to interpretation or under dispute with authorities and
establishes provisions where appropriate.
Current income tax assets and liabilities are measured
at the amount expected to be recovered from or paid to
the taxation authorities. Current tax assets and current tax
liabilities are offset only if there is a legally enforceable
right to set off the recognised amounts, and it is intended
to realise the asset and settle the liabilities on a net basis
or simultaneously.
Deferred taxes
Deferred tax is recognised in respect of temporary
differences between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes
at the reporting date.
Deferred tax is recognised for all taxable temporary
differences, except for:
• Temporary difference arising on the initial recognition
of goodwill or an asset or liability in a transaction
that is not a business combination and, at the time
of the transaction, affects neither the accounting nor
taxable profit or loss
• Taxable temporary differences associated with
investments in subsidiaries when the timing of
the reversal of the temporary differences can be
controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible
temporary differences, the carry forward of unused tax
credits and any unused tax losses. Deferred tax assets are
recognised to the extent that it is probable that taxable
profit will be available against which the deductible
temporary differences, and the carry forward of unused tax
credits and unused tax losses can be utilised.
For operations carried out under tax holiday period (Section
80IB and 80IE benefits of Income Tax Act, 1961), deferred
tax assets or liabilities, if any, have been recognised for the
tax consequences of those temporary differences between
the carrying values of assets and liabilities and their
respective tax bases that reverse after the tax holiday ends.
The carrying amount of deferred tax assets is reviewed
at each reporting date and reduced to the extent that it
is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred tax asset to be
utilised. Unrecognised deferred tax assets are re-assessed
at each reporting date and are recognised to the extent
that it has become probable that future taxable profits will
allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the year when the asset
is realised or the liability is settled, based on tax rates (and
tax laws) that have been enacted or substantively enacted
at the reporting date.
Deferred tax relating to items recognised outside profit or
loss is recognised outside profit or loss (either in OCI or in
equity). Deferred tax items are recognised in correlation to
the underlying transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if
a legally enforceable right exists to offset current tax assets
against current tax liabilities and the deferred taxes relate
to the same taxable entity and the same taxation authority.
Minimum alternate tax (MAT)
MAT expense in a year is charged to the statement of
profit and loss as current tax for the year. The MAT credit
available only to the extent that it is probable that the
Company will pay normal income tax during the specified
period, i.e., the period for which MAT credit is allowed to
be carried forward and is disclosed as deferred tax asset.
In the year in which the Company recognises MAT credit
as an asset, it is created by way of credit to the statement
of profit and loss and shown as part of deferred tax asset.
The Company reviews the “MAT credit entitlement" asset
at each reporting date and writes down the asset to the
extent that it is no longer probable that it will pay normal
tax during the specified period.
(M) Foreign currencies
Transactions in foreign currencies are initially recorded
by the Company at its functional currency spot rate at
the date the transaction first qualifies for recognition.
Exchange differences arising on settlement or restatement
of transactions, are recognised as income or expense
in the year in which they arise. Monetary assets and
liabilities denominated in foreign currencies are translated
at the functional currency spot rates of exchange at the
reporting date. Exchange differences arising on settlement
or translation of monetary items are recognised in the
statement of profit and loss. Non-monetary items that are
measured in terms of historical cost in a foreign currency
are translated using the exchange rates at the dates of the
initial transactions.
(N) Fair value measurement
Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability
takes place either:
• In the principal market for the asset or liability; or
• In the absence of a principal market, in the most
advantageous market for the asset or liability.
The principal or the most advantageous market must be
accessible by the Company.
The fair value of an asset or a liability is measured using
the assumptions that market participants would use
when pricing the asset or liability, assuming that market
participants act in their economic best interest. A fair value
measurement of a non-financial asset takes into account a
market participant's ability to generate economic benefits
by using the asset in its highest and best use or by selling
it to another market participant that would use the asset in
its highest and best use.
The Company uses valuation techniques that are
appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximising the
use of relevant observable inputs and minimising the use
of unobservable inputs.
All assets and liabilities for which fair value is measured
or disclosed in the financial statements are categorised
within the fair value hierarchy, described as follows, based
on the lowest level input that is significant to the fair value
measurement as a whole:
• Level 1 — Quoted (unadjusted) market prices in active
markets for identical assets or liabilities
• Level 2 — Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is directly or indirectly observable
• Level 3 — Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is unobservable
For assets and liabilities that are recognised in the
financial statements on a recurring basis, the Company
determines whether transfers have occurred between
levels in the hierarchy by re-assessing categorisation
(based on the lowest level input that is significant to the
fair value measurement as a whole) at the end of each
reporting period.
For the purpose of fair value disclosures, the Company has
determined classes of assets and liabilities on the basis of
the nature, characteristics and risks of the asset or liability
and the level of the fair value hierarchy as explained
above. Other fair value related disclosures are given in the
relevant notes.
(O) Financial instruments
I) Recognition and initial measurement
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity. Trade receivables are initially
recognised when they are originated. All other financial
assets and financial liabilities are initially recognised when
the Company becomes a party to the contractual provisions
of the instrument.
A financial assets (unless it is a trade receivable without
a significant financing component) or financial liabilities is
initially measured at fair value plus or minus, for an item
not at fair value through profit and loss (FVTPL), transaction
costs that are directly attributable to its acquisition or
issue. A trade receivable without a significant financing
component is initially measured at the transaction price.
II) Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified
as measured at:
- amortised cost;
- FVOCI - debt investment;
- FVOCI - equity investment; or
- FVTPL.
A financial asset is measured at amortised cost if it
meets both of the following conditions and is not
designated as at FVTPL:
- it is held within a business model whose objective is
to hold assets to collect contractual cash flows; and
- its contractual terms give rise on specified dates to
cash flows that are solely payments of principal and
interest on the principal amount outstanding.
These assets are subsequently measured at amortised
cost using the effective interest method. The amortised
cost is reduced by impairment losses. Interest income,
foreign exchange gains and losses and impairment are
recognised in the statement of profit or loss. Any gain or
loss on derecognition is recognised in the statement of
profit or loss.
A debt investment is measured at FVOCI if it meets both of
the following conditions and is not designated as at FVTPL:
- it is held within a business model whose objective is
achieved by both collecting contractual cash flows
and selling financial assets; and
- its contractual terms give rise on specified dates to
cash flows that are solely payments of principal and
interest on the principal amount outstanding.
These assets are subsequently measured at fair value.
Interest income calculated using the effective interest
method, foreign exchange gains and losses and impairment
are recognised in the statement of profit or loss. Other net
gains and losses are recognised in OCI. On derecognition,
gains and losses accumulated in OCI are reclassified to the
statement of profit or loss.
On initial recognition of an equity investment that is not
held for trading, the Company may irrevocably elect to
present subsequent changes in the investment's fair
value in OCI. This election is made on an investment-by¬
investment basis.
These assets are subsequently measured at fair value.
Dividends are recognised as income in the statement
of profit or loss unless the dividend clearly represents a
recovery of part of the cost of the investment. Other net
gains and losses are recognised in OCI and are never
reclassified to the statement of profit or loss.
All financial assets not classified as measured at amortised
cost or FVOCI as described above are measured at FVTPL.
On initial recognition, the Company may irrevocably
designate a financial asset that otherwise meets the
requirements to be measured at amortised cost or at FVOCI
as at FVTPL if doing so eliminates or significantly reduces
an accounting mismatch that would otherwise arise.
Financial liabilities
Financial liabilities are classified as measured at amortised
cost or FVTPL. A financial liability is classified as at FVTPL
if it is classified as held-for-trading, it is a derivative or it is
designated as such on initial recognition. Financial liabilities
at FVTPL are measured at fair value and net gains and
losses, including any interest expense, are recognised in
the statement of profit or loss. Other financial liabilities
are subsequently measured at amortised cost using the
effective interest method. Interest expense and foreign
exchange gains and losses are recognised in the statement
of profit or loss. Any gain or loss on derecognition is also
recognised in the statement of profit or loss.
III) De-recognition
Financial assets
The Company derecognises a financial asset when the
contractual rights to the cash flows from the financial asset
expire, or it transfers the rights to receive the contractual
cash flows in a transaction in which substantially all of
the risks and rewards of ownership of the financial asset
are transferred or in which the Company neither transfers
nor retains substantially all of the risks and rewards of
ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers
assets recognised on its balance sheet, but retains either all
or substantially all of the risks and rewards of the transferred
assets, the transferred assets are not derecognised.
Financial liabilities
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.
IV) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the
net amount is reported in the balance sheet if there is a
currently enforceable legal right to offset the recognised
amounts and there is an intention either to settle on a
net basis or to realise the assets and settle the liabilities
simultaneously.
V) Impairment of financial assets
In accordance with Ind AS 109, the Company applies
expected credit loss (ECL) model for measurement and
recognition of impairment loss on the following financial
assets and credit risk exposure:
a) Financial assets that are debt instruments, and are
measured at amortised cost e.g., loans, debt securities,
deposits, trade receivables and bank balance
b) Financial assets that are measured at FVTOCI
c) Trade receivables or any contractual right to receive
cash or another financial asset that result from
transactions that are within the scope of Ind AS 115
The Company follows ‘simplified approach' for recognition
of impairment loss allowance on Trade receivables.
The application of simplified approach does not require
the Company to track changes in credit risk. Rather, it
recognises impairment loss allowance based on lifetime
ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial
assets and risk exposure, the Company determines that
whether there has been a significant increase in the
credit risk since initial recognition. If credit risk has not
increased significantly, 12-month ECL is used to provide
for impairment loss. However, if credit risk has increased
significantly, lifetime ECL is used. If, in a subsequent period,
credit quality of the instrument improves such that there
is no longer a significant increase in credit risk since
initial recognition, then the entity reverts to recognising
impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting
from all possible default events over the expected life of
a financial instrument. The 12-month ECL is a portion of
the lifetime ECL which results from default events that are
possible within 12 months after the reporting date.
ECL is the difference between all contractual cash flows
that are due to the Company in accordance with the
contract and all the cash flows that the entity expects
to receive (i.e., all cash shortfalls), discounted at the
original EIR. When estimating the cash flows, an entity is
required to consider:
• All contractual terms of the financial instrument
(including prepayment, extension, call and similar
options) over the expected life of the financial
instrument. However, in rare cases when the expected
life of the financial instrument cannot be estimated
reliably, then the entity is required to use the
remaining contractual term of the financial instrument
• Cash flows from the sale of collateral held or
other credit enhancements that are integral to the
contractual terms
As a practical expedient, the Company uses a provision
matrix to determine impairment loss allowance on
portfolio of its trade receivables. The provision matrix is
based on its historically observed default rates over the
expected life of the trade receivables and is adjusted for
forward-looking estimates. At every reporting date, the
historical observed default rates are updated and changes
in the forward-looking estimates are analysed.
ECL impairment loss allowance (or reversal) recognized
during the period is recognized as (income) / expense
in the statement of profit and loss (P&L). Financial assets
measured as at amortised cost, contractual revenue
receivables and lease receivables: ECL is presented as
an allowance, i.e., as an integral part of the measurement
of those assets in the balance sheet. The allowance
reduces the net carrying amount. Until the asset meets
write-off criteria, the Company does not reduce impairment
allowance from the gross carrying amount.
For assessing increase in credit risk and impairment loss,
the Company combines financial instruments on the basis
of shared credit risk characteristics with the objective of
facilitating an analysis that is designed to enable significant
increases in credit risk to be identified on a timely basis.
The Company does not have any purchased or originated
credit-impaired (POCI) financial assets, i.e., financial assets
which are credit impaired on purchase/ origination.
(P) Cash and cash equivalents
Cash and cash equivalents consist of 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 cash flow
statement, 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.
(Q) Borrowing cost
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily takes
a substantial period of time to get ready for its intended use
or sale are capitalised as part of the cost of the respective
asset. All other borrowing costs are expensed in the period
they are incurred. Borrowing cost includes interest and
other costs that an entity incurs in connection with the
borrowing of funds. Borrowing cost also includes exchange
differences to the extent regarded as an adjustment to the
borrowing costs.
(R) Earnings per share
Basic earnings per share is calculated by dividing the
net profit or loss for the period attributable to equity
shareholders by the weighted average number of equity
shares outstanding during the 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 split, and reverse share split
(consolidation of shares) that have changed the number
of equity shares outstanding, without a corresponding
change in resources.
For the purpose of calculating diluted earnings per share,
the net profit or loss for the period attributable to equity
shareholders and the weighted average number of shares
outstanding during the period are adjusted for the effects
of all dilutive potential equity shares.
(S) Contingent liability and contingent assets
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 not wholly within 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
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 financial statements.
Contingent asset is not recognised in financial statements
since this may result in the recognition of income that may
never be realised. However, when the realisation of income
is virtually certain, then the related asset is not a contingent
asset and is recognized.
Contingent liabilities and contingent assets are reviewed at
each balance sheet date.
(T) Interest Income
For all debt instruments measured at amortised cost,
interest income is recorded using the Effective Interest
Rate ('EIR'). EIR is the rate that exactly discounts the
estimated future cash receipts over the expected life
of the financial instrument or a shorter period, where
appropriate, to the gross carrying amount of the financial
asset. When calculating the EIR, the Company estimates
the expected cash flows by considering all the contractual
terms of the financial instrument (for example, prepayment,
extension, call and similar options) but does not consider
the expected credit losses.
Note 2.3: Recent Accounting Pronouncements
A. Recent Pronouncements
On 7 May 2025 and 13 August 2025, the Ministry of
Corporate Affairs (MCA), notified Companies (Indian
Accounting Standards) Amendment Rules, 2025 and
Companies (Indian Accounting Standards) Second
Amendment Rules, 2025, respectively, effective on or
after 1 April 2025.
These amendments did not impact the financial statements
of the Company.
B. Standards/ Specific amendments issued but not yet
effective
Ind AS 1 - Presentation of Financial Statements - For
accounting periods beginning on or after 1 April 2026,
when an entity breaches any covenant of a long-term loan
arrangement on or before the end of the reporting period
with the effect that the liability becomes payable on demand,
it classifies the liability as current, even if the lender agreed,
after the reporting period and before the approval of the
financial statements for issue, not to demand payment as a
consequence of the breach. An entity classifies the liability
as current because, at the end of the reporting period, it
does not have the right to defer its settlement for at least
12 months after that date. However, an entity classifies the
liability as non-current if the lender agreed by the end of
the reporting period to provide a period of grace ending at
least 12 months after the reporting period, within which the
entity can rectify the breach and during which the lender
cannot demand immediate repayment.
This amendment is to be applied retrospectively for annual
reporting periods beginning on or after 1 April 2026, in
accordance with Ind AS 8, Accounting Policies, Accounting
Estimates and Errors.
Notes
(i) I n accordance with IND AS 36 “Impairment of Assets" the Company has assigned the carrying value of goodwill to the Avadh
business (Cash Generating Unit ('CGU')). Impairment testing of such Goodwill is performed by applying the value in use approach
i.e. using cash flow projections based on financial budgets covering a period of 5 years.
Based on the results of the Goodwill impairment test, the estimated value in use for CGU was higher than the respective carrying
amount, and accordingly no impairment loss has been recognised during the year (31 March 2025 - Nil). Management believes
that any reasonably possible change in the key assumptions on which recoverable amount is based would not cause the aggregate
carrying amount to exceed the aggregate recoverable amount of the Goodwill.
The key assumptions used in the estimation of the recoverable amount are set out below. The values assigned to the key assumptions
represent management's assessment of future trends in the relevant industry and are based on historical data from both external and
internal sources.
(c) Terms and rights attached to equity shares
The Company has only one class of equity shares having par value of ' 5 (31 March 2025: ' 5) per share. Each equity share
carries one vote and is entitled to dividend that may be declared by the Board of Directors, which shall be subject to the approval
of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets, after distribution
of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Note
1. The Secured term loan from bank carries a rate of interest of 3M T Bill rate spread. Rate of interest as on 31 March 2026 :
6.80% (31 March 2025 : 8.05%). Interest to be served at the end of each month. The term loan is repayable in 20 equal quarterly
instalments commencing from 31 December 2024. The term loan is secured by first charge on current assets (inventory and
receivables) with carrying amount of ' 15,270.35 Lakhs (31 March 2025 : ' 16,606.32 Lakhs).
2. The secured short term working capital loan from a bank carried a rate of interest of Repo rate spread. This loan has been repaid
during the year. Rate of interest as on 31 March 2025 : 8.65%, interest was to be serviced as and when charged. The said loan
was repayable in six months from the date of reimbursement of loan . The short term loan was secured by fixed deposits lien
marked in favour of bank with carrying amount on 31 March 2025 : ' 2,179.75 Lakhs.
3. The unsecured short term working capital loan from a bank carried a rate of interest of Repo rate spread. This loan has been
repaid during the year. Rate of interest as on 31 March 2025 : 8.65%, interest was to be serviced as and when charged. The said
loan was repayable on demand and secured by personal guarantee of Mr. Arvind Kumar Mehta (Chairman and Executive Director).
Note 34: Employee benefits
(a) Defined contribution plans
a. Provident and other fund
The Company makes contributions to provident and other funds which are in the nature of defined contribution for
eligible employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs.
The Company has no obligation, other than the contribution payable to the fund. The Company recognises contribution
payable to the provident fund scheme as an expense, when an employee renders the related service.
Details of asset-liability matching strategy
There are no minimum funding requirements for a gratuity benefits plan in India and there is no compulsion on the part of the
Company to fully or partially pre-fund the liabilities under the plan. Since the liabilities are unfunded, there is no asset-liability
matching strategy deviced for the plan.
Note 35: Leases
i) Company as a lessee
The Company has lease contracts for land, building and manufacturing facilities with lease term ranging between 1 to 10 years.
There are certain lease contracts that include extension and termination options. These options are negotiated by management
to provide flexibility in managing the leased-asset portfolio and align with the Company's business needs. Management exercises
judgement in determining whether these extension and termination options are reasonably certain to be exercised.
The Company also has certain leases of office premises and warehouses with lease term of 12 months or less and those of low
value. The Company applies the ‘short-term lease' and ‘lease of low-value assets' recognition exemptions as available in Ind AS
116 'Leases' for these leases.
Notes:
1. a. During the year ended 31 March 2024, the Company received a demand order in respect of the period 2017-2021
from the office of Joint Commissioner (Appeals), Commercial Tax department “GST" Madhya Pradesh regarding the
classification issue for its product category “Fried Namkeen-Fryums". The Company is in process of filing appeal
before the GSTAT, Tribunal.
b. During the year ended 31 March 2025, the Company received a show cause notice from the office of the Directorate
General of GST Intelligence, Karnataka regarding the classification issue for its product category Extruded Namkeen
(including Fried Pellet Namkeens “Fryums") under the Goods and Service Tax Act. This notice was issued for all the
GST registrations of the Company across different states for the period July 2017 to March 2024. Based on the
information available with the Company, this matter is an industry vide issue and similar notices had also been issued
to other key players of the industry. The Company filed a writ petition before the Hon'ble High Court of Karnataka and
obtained stay on the proceedings of the said Show Cause Notice. No demand order has been issued in this matter till
date. Further, the pending writ petition has been listed with similar writs filed by other key players of the industry and
the same is pending for disposal as at the year end.
The Company has assessed the impact of above matters on its financial statements and based on past favorable
judgements by the Hon'ble Supreme Court of India on similar classification matter under the erstwhile indirect tax
regime and opinion obtained from its tax advisors, it is of the view that the contention of the tax authorities in these
matters is not tenable and unlikely to be retained and it is only possible but not probable that outflow of economic
resources will be required.
Terms and conditions of transactions with related parties
The Company's material related party transactions and outstanding balances are with related parties with whom the Company's
routinely enters into transactions in the ordinary course of business at arm's length price.
Note 39: Segment information
The Company considers only one reportable segment - Snacks food. The Management monitors the operating results of this segment
for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated
based on profit or loss and is measured consistently with profit or loss in the financial statements.
C] Notes
1. Segment revenue in the geographical segments considered for disclosure are as follows:
a) Revenue within India includes sales to customers located within India.
b) Revenue outside India includes sales to customers located outside India.
2. The Company does not have any customer, with whom revenue from transactions is more than 10% of Company's total revenue.
3. Non current assets consist of property, plant and equipment, capital work-in-progress, goodwill, intangible assets, capital
advances and intangible assets under development.
Note 40: Government grants
Government grant consists of GST incentive amounting to ' 114.30 lakhs (31 March 2025: ' 171.92 lakhs) and capital subsidy
amounting to ' 274.40 lakhs (31 March 2025: ' 293.48 lakhs). There are no unfulfilled conditions or contingencies attached
to these grants.
a. On November 21, 2025, the Government of India notified the four Labour Codes - the Code on Wages, 2019, the Industrial
Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020
- consolidating 29 existing labour laws. The Ministry of Labour & Employment published draft Central Rules and FAQs to enable
assessment of the financial impact due to changes in regulations. The Company has assessed and disclosed the incremental
impact of these changes in line with the guidance provided by the Institute of Chartered Accountants of India. Considering the
materiality and regulatory-driven, non-recurring nature of this impact, the Company has presented such incremental impact as
Statutory impact of new Labour Codes under Exceptional Items. The incremental impact consisting of gratuity of ' 210.97 lacs
and compensated absences of ' 24.18 Lacs primarily arises due to change in wage definition. The Company continues to monitor
the finalisation of Central / State Rules and clarifications from the Government on other aspects of the Labour Code and would
provide appropriate accounting effect on the basis of such developments as needed.
b. During the year ended 31 March 2026, Company received an insurance claim amounting to ' 77.17 Lakhs. The claim was filed
in an earlier year with respect to the loss of finished goods inventory due to a fire incident that occured on 6 June 2023 at the
warehouse of a Co- manufacturing plant situated at Hoogly, West Bengal.
c. During the year ended 31 March 2025, a fire occurred at one of the Company's plants located in Jammu on 30 December 2024.
This incident significantly affected the building, plant and machinery, leasehold improvements, and inventories at the site; however,
there were no human casualties. The total financial loss resulting from this event was estimated at ' 3,433.53 lakhs. The Company
had adequate insurance coverage to recover its loss and initiated the requisite claim process with the Insurance Company.
During the year ended 31 March 2025, the Company also received an insurance claim amounting to ' 892.81 Lakhs. This claim was
filed in an earlier year with respect to the loss of property, plant and equipment, and inventories due to a fire accident that occurred on
3 November 2021 at one of the Company's plants located in Howrah, West Bengal.
Given the nature and impact of these matters on the Company's financial statements, the cumulative impact of the above amounts
has been disclosed as an exceptional item in the Statement of Profit and Loss for the year ended 31 March 2026 and 31 March 2025.
Note 42: Employee Stock Appreciation Rights
The Prataap Employees Stock Appreciation Rights Plan, 2018 (“ESAR") was approved by the shareholders of the Company at their
Annual General Meeting held on 28 September 2018. Pursuant to the said approval, the Nomination and Remuneration Committee of
the Board of Directors, at its respective meetings granted Stock Appreciation Rights (“SARs") to eligible employees of the Company
under the ESAR.
The SARs entitle eligible employees to receive equity shares of the Company upon satisfaction of the service conditions attached to
the respective grants and subsequent exercise of the SARs.
The SARs vest in accordance with the terms specified in the respective grant letters and, in most cases, vest in four equal annual
instalments, commencing at the end of one year from the date of grant. The number of equity shares to be issued upon exercise shall
be determined based on the difference between the base price as specified under the ESAR and the market price of the Company's
equity shares on the date of exercise. Vested SARs may be exercised within a period of three years from the date of vesting. SARs that
are not exercised within the prescribed exercise period shall lapse and be treated as expired.
The fair value of the financial assets and liabilities is 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. Loans and other financial assets are evaluated by the Company based on parameters such as interest rates, individual credit
worthiness of the counterparties and expected duration of realisability as at the balance sheet date.
The Company determines the fair value of its financial instruments on the basis of the following hierarchy:
Level 1: The fair value of financial instruments that are quoted in active markets are determined on the basis of quoted price for
identical assets or liabilities.
Level 2: The fair value of financial instruments that are not traded in an active market are determined using valuation techniques based
on observable market data.
Level 3: The fair value of financial instruments that are measured on the basis of entity specific valuations using inputs that are not
based on observable market data (unobservable inputs).
There are no transfers between different fair value hierarchy levels in 31 March 2026 and 31 March 2025.
Note 45: Financial risk management objectives and policies
The Company's principal financial liabilities comprise borrowings, lease liabilities, trade and other payables. The main purpose of these
financial liabilities is to finance the Company's operations. The Company's principal financial assets include loans, subsidy receivable,
cash and cash equivalents, trade receivables and other receivables that are derived directly from its operations.
The Company is exposed to market risks, credit risks and liquidity risks. The Company's senior management oversees the management
of these risks. The Company's senior management provides assurance that the Company's financial risk activities are governed by
appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company's
policies and risk objectives. The Board of Directors review and agree policies for managing each of these risks.
Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices.
Market risk comprises three types of risks namely interest rate risk, currency risk and price risk, such as equity price risk. The Company
is not significantly exposed to currency risk and price risk whereas the exposure to interest risk is given below.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's borrowings.
Interest rate sensitivity
The sensitivity analysis below has been determined based on exposure to interest rates for term loans that have floating rate at the
end of the reporting period and the stipulated change taking place at the beginning of the financial year and held constant throughout
the reporting period.
If the interest rates had been 100 basis points higher or lower and all the other variables were held constant, the effect on Interest
expense for the respective financial years and consequent effect on Company's profit in that financial year would have been as below:
Credit Risk
Credit risk is the risk that the counterparty will not meet its obligations under a financial instrument or customer contract, leading
to a financial loss. The Company is exposed to credit risk arising on its trade receivables and loan to employees under Employee
Stock Purchase Plan. Based on the historical experience and credit profile of counterparties (scheduled banks, government and
employees), the Company does not expect any significant risk of defaults arising on financial assets except trade receivables and loan
to employees under Employee Stock Purchase Plan i.e. loans to employees, subsidy receivables, cash and cash equivalents and other
financial assets.
Refer Note a and b below for credit risk and other information in respect of trade receivables and Loan to employees under Employee
Stock Purchase Plan respectively.
a. Trade receivables
Customer credit is managed by the Company through established policies and procedures related to customer credit risk
management. Each outstanding customer receivables are regularly monitored and if outstanding is above due date, the further
shipments are controlled and can only be released if there is a proper justification.
The Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables.
The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is
adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes
in the forward-looking estimates are analysed. Based on the industry practices and the business environment in which the
Company operate, management considers the trade receivables are in default (credit impaired) if the payments are more than
365 days past due.
The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several
jurisdictions and operate in largely independent markets and are monitored at periodical intervals. The maximum exposure to
credit risk at the reporting date is the carrying value of each class of financial assets.
b. Loan to employees under Employee Stock Purchase Plan
Loans provided by the Company to eligible employees under the Employee Stock Purchase Plan (ESPP) to facilitate the purchase
of Company shares are governed by the specified terms and conditions. The recoverability of such loans is assessed periodically,
taking into account the employment status, the shares held by the individual and availability of lien on those shares.
At each reporting date, the Company reviews the carrying amount of such loans for any indicators of impairment.
As these loans are extended across a broad employee base and are subject to structured monitoring and repayment mechanisms,
the Company assesses the concentration of credit risk to be low. The maximum exposure to credit risk at the reporting date is
limited to the carrying amount of these loans.
Liquidity Risk
(i) Liquidity risk management
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities
that are settled by delivering cash or another financial asset. The Company's principle sources of liquidity are cash and bank
balances, fixed deposits and the cash flow that is generated from operations. The Company manages liquidity risk by maintaining
adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows
and matching the maturity profiles of financial assets and liabilities. The Company believes that the working capital is sufficient to
meet its current requirements. Accordingly, liquidity risk is considered as low. The Company closely monitors its liquidity position
and also maintains adequate source of funding.
(ii) Maturities of financial liabilities
The following tables detail the Company's remaining contractual maturity for its financial liabilities with agreed repayment periods.
The amount disclosed in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the
earliest date on which the Company can be required to pay. To the extent that interest flows are floating rate, the undiscounted
amount is derived from interest rate at the end of the reporting period. The contractual maturity is based on the earliest date on
which the Company may be required to pay.
Notes:
1. Debt - equity ratio - Repayment of short-term debt resulted in decrease in ratio.
2. Debt service coverage ratio - Increase in profit for the year has resulted in increase in ratio.
3. Return on equity ratio - Increase in profit for the year has resulted in increase in ratio.
4. Trade receivable turnover ratio - Increase in trade receivable on account of increase in credit limit has resulted in decrease in ratio.
5. Net capital turnover ratio - Increase in current asset has resulted in decrease in ratio.
6. Net profit ratio - Increase in profit for the year has resulted in increase in ratio.
7. Return on capital employed - Increase in profit for the year has resulted in increase in ratio.
Note 47: Capital management
For the purpose of the Company's capital management, equity includes issued equity capital, securities premium and all other equity
reserves attributable to the equity holders of the Company. The Company's capital management objectives are to maintain equity
including all reserves to protect economic viability and to finance any growth opportunities that may be available in future so as
to maximise shareholders' value. The Company is monitoring capital using debt equity ratio as its base, which is debt to equity.
The Company's policy is to keep healthy debt equity ratio ensuring minimum debt. The Company manages its capital structure and
makes adjustments in light of changes in economic conditions and the requirements of the financial covenants.
Note 48: Loan to employees under Employee Stock Purchase Plan
The Company had formulated an Employee Stock Purchase Plan (ESPP) where the company granted loan to employees through a
separate Prataap Snacks Employee Welfare Trust (the ‘Trust') for providing monetary assistance to the employees for acquisition of
shares granted under the ESPP plan. The Trust was identified as a subsidiary. The Company had adopted the policy of considering
the trust in the Standalone financial statements to reflect a more appropriate presentation of the activity of the Trust in the financial
statements as the Trust carried out activities for the benefit of the employees of the Company. Consequently, in the financial statements
of the Company, the loan given to the Trust (including interest) is eliminated.
Note 49: Other Statutory Information
(i) The Company does not have any Benami property. Further, there are no proceedings initiated or pending against the Company
for holding any benami property under the Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.
(ii) Except as disclosed below, the Company does not have any transactions with companies struck off under section 248 of
Companies act 2013 :
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the current financial year and
previous financial year
(v) 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:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the
Company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(vi) 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:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the
Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
(vii) The Company does not have any such transactions which has not been recorded in the books of accounts but has been
surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or
survey or any other relevant provisions of the Income Tax Act, 1961
(viii) The Company has used accounting softwares for maintaining its books of account, which have a feature of recording audit trail
(edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the respective softwares,
except that the feature of audit trail was not enabled at the database level for the period 1 April 2025 to 14 July 2025 to log any
direct data changes in respect of one of the accounting softwares used for maintaining the books of account.
Further, wherever the audit trail (edit log) facility was enabled and was operating for the respective accounting softwares, there
were no instance of the audit trail feature being tampered with. Additionally, the audit trail has been preserved by the Company
as per the statutory requirements for record retention, except that the audit trail (edit logs) was not preserved at the database
level for the period 1 July 2025 to 31 December 2025 in respect of one of the accounting softwares used for maintaining the
books of account.
(ix) The Company has not been declared as wilful defaulter by any bank of financial institution or other lender.
(x) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous
financial year.
(xi) The Company has borrowings from banks on the basis of security of current assets. No quarterly returns or statements of current
assets are required to be submitted with such banks.
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