6.3 The above loan has been given for business purpose.
6.4 During the year ended 31st March, 2024, the company has recognised a Foreign Exchange fluctuation gain/(loss) of ' 87.37 Lakhs (Previous year ' 558.75 Lakhs)) and interest on fair value adjustment as per Ind AS 113 is ' (202.73) Lakhs (Previous year ' (229.53) Lakhs) with respect to loan given to Soma Textiles FZC. Actual repayment of loan during the year ' 1118.10 Lakhs (Previous year ' 1128.23 Lakhs). So, net repayment of loan during the year ' 1233.46 Lakhs (Previous year ' 799.01 Lakhs)
7.1 The management has assessed that carrying value of the investments to the fair value.
7.2 Increase in the amount of loan during the period is on account of notional interest on fair valuation of financial assets amounting ' 202.73 Lakhs.
7.3 The Company out of the GDR issue proceeds had made an investment of USD 1,79,00,054 in 2006-07, out of which USD 1,15,27,456 has been repaid by Soma Textiles FZC till 31st March, 2024 leading balance of USD 63,72,597 as on 3151 March, 2024 which is equivalent to ' 5255.90 Lakhs (Previous Year ' 6083.89 Lakhs) , by way of long term loan and also invested in the Equity Share capital i.e 300 equity shares equivalent to ' 34.21 Lakhs (Previous Year ' 34.21 Lakhs) of Soma Textile FZC,Umm Al Quwain Free Trade Zone, Umm Al Quwain, U.A.E. an associate (Formerly Soma Textile FZE, Sharjah, U.A.E., a wholly owned subsidiary).
Rights, preferences and restrictions attached to shares:
Equity Shares:
The company has one class of shares referred to as equity shares having a par value of '10 each. Each shareholder is entitled to one vote per share held. The dividend proposed by the Board of Directors, if any is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
* Equity shares 3,85,300 has been forfeited in the year 1996-97, total amounting to '19,44,680 (@ '5.05 per share)
Nature & purpose of Reserve:
a) Capital Reserves (Other than Capital Contribution)
Created on forfeiture of equity shares and transfer of Debenture redemption reserve. It shall be utilised as per provision of the Companies Act, 2013.
b) Equity Component of Compound Financial Instruments
Equity Component of Compound Financial Instruments represent residual amount after deducting liability component from the fair value of the compound financial instrument.
c) Securities Premium Account
Created on conversion of convertible debenture and issue of equity shares. It shall be utilised as per provision of the Companies Act, 2013.
d) General Reserve
General Reserve is created out of the profit earned by the company by way of transfer from surplus in the statement of profit and loss. The company can use this reserve for payment of dividend and issue of fully paid up shares. As general reserve is created by transfer from surplus in the statement of profit and loss and is not an item of other comprehensive income, item included in general reserve will not be reclassified to statement of profit and loss.
32 Employee benefit plans
1) Defined contribution plans :
The Company participates in defined contribution plans on behalf of relevant personnel. Any expense recognised in relation to these schemes represents the value of contributions payable during the period by the Company at rates specified by the rules of those plans. The only amounts included in the balance sheet are those relating to the prior months contributions that were not due to be paid until after the end of the reporting period.
The defined contribution plans are as below:
a) Provident fund
In accordance with the Employee's Provident Fund and Miscellaneous Provisions Act, 1952 eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees' salary. The contributions, as specified under the law, are made to the provident fund administered and managed by Government of India (GOI). The Company has no further obligations under the fund managed by the GOI beyond its monthly contributions which are charged to the Statement of Profit and Loss in the period they are incurred. The benefits are paid to employees on their retirement or resignation from the Company.
(2) Defined Benefit Plans:
The Defined Benefit Plan is as below:
Gratuity (unfunded)
The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for compensated absences is recognised in the same manner as gratuity.
The plan typically exposes the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.
Investment risk
The Probability or likelihood of occurrence of losses relative to the expected return on any particular investment. . Interest risk
If the Discount Rate i.e the yield on the Government Bonds decrease in future, the Actuarial Liability will increase and vice versa.
The quantum of increase in valuation liability corresponding to specific decrease in the Discount Rate and vice versa, has been shown in the annexure containing the sensitivity Analysis of Key Actuarial Assumption. .
Longevity risk
If the Mortality rate experienced by the staff of a particular company is higher than what is assumed in mortality Table used in the valuation, the valuation liability will increase.
However, it will be very cumbersome to measure the quantum of increase for assumed reduction of Mortality rates as can be done in case of changes in salary Growth Rate and Interest Rate.
Salary risk
If the salary Growth Rate over the future years of services is increased, the Actuarial Liability will increase and vice versa. The quantum of increase in the valuation liability corresponding to specific increase in the salary growth rate and vice versa has been shown in the annexure containing Sensitivity Analysis of key Actuarial Assumption.
The most recent actuarial valuation of the present value of the defined benefit obligation was carried out at 31st March, 2024 by an independent actuary. The present value of the defined benefit obligation, the related current service cost and past service cost were measured using the projected unit credit method.
H. Sensitivity Analysis
The Sensitivity Analysis below has been determined based on reasonably possible change of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant. These sensitivities show the hypothetical impact of a change in each of the listed assumptions in isolation. While each of these sensitivities holds all other assumptions constant, in practice such assumptions rarely change in isolation and the asset value changes may offset the impact to some extent. For presenting the sensitivities, the present value of the Defined Benefit Obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the Defined Benefit Obligation presented above. There was no change in the methods and assumptions used in the preparation of the Sensitivity Analysis from previous year.
34 Disclosure pursuant to Indian Accounting Standard (Ind AS) - 107 : Financial Instruments: Disclosures
Financial instruments and Risk management
34.1 Capital management
The capital structure of the Company consists of net debt (borrowings offset by cash and bank balances) and total equity of the Company. The Company trying to manages its capital to ensure that the Company will be able to continue as going concern. The Company's management reviews it's capital structure considering the cost of capital, the risks associated with each class of capital and the need to maintain adequate liquidity to meet its financial obligations when they become due.
34.3 Financial risk management
The financial risks emanating from the Company's operating business include market risk, credit risk and liquidity risk. These risks are managed by the Company using appropriate financial instruments. The Company has laid down written policies to manage these risks.
34.3.1 Market risk management
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 of Currency risk, Interest rate risk and other price risk.
A. Foreign currency risk management
The Company is exposed to foreign currency risk arising mainly on import, export (of finished goods) and the foreign currency loan. Foreign currency exposures are managed within approved policy parameters.
A. 1 Foreign currency sensitivity analysis
The Company's exposure to Foreign Currency changes is not material.
B. Interest rate risk management
The Company does not have interest rate risk exposure on its outstanding loans as at the year end as all the loans are assigned to ARC as term loans on fixed interest rate basis.
C. Other price risks
The Company is exposed to price risks arising from its investments in mutual funds and equity.
Equity price risk is related to change in market reference price of investments in equity shares held by the Company. The fair value of quoted investments held by the Company exposes it to equity price risks. In general, these investments are not held for trading purposes.
The Company manages the surplus funds majorly through investments in mutual fund schemes. The price of investment in these mutual funds Net Asset Value (NAV) declared by the Asset Management Company on daily basis as reflected by the movement in the NAV of invested schemes. The Company is exposed to price risk on such Investment schemes.
Mutual fund investments are susceptible to market price risk, mainly arising from changes in the interest rates or market yields which may impact the return and value of such investments. However, due to the very short tenor of the underlying portfolio in the liquid schemes, these do not hold any significant price risks.
C.1 Mutual fund price sensitivity analysis
The sensitivity analysis below has been determined based on Mutual Fund Investment at the end of the reporting period. If NAV had been 1% higher / lower, the profit for year ended 31st March, 2024 would have increased/ decreased by ' 23.06 lakhs (2022-23: increase/decrease by ' 0.39 lakhs) as a result of the changes in fair value of mutual funds.
34.3.2 Credit risk management
Credit risk arises from the possibility that a counter party's inability to settle its obligations as agreed in full and in time. The maximum exposure to credit risk in respect of the financial assets at the reporting date is the carrying value of such assets recorded in the financial statements net of any allowance for losses.
A. Trade Receivables
The Company's trade receivables consist of a large and regular base customers. Hence the Company is not exposed to concentration and credit risk.
B. Other Financial Assets
The Company maintains exposure in cash and cash equivalents, time deposits with banks, investments in mutual funds and Non Convertible Debentures. Investment of surplus funds are made only with approved counter parties. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. .
34.3.3 Liquidity risk management
The objective of liquidity risk management is to maintain sufficient liquidity to meet financial obligations of the Company as they become due. The Treasury Risk Management Policy includes an appropriate liquidity risk management framework for the management of the short-term, medium-term and long term funding and cash management requirements. The Company manages the liquidity risk by maintaining adequate cash reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities.
34.3.3.1 Liquidity risk table
The following table details the Company's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. 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. The tables include principal cash flows along with interest.
a) No amount has been written off or written back during the year ended 31st March, 2024 (Previous year - Nil)
b) Remuneration does not include the provision made for gratuity as they are determined on an actuarial basis for the company as a whole.
c) The transaction with related parties are made in the normal course of business and on terms equivalent to those that prevail in arms length transaction.
40 The Hon'ble Gujarat High Court directed to close down the operations of polluting industries in and around Ahmedabad in the state of Gujarat and the decision of the High Court was upheld by Hon'ble Supreme Court of India, due to which the Company has discontinued its core manufacturing operations. The company has started the new business of trading in cotton from the month of November, 2022. The Company has identified 'Textile' Business as its only primary reportable segment in Trading and manufacturing in accordance with the requirement of Ind AS 108 “Indian Accounting Standard on Operating Segments”. Accordingly, no separate segment information has been provided.
42 Exceptional items for the year ended 31st March, 2024 represent foreign exchange fluctuation on advance to Soma Textiles FZC (Overseas associate company) in earlier years, Profit on Sale of Assets & Balance Written off for Receivables and Payables.
43 Other statutory information
i) The Company does not have any benami property, where any proceeding has been initiated or pending against the Company for holding any benami property.
ii) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
iii) 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
iv) 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.
v) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
vi) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.
vii) The Company is not declared wilful defaulter by and bank or financial institutions or lender during the year.
viii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
ix) The Company does not have borrowings from banks/financial institutions on the basis of security of current assets during the year ended 31st March, 2024 and 31st March, 2023.
x) The title deeds of all the immovable properties, (other than immovable properties where the Company is the lessee and the lease agreements are duly executed in favour of the Company) disclosed in the financial statements included in property, plant and equipment are held in the name of the Company as at the balance sheet date.
xi) The Company does not have any transactions with the companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956 during the year ended 31st March, 2024 and 31st March, 2023.
xii) The Company has not entered into any scheme of arrangement approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013 which has an accounting impact during the year ended 31st March, 2024 and 31s March, 2023.
xiii) The Company is not required to spend towards Corporate Social Responsibility (CSR) as per Section 135 of the Companies Act, 2013, since there is no average profit in the last 3 years calculated as per the provisions of the Act.
a44 Based on information available with the company, there are no suppliers who are registered as micro, small or medium enterprise under "The Micro, Small and Medium Enterprise Development Act, 2006" (Act) till 31st March, 2024. Accordingly, no disclosure is required to be made under said act.
45 Company has entered into a Registered Development Agreement on 20th November, 2012, with Shayona Land Corporation for development of Part Leasehold Land owned by Company, by putting up construction of commercial units on the said land situated at Rakhial (sim), Taluka City, in the Registration District , Ahmedabad and Sub District, Ahmedabad No. 7 (Odhav), bearing final Plot No.80, admeasuring about 10648 square yards equivalent to 8903 square meters of town planning scheme No.10 (Rakhial).
46 The Code on Social Security, 2020('Code') relating to employee benefits during employment and post - employment benefits received Indian Parliament approval and Presidential assent in September 2020. The code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.
47 The figures for the previous year have been regrouped / reclassified, wherever necessary, to make them comparable with the figures for the current year.
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