(L) Provisions and Contingent Liabilities: [Ind AS 37]
A provision is recognised when the company has a present obligation as a result of past events and
it is probable that an outflow of resources will be required to settle the obligation, in respect of which
a reliable estimate can be made. Provisions are not discounted to their present value and are
determined based on best estimates required to settle the obligation at the balance sheet date.
A contingent liability is a possible obligation that arises from past events whose existence will be
confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized because it is not probable that
an outflow of resources will be required to settle the obligation. A contingent liability also arises in
extremely rare cases where there is a liability that cannot be recognized because it cannot be
measured reliably.
Contingent Liabilities:
a) The Company has given corporate guarantee to Bank of Baroda, Singapore for term loan given
to Sumeet Global PTE Limited and the present outstanding is Rs 64.18 Crores
($78,10,016.82)
b) A sum of Rs. 71,109/- has been paid against the demand raised by GST Department during FY
2022-23 against which an appeal has been filed before the Appellate Authority. The same
amount has been shown under other current Assets for the GST Penalty paid against appeal
filed.
(M) Intangible assets (Excluding Goodwill): [Ind AS 38]
Intangible assets are recognized when it is probable that the future economic benefits that are
attributable to the asset will flow to the enterprise and the cost of the assets can be measured
reliably.
Intangible Assets are stated at cost of acquisition net of recoverable taxes, trade discount and rebates
less accumulated amortization/depletion and impairment loss, if any. Such cost includes purchase
price, borrowing costs, and any cost directly attributable to bringing the asset to its working condition
for the intended use, net charges on foreign exchange contracts and adjustments arising from
exchange rate variations attributable to the intangible assets. Subsequent costs are included in the
asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the entity and the cost can be
measured reliably.
(N) Segment reporting: [Ind AS 108]
Ind AS 108 establishes standards for the way public business enterprises report information about
operating segments and related disclosures about product, services, geographic areas, and major
customers.
Operating segment
Operating segments are defined as components of a company for which discrete financial information
is available that is evaluated regularly by Chief Operating Decision Maker ("CODM"), in deciding
how to allocate resources and assessing performance. Operating segments are reported in a manner
consistent with the internal reporting provided to the chief operating decision-maker. The operations
of the company are limited to one segment viz. Yarn manufacturing.
(O) Financial instruments: [Ind AS 109]
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.
Financial assets:
Classification
The Company classifies its financial assets in the following measurement categories:
• those to be measured subsequently at fair value (either through other comprehensive income,
or through the Statement of Profit and Loss), and
• those measured at amortized cost.
The classification depends on the entity's business model for managing the financial assets and the
contractual terms of the cash flows.
Initial recognition and measurement
Financial assets are recognized when the Company becomes a party to the contractual provisions of
the instrument. Financial assets are recognized initially at fair value plus, in the case of financial
assets not recorded at fair value through Profit and Loss, transaction costs that are attributable to the
acquisition of the financial asset. Transaction costs of financial assets carried at fair value through
Profit and Loss are expensed in the Statement of Profit and Loss.
Subsequent measurement
After initial recognition, financial assets are measured at:
• fair value (either through other comprehensive income or through Profit and Loss), or
• amortized cost.
Amortised cost:
Assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest are measured at amortized cost. A gain or loss on a debt investment
that is subsequently measured at amortized cost is recognized in the Standalone Statement of Profit
and Loss when the asset is derecognized or impaired. Interest income from these financial assets is
included in other income using the effective interest rate method.
Fair Value through Other Comprehensive Income (FVOCI):
Assets that are held for collection of contractual cash flows and for selling the financial assets, where
the assets, cash flows represent solely payments of principal and interest, are measured at FVOCI.
Movements in the carrying amount are taken through OCI, except for the recognition of impairment
gains or losses, interest revenue and foreign exchange gains and losses which are recognised in the
Standalone Statement of Profit and Loss. When the financial asset is derecognized, the cumulative
gain or loss previously recognised in OCI is reclassified from equity to Standalone Statement of
Profit and Loss and recognised in other gains/ (losses). Interest income from these financial assets is
included in other income using the effective interest rate method.
Fair Value through Profit and Loss (FVTPL):
Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVTPL. A gain or
loss on a debt investment that is subsequently measured at FVTPL is recognised in Standalone
Statement of Profit and Loss in the period in which it arises. Interest income from these financial
assets is recognised in the Standalone Statement of Profit and Loss.
Equity instruments
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which
are held for trading are classified as at FVTPL. For all other equity instruments, the Company decides
to classify the same either as at FVTOCI or FVTPL.
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period
the company changes its business model for managing financial assets.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes
on the instrument, excluding dividends, are recognized in Other Comprehensive Income (OCI).
There is no recycling of the amounts from OCI to Standalone Statement of Profit and Loss, even on
sale of such investments.
Equity instruments included within the FVTPL category are measured at fair value with all changes
recognized in the Standalone Statement of Profit and Loss.
Debt instruments
Debt instruments are subsequently measured at amortized cost on the basis of :
(i) the entity's business model for managing the financial assets and
(ii) the contractual cash flow characteristics of the financial asset.
De-recognition
A financial asset shall be derecognized only when:
(a) the contractual rights to the cash flows from the financial asset expire, or
(b) it transfers the financial asset and the transfer qualifies for derecognition.
The management assessed that fair value of Cash and short-term deposits, trade and other short-term
receivables, trade payables, other current liabilities, approximate their carrying amounts largely due to
the short- term maturities of these instruments.
The fair values of the investments are not based on the observable market data (unobservable inputs) and
are based on the assessment of the management. Further, investment in unquoted shares are assessed on
book value.
*In regards to the market Value of Questfin Ltd., the management is not receiving any communication
from the company and hence the value has been recorded at cost due to lack of data from the party.
Financial liabilities:
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through
profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in
an effective hedge, as appropriate. In the case of a financial liability not at FVTPL, transaction costs
that are directly attributable to the issue/origination of the financial liability.
Preference Shares being redeemable at fixed date and having right of cumulative dividend are
considered as financial liability.
Subsequent measurement
Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is
classified as at FVTPL if it is classified as held for trading, or it is a derivative or it is designated as
such an initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains
and losses, including any interest expense, are recognized in standalone statement of profit and loss.
Other financial liabilities are subsequently measured at amortized cost using the effective interest
method. Interest expense and foreign exchange gains and losses are recognized in Standalone
Statement of Profit and Loss. Any gain or loss on de-recognition is also recognized in Standalone
Statement of Profit and Loss.
De-recognition
A financial liability is derecognized when the obligation specified in the contract is discharged,
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 derecognition of the original liability and the recognition
of a new liability. The difference in the respective carrying amounts is recognised in the standalone
statement of profit or loss.
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
to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
(P) Fair value measurement [Ind AS 113]
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot
be measured based on quoted prices in active markets, their 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) prices in active market for identical assets or liabilities.
Investments in Quoted Shares are valued as per quoted price in active market.
• Level 2 -(Inputs other than quoted prices included in Level 1) 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
The inputs to these models are taken from observable markets where possible, but where this is not
feasible, a degree of judgement is required in establishing fair values. Judgements include
considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions
about these factors could affect the reported fair value of financial instruments.
For financial assets and liabilities maturing within one year from the Balance Sheet date and which
are not carried at fair value, the carrying amount approximates fair value due to the short maturity of
these instruments.
(Q) Revenue from Contracts with Customers: [Ind AS 115]
> Revenue from contract with customer is recognized when control of Goods or services are
transferred to the buyer as per the terms of the contract; the entity retains neither continuing
managerial involvement nor effective control over the goods sold; the amount of revenue can
be measured reliably; it is probable that the economic benefits associated with the transaction
will flow to the entity; and the costs incurred or to be incurred in respect of the transaction can
be measured reliably.
> Revenue is measured at fair value of the consideration received or receivable, after deduction
of any trade discounts, volume rebates and any taxes or duties collected on behalf of the
government which are levied on sales.
> Export sales are accounted when the goods have left the premises or when the goods are
received by the customers and incoterms are fulfilled at the exchange rate prevailing on the date
of invoice. These are net of commission and do not include freight wherever applicable as per
the terms of the sales contract.
> Dividend income is recognized when the right to receive the dividend is established by the
reporting date, which is generally when shareholders approve the dividend.
> Interest income is recognized using the effective interest method (EIR) and accounted on
accrual basis. EIR is the rate that exactly discounts the estimated future cash payments or
receipts over the expected life of a financial liability or a financial asset to their gross carrying
amount.
(R) Cash and cash equivalents:
For the purpose of presentation in the Statement of Cash Flows, Cash and Cash Equivalents includes
Cash on hand, balance with banks and demand deposits with banks and other short term highly liquid
investments that are readily convertible into cash and which are subject to an insignificant risk of
changes in value.
25. The following term loans are called up by banks so now these are payable on demand basis. We are
shown under the head Current Liabilities as Borrowing.
• BOB (FDY Winder) Term Loan
• Canara Bank Term Loan [Texturizing]
• IDBI Corporate Loan
• Bremer Kredit bank AG*
• ECB London Term Loan (BOB)
*The Company has taken loan from Bremer Kreditbank AG. During the F.Y. 2019-20 on the basis of
information received by the company the name was changed from Bremer Kreditbank AG to
Oldenburgische Landesbank AG. But Oldenburgische Landesbank AG has unable to provide any
document for the same, hence during the current financial year the name has been taken as Bremer
Kreditbank AG, which is shown under the current maturity of long-term debt.
29. Previous year’s figures have been regrouped and recasted wherever necessary.
30. Additional regulatory information required by Schedule III of Companies Act, 2013
(i) The Company has not revalued its property, plant and equipment during the current or previous
year.
(ii) No proceedings have been initiated or are pending against the Company for holding any Benami
property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made
there under.
(iii) The Company has no transactions with struck off companies during the year.
(iv) The Company does not have any charges or satisfaction which is yet to be registered with Registrar
of Companies beyond the statutory period.
(v) The Company has not entered into any scheme of arrangement in terms of sections 230 to 237 of
the Companies Act, 2013, which has an accounting impact on current or previous financial year.
(vi) The Company has not advanced or loaned funds to any persons or entities, 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.
(vii) 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
(viii) There is no income surrendered or disclosed as income during the current or previous year in the
tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of
account.
(ix) The Company has not traded or invested in crypto currency or virtual currency during the current
or previous year.
31. CIRP Status-
a. The Standalone Financial Statement explains that the Company was admitted under the CIRP
vide order dated 20.12.2022 as the Corporate Debtor was admitted into CIRP, in an application
filed by the Financial Creditor, namely, IDBI Bank u/s 7 of the IB Code, triggering moratorium
under section 14 of the IB Code and Mr. Kuresh Hatim Khambati was appointed as Interim
Resolution Professional (hereinafter referred to as “IRP"), who made a public announcement in
Form-A on 28.12.2022
b. After collating the claims received from the creditors of the Corporate Debtor, the IRP formed
the CoC on 18.01.2023 comprised of Six Financial Creditors, namely: Union Bank of India with
4.61% voting share, Bank of Baroda with 60.98 % voting share, IDBI Bank Limited with 25.10
% voting share, Canara Bank with 3.04 % voting share, Central Bank of India with 4.68 % voting
share, Oldenburgische Landesbank AG with 1.59 % voting share (with which Bremer Kredibank
AG, formerly known as KBC Bank Deutschland AG merged).
c. The 1st CoC meeting was held on 24.01.2023 wherein the members of the COC did not confirm
the IRP as RP. Further, in the 2nd COC meeting was held on 09.02.2023 in which COC passed
the resolution for the appointment and replacement of IRP from RP Mr. Satyendra Prasad
Khorania. It is also decided by the CoC for the appointment of two Registered Valuers to carry
out the valuation. The 03rd CoC meeting was held on 04.03.2023 wherein the COC approved the
resolution for publication of FORM- G along with the eligibility criteria and the same was
published on 12.03.2023.
d. The Resolution Professional had examined and admitted the claims from Secured Financial
Creditors amounting to Rs. 583.48 Cr, Unsecured Financial Creditors amounting to Rs. 107.61
Cr and from Operational Creditors (other than Workmen, Employees and Government dues)
amounting to Rs. 36.64 Cr. The variations between balances as per books and amount claimed
by the Secured financial creditors was due to charging of interest and other charges claimed by
the financial creditors and by unsecured financial creditors amounting was due to claim by Bank
of Baroda against Corporate Guarantee by Company for Sumeet Global Pte Ltd and claim by
Sitaram Prints Pvt. Ltd. against Corporate Guarantee given in favour of secured creditors of
company, as explained to us.
e. Then an application was been filed by Mr. Satyendra Prasad Khorania, Resolution Professional
of M/s. Sumeet Industries Ltd. under section 30(6) read with Section 31 and 60(5) of Insolvency
& Bankruptcy Code, 2016 (hereinafter referred to as IBC, 2016) for approval of the Resolution
Plan submitted by the M/s Eagle Fashions Private Limited, Eagle Fibers Limited, Eagle
Synthetics Private Limited, Padmini Polytex Private Limited, Eagle Sizers & JPB Fibers Jointly
as Eagle Group / Successful Resolution Applicant(hereinafter referred to as “SRA”) which was
approved by Committee of Creditors ("COC") of Sumeet Industries Limited (“Corporate
Debtor”). However, pertaining to the observations as mentioned in the points a) to k) of Para 20
of the NCLT order pronounced on 05.04.2024 the application was rejected. The company have
filed an appeal before the NCLAT against the order passed vide Company Appeal (AT)
(Insolvency) No. 922 of 2024 registered on 29.04.2024 and the order is awaited.
f. The Holding Company’s ability to continue as a going concern is dependent upon many factors
including continued support from the financial creditors, operational creditors and approval of a
viable resolution plan by the prospective investor. These events or conditions indicate that a
material uncertainty exists that may cast significant doubt on the Holding Company’s ability to
continue as a going concern. In view of the opinion of the Directors and KMPs, resolution and
revival of the Holding Company is possible in foreseeable future. Further the RP is required to
make every endeavor to protect and preserve the value of the property of the corporate debtor
and manage the operations of the corporate debtor as a going concern. In view of the aforesaid
details and pending outcome of the CIRP at NCLAT, the financial results of the Holding
Company have been prepared on going concern basis.
32. The figures have been rounded off to the nearest lakhs of rupees upto two decimal places.
See accompanying notes to the financial statements for and on behalf on Board of Directors
As per our report of even date
FOR H T K S & Co.
CHARTERED ACCOUNTANTS
Shankarlal Somani- Chairman
CA. HARISHANKAR TOSNIWAL Sumeet Kumar Somani - Mg. Director.
PARTNER
M.NO.: 055043
PAN : AACFH 1890 B Anil Kumar Jain - Company Secretary.
FIRM REG. NO: 111032W
PLACE:SURAT
DATE : 28.05.2024
Abhishek Prasad - CFO.
Taken on Record
Satyendra P. Khorania - RP
Reg. No. IBBI/IPA-002/IP-N00002/2016-17/10002
AFA NO.: AA2/10002/02/101224/203107 & Valid
upto 10.12.2024
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