1. Corporate Information
Binny Mills Ltd (“the Company”) was incorporated as a Public Limited Company on December 20, 2007. The company was issued a Certificate for Commencement of Business on February 6, 2008. The Company is engaged in the business of providing renting services and trading of goods. The company derives rental income by letting out, its warehouse situated in Perambur, Chennai. Apart from this, the Company is indulged in retail sales of textiles, from its textile division at Chennai and the showrooms in Bangalore.
2. Basis of preparation of financial statements
(i) Statement of compliance
These financial statements are prepared in accordance with Indian Accounting Standards (“Ind AS”) under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values or amortised cost at the end of each reporting period, the provisions of the Companies Act, 2013 ('the Act') (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI).
Accounting policies have been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
(ii) Use of estimates and judgements
The preparation of financial statements in conformity with Ind AS requires the management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses and the disclosure of contingent liabilities on the date of the financial statements.The application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed in Note 2A. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as the Management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which the changes are made and, if material, their effects are disclosed in the notes to the financial statements.
(iii) Functional and presentation currency
These financial statements are presented in Indian Rupees (INR), which is the Company's functional currency. All financial information presented in INR has been rounded to the nearest lakhs (up to two decimals). The financial statements are approved for issue by the Company's Board of Directors on 30.05.2024.
2A. Critical accounting estimates and management judgments
In application of the accounting policies, which are described in note 2, the management of the Company is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
Information about significant areas of estimation, uncertainty and critical judgements used inapplying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:
Property, Plant and Equipment (PPE)
The residual values and estimated useful life of PPEs are assessed by the technical team at each reporting date by taking into account the nature of asset, the estimated usage of the asset,the operating condition of the asset, past history of replacement and maintenance support. Upon review, the management accepts the assigned useful life and residual value for computation of depreciation/ amortisation. Also, management judgement is exercised for classifying the assetas investment properties or vice versa.
Current tax
Calculations of income taxes for the current period are done based on applicable tax laws and management's judgement by evaluating positions taken in tax returns and interpretations of relevant provisions of law.
Deferred Tax Assets
Significant management judgement is exercised by reviewing the deferred tax assets at each reporting date to determine the amount of deferred tax assets that can be retained / recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
Fair value
Management uses valuation techniques in measuring the fair value of financial instruments where active market quotes are not available. In applying the valuation techniques, management makes maximum use of market inputs and uses estimates and assumptions that are, as far as possible, consistent with observable data that market participants would use in pricing the instrument. Where applicable data is not observable, management uses its best estimate about the assumptions that market participants would make. These estimates may vary from the actual that would be achieved in an arm's length transaction at the reporting date.
Impairment of Trade Receivables
The impairment for trade receivables is done based on assumptions about risk of default and expected loss rates. The assumptions, selection of inputs for calculation of impairment are based on management judgement considering the past history, market conditions and forward-looking estimates at the end of each reporting date.
Impairment of Non-financial assets (PPE)
The impairment of non-financial assets is determined based on estimation of recoverable amount of such assets. The assumptions used in computing the recoverable amount are based on management's judgement considering the timing of future cash flows, discount rates and the risks specific to the asset.
Defined Benefit Plans and Other long-term benefits
The cost of the defined benefit plan and other long-term benefits, and the present value of such obligation are determined by the independent actuarial valuer. An actuarial valuation involves making various assumptions that may differ from actual developments in future. Management believes that the assumptions used by the actuary in determination of the discount rate, future salary increases, mortality rates and attrition rates are reasonable. Due to the complexities involved in the valuation and its long-term nature, this obligation is highly sensitive tochanges in these assumptions. All assumptions are reviewed at each reporting date.
Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities could not be measured based on quoted prices in active markets, management uses valuation techniques including the Discounted Cash Flow (DCF) model, to determine its fair value The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is exercised in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility.
Provisions and contingencies
The recognition and measurement of other provisions are based on the assessment of the probability of an outflow of resources, and on past experience and circumstances known at the reporting date. The actual outflow of resources at a future date may therefore vary from the figure estimated at end of each reporting period.
3. MaterialAccounting Policies
a) Current versus non-current classification
Based on the time involved between the acquisition of assets for processing and their realization in cash and cash equivalents, the group has identified twelve months as its operating cycle for determining current and non-current classification of assets and liabilities in the balance sheet.
b) Fair value measurement
The Company applies fair value measurement where necessary, defined as the price to sell an asset or transfer a liability in an orderly transaction between market participants on the measurement date. Fair value is determined in either the principal market or, if absent, the most advantageous market accessible by the Company.
Assumptions used in fair value measurement of an asset/liability reflect market participants' economic interests. For non-financial assets, the highest and best use is considered, whether by use or sale.
Valuation techniques maximize observable inputs and minimize unobservable ones, categorized within the fair value hierarchy:
Level 1: Quoted prices in active markets for identical items.
Level 2: Techniques using observable inputs.
Level 3: Techniques using unobservable inputs.
Recurring fair value measurements are reassessed each reporting period for proper categorization. Team leads set policies for fair value measurements, with external valuers involved as approved by the board, based on market knowledge, reputation, and independence.
For disclosures, assets and liabilities are categorized by nature, risk, and fair value hierarchy level, detailed in the notes to the Financial Statements.
c) Revenue Recognition Sale of goods
Revenue is recognized when it is probable that economic benefits will flow to the company and the revenue can be reliably measured, regardless of payment timing. For goods, revenue is recognized when risks and rewards of ownership is transferred to the buyer, usually upon dispatch or as per the termsagreed with the customer.
Revenue is measured at the fair value of consideration received or receivable, including invoice value after deducting discounts, volume rebates, and applicable taxes, and excluding selfconsumption.
Rental income
Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease, if the escalation is not a compensation for increase in cost inflation index.
Revenues in respect of rental income and hire charges received are recognized in accordance with the terms of the agreement.
d) Property, plant and equipment
Deemed cost option for first time adopter of Ind AS
Under the previous GAAP (Indian GAAP), the property, plant and equipment were carried in the balance sheet at cost less accumulated depreciation. The company has elected to continue the carrying amount of PPE in the existing financials as the deemed cost as at the date of transition,viz.,1 April 2016.
Presentation
Property, plant, and equipment are recorded at cost minus accumulated depreciation and impairment losses. Costs include replacements and borrowing costs for qualifying assets.
Significant parts with different useful lives are depreciated separately, while repair and maintenance costs are expensed immediately.
Advances for acquiring property, plant and equipment are listed as capital advances under noncurrent assets. Costs of assets not yet ready for intended use are listed as capital work in progress.
Component Cost
All significant components of the plant are identified and accounted for separately. Each component's useful life is analyzed independently, and depreciation is calculated based on these specific useful lives.
The cost of replacing a part of property, plant, and equipment is added to the carrying amount if future economic benefits are probable and the cost is measurable. Repair and maintenance costs are expensed as incurred.
Machinery spares/ insurance spares that can be issued only in connection with an item of fixed assets and their issue is expected to be irregular are capitalised. Replacement of such spares ischarged to revenue. Other spares are charged as revenue expenditure as and when consumed
Derecognition
Gains or losses from derecognition of property, plant, and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset. These gains or losses are recognized in the statement of profit and loss when the asset is derecognized.
e) Depreciation on property, plant and equipment
Depreciation is the systematic allocation of depreciable amount of an asset over its useful life. The depreciable amount is the cost of an asset less 5% residual value. Depreciation is calculated using the straight-line method over the useful lives specified in Schedule II to the Companies Act, 2013.
For new additions, depreciation is calculated on a pro-rata basis from the addition date. For deletion/ disposals, it's calculated up to the date of sale or discard. Assets costing Rs. 5,000 or less are fully depreciated, retaining their residual value.
The residual values, estimated useful lives, and depreciation methods are reviewed annually and adjusted prospectively if needed.
f) Investment property
Investment properties are held to earn rentals and/or for capital appreciation, including properties under construction for such purposes. They are initially measured at cost, including transaction costs. Subsequently, they follow the cost model as per Ind AS 16, including costs for replacing parts and borrowing costs for long-term projects if recognition criteria are met. Significant parts are depreciated separately based on their useful lives, while repair and maintenance costs are expensed as incurred.
Depreciation for investment properties follows the useful life prescribed in Schedule II of the Companies Act, 2013. Investment properties are derecognized upon disposal or when permanently withdrawn from use with no expected future economic benefits. Gains or losses on derecognition (difference between net disposal proceeds and carrying amount) are recognized in the profit and loss statement in the period of derecognition.
g) Inventories
Inventories are carried at the lower of cost and net realisable value. Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Costs are determined based on weighted average basis.
h) Financial Instruments Financial assets
Financial assets and financial liabilities are recognised when an entity becomes a party to the contractual provisions of the instruments.
Initial recognition and measurement
All financial assets are initially recognized at fair value. For financial assets not recorded at fair value through profit or loss, transaction costs attributable to the acquisition are added. Purchases or sales of financial assets requiring delivery within a regulated time frame (regular way trades) are recognized on the trade date, i.e. the date that the Company commits to the transaction.
Subsequent measurement
For subsequent measurement, financial assets are classified based on their contractual cash flow characteristics and the company's business model for managing them. The classifications are:
l Financial instruments (other than equity instruments) at amortized cost
l Financial instruments (other than equity instruments) at fair value through other comprehensive income (FVTOCI)
l Other financial instruments, derivatives, and equity instruments at fair value through profit or loss (FVTPL)
l Equity instruments measured at fair value through other comprehensive income (FVTOCI) Derecognition
A financial asset is derecognised when: l The rights to receive cash flows have expired, or
l The Company has transferred its rights to receive cash flows or assumed an obligation to pass them to a third party, and either:
a) Transferred substantially all risks and rewards of the asset, or
b) Neither transferred nor retained substantially all risks and rewards, but transferred control of the asset.
If the Company has neither transferred nor retained substantially all risks and rewards nor transferred control, it continues to recognise the asset to the extent of its continuing involvement, along with an associated liability. This is measured based on retained rights and obligations.
Continuing involvement, like a guarantee, is measured at the lower of the original carrying amount or the maximum amount the Company might repay.
Impairment of financial assets
In accordance with Ind AS 109, the Company uses 'Expected Credit Loss'(ECL) model, for evaluating impairment ofFinancial Assets other than those measured at Fair Value Through Profit and Loss(FVTPL).
Expected Credit Losses are measured through a loss allowance at an amount equal to:
l The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
l Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
For Trade Receivables the Company follows 'simplified approach' which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward-looking estimates are analysed.
For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant increase incredit risk. If there is significant increase incredit risk full lifetime ECL is used.
Financial liabilities
Initial recognition and measurement
All Financial Liabilities are recognised atfair value and in case of borrowings, net of directly attributable cost. Fees of recurring nature are directly recognised in the Statement of Profit and Loss as finance cost.
The Company's financial liabilities include trade and other payables, loans and borrowings(including bank overdrafts), financial guarantee contracts and derivative financial instruments.
Subsequent Measurement
Financial Liabilities are carried at amortised cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
Derecognition of 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 derecognition 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 or loss.
i) Borrowing Costs
Borrowing costs include interest using the Effective Interest Rate method, ancillary costs amortisation, and relevant foreign exchange differences.
Borrowing costs directly attributable to a qualifying asset acquisition, construction, or production are capitalized, based on a weighted average borrowing cost rate. This excludes specific borrowings for asset purchase. The amount of borrowing cost capitalised during the period does not exceed the amount of borrowing cost incurred during that period. Other borrowing costs are expensed when incurred.
Interest income from temporarily invested borrowings for qualifying assets is deducted from capitalizable borrowing costs. All other borrowing costs are expensed as incurred.
j) Taxes
Current income tax
Current tax assets and liabilities aremeasured at the amount expected to be recovered from or paid to the Income Tax authorities, based on tax rates and laws that are enacted at the Balance sheet date.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amountsof assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax assets are recognised to the extent it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax losses can be utilised.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of Deferred tax liabilities and assets are reviewed at the end of each reporting period.
k) Retirement and other employee benefits Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised as an expense during the period when the employees render the services.
Defined contribution plans
The Company recognizes provident fund contributions as expenses when employees render the related services.Excess contributions due but unpaid are recognized as liabilities.Excess contributions already paid are recognized as assets if they lead to future payment reduction or a cash refund.
Defined benefit plans
The Company runs a defined benefit gratuity plan in India, contributing to a separate fund. Benefits are calculated using the projected unit credit method.
Remeasurements, comprising of actuarial gains and losses and the effect of the asset ceiling (excluding amounts included in net interest on the net defined benefit liability and return on plan assets), are recognized in the balance sheet. This is done with a corresponding debit or credit to retained earnings through OCI in the period. Remeasurements are not reclassified to profit or loss in later periods.
Compensated absences
The Company's policy covers both accumulating and non-accumulating compensated absences.The expected cost of accumulating absences is determined by an independent actuary using the projected unit credit method at each balance sheet date. Expenses for non-accumulating absences are recognized when they occur.
l) Impairment of non-financial assets
At each reporting date, the Company assesses for indicators of asset impairment. If any indication exists, or during annual impairment testing, the Company estimates the recoverable amount, which is the higher of fair value less costs of disposal or value in use. Recoverable amount is determined for individual assets unless cash flows are not largely independent. If carrying amount exceeds recoverable amount, the asset is impaired and written down.
m) Provisions, contingent liabilities and contingent asset Provisions
Provisions are recognized when the Company has a present obligation from a past event, and it's likely that resources will be needed to settle it, with a reliable estimate.
If time value of money is material, provisions are discounted using pre-tax rates reflecting risks. The increase due to time passage is recognized as finance cost. Provisions are reviewed at each balance sheet date and adjusted.
Provision for doubtful debts, claims, etc., is made if realization is doubtful per management judgment.
Contingent liability
A contingent liability is a possible obligation arising from past events, confirmed by uncertain future events. It's not recognized if unlikely to require resource outflow to settle the obligation or if the measurement is unreliable. They are disclosed separately. Show Cause notices are considered contingent liabilities only upon conversion to demands.
Contingent assets
Where an inflow of economic benefits is probable, the Company discloses a brief description of the nature of the contingent assets at the end of the reporting period, and, where practicable, an estimate of their financial effect. Contingent assets are disclosed but not recognised in the financial statements.
n) Cash and cash equivalents
Cash comprises cash in hand and demand deposits with banks. Cash equivalents are short term balances with original maturity of less than 3 months, highly liquid investments that are readily convertible into cash, which are subject to insignificant risk of changes in value.
o) Cash Flow Statement
Cash flows are presented using indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments.
Bank borrowings are generally considered to be financing activities. However, where bank overdrafts which are repayable on demand form an integral part of an entity's cash management, bank overdrafts are included as a component of cash and cash equivalents for the purpose of Cash flow statement.
p) Earnings per share
Basic earnings per share is calculated by dividing the net profit after tax by the weighted average number of equity shares outstanding during the year adjusted for bonus element in equity share. Diluted earnings per share adjusts the figures used in determination of basic earnings per share to consider the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as at the beginning of the period unless issued at a later date.
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