3 MATERIAL ACCOUNTING POLICIES
Material accounting policy information has been identified
and disclosed based on the guidance provided under Ind
AS 1. The material accounting policy information used in
preparation of the standalone financial statements have
been disclosed in the respective notes.
4 CRITICAL ACCOUNTING ESTIMATES AND
JUDGEMENTS
The preparation of financial statements require judgements,
estimates and assumptions to be made that affect
the reported amount of assets and liabilities including
contingent liabilities on the date of the financial statements
and the reported amount of revenues and expenses during
the reporting period. Difference between actual results
and estimates are recognized in the period prospectively
in which the results are known / materialized. Information
about significant judgements and key sources of estimation
made in applying accounting policies that have the most
significant effects on the amounts recognized in the
financial statements is included in the following notes:
a) Revenue recognition: Revenue is recognised
upon transfer of control of promised products or
services to customers in an amount that reflects
the consideration which the Company expects to
receive in exchange for those products or services.
Revenue is measured based on the transaction
price, which is the consideration, adjusted for volume
discounts, price concessions and incentives, if any,
as specified in the contract with the customer. The
Company exercises judgment in determining whether
the performance obligation is satisfied at a point in
time or over a period of time. The Company considers
indicators such as how customer consumes benefits
as services are rendered or who controls the asset as
it is being created or existence of enforceable right to
payment for performance to date and alternate use
of such product or service, transfer of significant risks
and rewards to the customer, acceptance of delivery
by the customer, etc.
b) Recognition of Deferred Tax Assets: The extent to
which deferred tax assets can be recognized is based
on an assessment of the probability of the Company's
future taxable income against which the deferred
tax assets can be utilized. In addition, significant
judgement is required in assessing the impact of any
legal or economic limits.
c) Useful lives of depreciable/ amortisable assets
(tangible and intangible): Management reviews
its estimate of the useful lives of depreciable/
amortisable assets at each reporting date, based on
the expected utility of the assets. Uncertainties in
these estimates relate to actual normal wear and tear
that may change the utility of plant and equipment.
d) Defined Benefit Obligation (DBO): Employee benefit
obligations are measured on the basis of actuarial
assumptions which include mortality and withdrawal
rates as well as assumptions concerning future
developments in discount rates, medical cost trends,
anticipation of future salary increases and the inflation
rate. The Company considers that the assumptions
used to measure its obligations are appropriate.
However, any changes in these assumptions may have
a material impact on the resulting calculations.
e) Provisions and Contingencies: The assessments
undertaken in recognising provisions and
contingencies have been made in accordance with
Indian Accounting Standards (Ind AS) 37, ‘Provisions,
Contingent Liabilities and Contingent Assets'. The
evaluation of the likelihood of the contingent events
is applied best judgement by management regarding
the probability of exposure to potential loss.
f) I impairment of Financial Assets: The Company
reviews its carrying value of investments carried at
amortized cost annually, or more frequently when there
is indication of impairment. If recoverable amount is
less than its carrying amount, the impairment loss is
accounted for.
g) Allowances for Doubtful Debts: The Company
makes allowances for doubtful debts through
appropriate estimations of irrecoverable amount.
The identification of doubtful debts requires use of
judgment and estimates. Where the expectation is
different from the original estimate, such difference
will impact the carrying value of the trade and other
receivables and doubtful debts expenses in the
period in which such estimate has been changed.
h) Fair value measurement of financial instruments:
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 using valuation techniques
including the Discounted Cash Flow model. The input
to these models are taken from observable markets
where possible, but where this 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.
i) Extension and termination option in leases:
Extension and termination options are included in
many of the leases. In determining the lease term the
Management considers all facts and circumstances
that create an economic incentive to exercise an
extension option, or not exercise a termination option.
This assessment is reviewed if a significant event or
a significant change in circumstances occurs which
affects this assessment and that is within the control
of the Company.
5 Property, plant and equipment
Accounting Policy
Property, plant and equipment held for use in the production
or/and supply of goods or services, or for administrative
purposes, other than freehold Land is stated in the balance
sheet at cost, less any accumulated depreciation and
accumulated impairment losses (if any). Freehold Land
is carried at historical cost. The cost of property, plant
and equipment comprises its purchase price net of any
trade discounts and rebates, any import duties and other
taxes (other than those subsequently recoverable from
the tax authorities), any directly attributable expenditure
on making the asset ready for its intended use, other
incidental expenses and interest on borrowings attributable
to acquisition of qualifying property, plant and equipment
up to the date the asset is ready for its intended use.
In case of self-constructed assets, cost includes the costs of
all materials used in construction, direct labour, allocation
of overheads, directly attributable borrowing costs.
Subsequent costs are included in the asset's carrying
amount, only when it is probable that future economic
benefits associated with the cost incurred will flow to the
company and the cost of the item can be measured reliably.
The carrying amount of any component accounted for as a
separate asset is derecognized when replaced.
Depreciation is provided on written down method at the
rates determined based on the useful lives of respective
assets as prescribed in the Schedule II of the Companies
Act, 2013.
As per the above policy, depreciation on the solar plant
have been provided at the rate which are different from the
corresponding rates prescribed in Schedule II based on the
estimated useful life of the project.
5.1 Refer Note 20 for hypothecation of property, plant and equipment against borrowing.
5.2 Title deeds for immovable properties are held in the name of the company.
5.3 The company has not revalued its Property, Plant and Equipment during the current year or previous year.
5.4 The company has performed an assessment of its Property, Plant and Equipment for possible triggering events or
circumstances for an indication of impairment and has concluded that there were no triggering events or circumstances
that would indicate the Property, Plant and Equipment are impaired.
5.5 Property, Plant and Equipment amounting to H 25,823.97 lacs (March 31, 2024 - H 21,134.70 lacs) have been pledged
to secure borrowings of the Company (Refer note 20). Details of charge has been given on the basis of records available
with Registrar of Companies.
6 Capital work-in-progress
Accounting Policy
Capital work-in-progress is stated at cost which includes expenses incurred during construction period, interest on amount
borrowed for acquisition of qualifying assets and other expenses incurred in connection with project implementation in so far
as such expenses relate to the period prior to the commencement of commercial production.
During the previous year, there were no projects as on reporting period where activity had been suspended. Also there were no
projects as on the reporting period which has exceeded cost as compared to its original plan or where completion is overdue.
6.1 The company has performed an assessment of its Capital Work-in-Progress for possible triggering events or circumstances
for an indication of impairment and has concluded that there were no triggering events or circumstances that would
indicate the Capital Work-in-Progress are impaired
6.2 Capital Work-in-Progress amounting to H 63.13 lacs (March 31, 2024 - H 1,685.01 lacs) have been pledged to secure
borrowings of the Company (Refer note 20). Details of charge has been given on the basis of records available with
Registrar of Companies.
7 Right of use assets
Accounting Policy
The company recognises right of use assets at the commencement date of the lease (i.e., the date the underlying asset is
available for use). Right of use assets are measured at cost, less any accumulated depreciation and impairment losses, and
adjusted for any remeasurement of lease liabilities. The cost of right of use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease payments made at or before the commencement date. Right of use assets
are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets. If
ownership of the leased asset transfers to the company at the end of the lease term or the cost reflects the exercise of a
purchase option, depreciation is calculated using the estimated useful life of the asset
7.1 The company has performed an assessment of its Right of use assets for possible triggering events or circumstances for an
indication of impairment and has concluded that there were no triggering events or circumstances that would indicate the
Right of use assets are impaired
8 Intangible assets
Accounting Policy
Intangible assets purchased are initially measured at cost. The cost of a separately purchased intangible asset comprises its
purchase price including duties and taxes and any costs directly attributable to making the asset ready for their intended use.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is
an indication that the intangible asset may be impaired.
Intangible assets (System Oriented Softwares) are amortised on straight line basis over its estimated useful life of 3 years. All
other expenditure is recognised in Statement of Profit & Loss as incurred unless such expenditure forms part of carrying value
of another asset. The amortisation period and amortisation method are reviewed at least at the end of each financial year. If the
expected useful life of assets is significantly different from previous estimates, the amortisation period is revised accordingly.
9 Investments in subsidiary & joint venture
Accounting Policy
Investments in Subsidiary and Joint Venture are carried at cost less accumulated impairment losses, if any. Where an indication
of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable
amount. On disposal of investments in joint venture, the difference between net disposal proceeds and the carrying amounts
are recognised in the statement of profit and loss.
Impairment of Non - Financial Assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. An asset is treated
as impaired when the carrying cost of the asset exceeds its recoverable value being higher of value in use and net selling price.
Value in use is computed at net present value of cash flow expected over the balance useful lives of the assets. For the purpose
of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which
are largely independent of the cash inflows from other assets or group of assets (Cash Generating Units - CGU).
An impairment loss is recognized as an expense in the Statement of Profit and Loss in the year in which an asset is identified
as impaired. The impairment loss recognized in earlier accounting period is reversed if there has been an improvement in
recoverable amount.
9.1 On 20-01-2023, the company acquired 66.66% of the share capital in M/s. Dollar Garments Private Limited and hence the
same is treated as a Subsidiary as it has control over it.
9.2 The company holds 49% of the share capital in the Joint Venture Company. During the year, the Company has provided for
reversal of impairment on its investment in Joint Venture viz. Pepe Jeans Innerfashions Pvt Ltd (PJIFPL) of H 318.86 Lacs.
Hence, the carrying amount of investment has increased to H 1,497.00 Lacs.
Financial Asset
Accounting Policy
(a) Initial recognition and measurement
All financial assets are initially recognized when the Company becomes a party to the contractual provisions of the instruments.
A financial asset is initially measured at fair value plus, in the case of financial assets not recorded at fair value through profit
or loss, transaction costs that are attributable to the acquisition of the financial asset.
(b) Subsequent Measurement and Classification:
For purposes of subsequent measurement, financial assets are classified in four categories:
Ý Measured at Amortized Cost;
Ý Measured at Fair Value Through Other Comprehensive Income (FVTOCI);
Ý Measured at Fair Value Through Profit or Loss (FVTPL);
Ý Equity Instruments measured at Fair Value through Other Comprehensive Income (FVTOCI).
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.
Financial assets carried at amortised cost - A financial asset is subsequently measured at amortised cost if it is held
within a business model whose objective is to hold the asset in order to collect contractual cash flows, and the contractual
terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on
the principal amount outstanding. The Company may irrevocably elect at initial recognition to classify a Financial asset that
meets the amortised cost criteria above as at FVTPL if that designation eliminates or significantly reduces an accounting
mismatch had the financial asset been measured at amortised cost.
Financial assets at fair value through other comprehensive income - A financial asset is subsequently measured at
fair value through other comprehensive income if it is held within a business model whose objective is achieved by both
collecting contractual cash flows and selling financial assets and the contractual terms of the financial assets give rise
on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial Asset meeting these criteria are measured initially at fair value plus transaction costs. They are subsequently
measured at fair value with any gains or losses arising on remeasurement recognized in other comprehensive income, except
for impairment gains or losses and foreign exchange gains or losses. Interest calculated using the effective interest method
is recognized in the Statement of Profit and Loss in investment income.
Financial assets at fair value through profit and loss - Financial assets are measured at fair value through profit or loss
unless they are measured at amortised cost or at fair value through other comprehensive income on initial recognition. The
transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through profit or loss
are immediately recognised in statement of profit and loss.
Equity Instruments measured at FVTOCI: 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 may make
an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The Company makes
such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable. In case
the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding
dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to P&L, even on sale of investment.
(c) Derecognition:
The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
d) Impairment
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period.
Ind AS 109 requires expected credit losses to be measured through a loss allowance.
12 Income taxes
Accounting Policy
Income Tax comprises current and deferred tax. It is recognized in the statement of Profit and Loss except to the extent that
it relates to an item recognized directly in equity or in other comprehensive income.
Current tax liabilities (or assets) for the current and prior periods are measured at the amount expected to be paid to (recovered
from) the taxation authorities using the tax rates (and tax laws) that have been enacted or substantively enacted, at the end
of the reporting period.
Deferred Tax assets and liabilities shall be measured at the tax rates that are expected to apply to the period when the asset
is realized or the liability is settled based on tax rates (and tax laws) that have been enacted or substantively enacted by the
end of the reporting period.
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the corresponding amounts used for taxation purposes (i.e., tax base). Deferred tax is also
recognized for carry forward of unused tax losses and unused tax credits.
Deferred tax assets are recognized 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 utilized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period. The company reduces the carrying
amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow
the benefit of part or that entire deferred tax asset to be utilized. Any such reduction is reversed to the extent that it becomes
probable that sufficient taxable profit will be available.
Deferred tax relating to items recognized outside the statement of Profit and Loss is recognized either in other comprehensive
income or in equity. Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly
in equity.
14 Inventories (as at cost or net realisable value, whichever is lower)
Accounting Policy
Inventories are valued at Cost or Net Realizable Value, whichever is lower. Costs incurred in bringing each product to its present
location and condition are as follows:
Raw materials, consumables, and packing materials: Cost includes cost of purchase and other costs incurred in bringing
the inventories to their present location and condition. Cost is determined on a weighted average.
Work-in-progress and Finished goods: Cost includes direct materials and labour and a proportion of manufacturing overheads
based on normal operating capacity. Cost of work-in-progress, (measured in Kgs) is determined on weighted average basis and
cost of work-in-progress (measured in Pieces) is determined on retail sales price method. Cost of finished goods is determined
on retail sales price method.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and
estimated costs necessary to make the sale.
15.1 In determining allowance for credit losses of trade receivables, the Company has used the practical expedient by computing
the expected credit loss allowance based on a provision matrix. The provision matrix takes into account historical credit loss
experience and is adjusted for forward looking information. The expected credit loss allowance is based on ageing of the
receivables and rates used in the provision matrix.
15.2 The Company considers its maximum exposure to credit risk with respect to customers as at March 31, 2025 to be H 53,921.64
lacs (March 31, 2024: H 48,050.75 lacs), which is the carrying value of trade receivables after allowance for credit losses.
The Company's exposure to customers is diversified and no single customer contributes more than 10% of the outstanding
receivables As at March 31, 2025 and March 31, 2024.
15.3 There are no outstanding receivables due from directors or other officers of the Company.
18.4 Rights, preferences and restrictions attached to shares
The Company has one class of issued shares i.e. equity shares having par value of H 2 per share. Each holder of ordinary shares
is entitled to one vote per share. The dividend proposed by Board of Directors is subject to approval of the shareholders in the
ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation of the Company, the holders of
equity shares will be entitled to receive the remaining assets of the Company in proportion to the number of equity shares held.
18.5 The Company does not have any holding Company or ultimate holding Company.
18.6 No shares have been reserved for issue under options and contracts / commitments for the sale of shares / disinvestment
as at the balance sheet date.
18.7 No convertible securities has been issued by the Company during the year.
18.8 No calls are unpaid by any Director and officer of the Company during the year.
(b) Nature and purpose of reserves
19.1 Securities premium
Securities premium represents premium received on issue of shares. The reserve is utilised in accordance with the provisions
of the Companies Act, 2013.
19.2 General reserve
General reserve is created out of the profits transferred from the earnings during the year. It is available for distribution to
the shareholders.
19.3 Retained earnings
Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or
other distributions paid to shareholders.
19.4 Remeasurement of defined benefit Plans
Remeasurement of defined benefit plans comprises actuarial gains and losses and return on plan asset (excluding interest
income) which are recognised in other comprehensive income and then immediately transferred to retained earnings.
Financial Liabilities
Accounting Policy
Recognition and Initial measurement
Financial liabilities are classified, at initial recognition, as fair value through profit or loss, loans and borrowings, payables or as
derivatives, as appropriate. All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings
and payables, net of directly attributable transaction costs.
Subsequent Measurement
Financial liabilities are measured subsequently at amortized cost or FVTPL. A financial liability is classified as FVTPL if it is
classified as held-for-trading, or 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 recognized in profit or loss. Other
financial liabilities are subsequently measured at amortized cost using the effective interest rate method. Interest expense
and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on de-recognition is also recognized
in statement of Profit and Loss.
De-recognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable
right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the
liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the
normal course of business and in the event of default, insolvency or bankruptcy of the counterparty.
20.1 Nature of security
a) Term loan from Indian Bank (previously Allahabad Bank) is secured by exclusive first charge over the assets acquired out
of the proceeds of the respective loan and situated at the Dyeing & Bleaching unit of the company at Dist. Erode, Taluk:
Penrundurai, SIPCOT industrial Growth Centre, Tamil Nadu, PIN:938052. Factory land & Building, Windmill properties
are also pledged as collateral security (on pari passu with all consortium banks). The said term loan stand repaid during
the year
b) Term loan from HDFC Bank is secured by exclusive charge on the capital assets procured out of the proceeds of the
respective loan. Personal Guarantee of the promoter directors are also provided as collateral security.
c) As on 31.03.2024, a new Term loan from HDFC Bank (Sanctioned Limit - H 5000 lacs) is secured by exclusive charge on
the capital assets procured out of the proceeds of the respective loan and Pari Passu first charge on Factory Land and
Building of spinning unit on NH7, V. Paddukotal Village, P.O. Minukkampatti, Taluk: Vedasandur, Dist: Dindigul, Tamil Nadu.
Personal Guarantee of the promoter directors are also provided as collateral security.
d) Working capital loan and packing credit from consortium member banks (Total Sanctioned Limit - H 27500 lacs) are
secured by way of hypothecation charge over entire current assets viz. raw materials, stock-in-trade and book debts
both present and future ranking pari passu with other consortium member banks.Factory land & Building, Windmill
properties, entire fixed assets of the company are also pledged as collateral security (on pari passu with all consortium
banks). Furthermore, personal guarantee of promoter directors are provided against the same.
20.2 Repayment terms of loans outstanding As at March 31, 2025
a) Allahabad Bank term loan “V” amounting Nil (March 31, 2024: H Nil lacs) was repayable in 19 equal quarterly instalments
beginning from June, 2019, the loan has been fully repaid during the year 2023-24.
b) HDFC Bank term loan amounting H Nil lacs (March 31, 2024: H 14.38 lacs) is repayable in 20 equal quarterly instalments
beginning from February, 2021, the loan has been fully repaid during the year.
c) HDFC Bank term loan amounting H 4,316.58 lacs (March 31, 2024: H 3,427.15 lacs) is repayable in 16 equal quarterly
instalments beginning from October, 2024, the next instalment is due in April, 2025
d) Working capital loans from banks amounting to H 25,366.78 lacs (March 31, 2024: H 25,113.17 lacs) is repayable
on demand.
20.3 Interest rates on the above loans from banks and body corporate is between 6.50% to 9.15% p.a.
20.4 The Company has filed quarterly returns or statements with the banks in lieu of the sanctioned working capital facilities,
which are not in agreement with the books of account as set out below.
21 Lease liabilities
Accounting Policy
Lease liability is initially measured at the present value of future lease payments. Lease payments are discounted using
the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. Lease liability is
subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability and reducing the carrying
amount to reflect the lease payments made.
A lease liability is remeasured upon the occurrence of certain events such as a change in the lease term or a change in an
index or rate used to determine lease payments. The remeasurement normally also adjusts the leased assets.
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