1. Corporate Information
Maral Overseas Limited (the Company) is a public
limited company incorporated and domiciled in India
having its registered office at Maral Sarovar, V&P.O.
Khalbujurg Tehsil Khasrawad, District Khargone,
Madhya Pradesh, India. The Company has its primary
listing on the BSE Limited and National Stock Exchange
India Limited in India.
The Company is one of India's largest vertically
integrated textile companies, having multiple facilities
to produce Grey Yarn, Dyed Yarn, Knitted Fabric and
Garments. The manufacturing plants of the Company
are located in India.
1.1. Statement of Compliance
The financial statements are the separate financial
statement which are prepared in accordance with
Indian Accounting Standards (Ind AS), as prescribed
under section 133 of the Companies Act, 2013('the
Act') (to the extent notified) read with the Rule 3 of the
Companies (Indian Accounting Standard) Rules 2015
as amended and relevant amendment rules issued
thereafter. These Ind AS had been adopted w.e.f.
1 April, 2017 as notified by Ministry of Corporate Affairs
under the Companies (Indian Accounting Standards)
Rules, 2015 as amended
1.2. Basis of preparation and presentation
The Financial Statements have been prepared on
historical cost basis except for following that are
measured at fair value:
• Defined benefit plan-plan assets measured
at fair value,
• Certain financial assets and liabilities (including
derivative instruments).
Historical cost is generally based on the fair
value of the consideration given in exchange for
goods and services.
1.3. Functional and Presentation Currency
The financial statements are presented in Indian
Rupees, which is the functional currency of the
Company and the currency of the primary economic
environment in which the Company operates.
All values are rounded to the nearest Lakhs (C 00,000)
except when otherwise indicated.
1.4. Disclosure of material accounting policy
During the year the company have evaluated the
amendment of disclosing their material accounting
policy in place of significant accounting policy and
the impact of the amendment is insignificant to the
company's financial statement.
2. Accounting Policies:
2.1. Classification of Assets and Liabilities as Current
and Non-Current
Assets are classified as current when any of following
criteria are satisfied:
i. it expects to realise the asset, or intends to sell
or consume it, in its normal operating cycle;
ii. it holds the asset primarily for the
purpose of trading;
iii. it expects to realise the asset within twelve
months after the reporting period;
iv. The asset is cash or a cash equivalent unless the
asset is restricted from being exchanged or used
to settle a liability for at least twelve months after
the reporting period.
All other assets are classified as non-current
Liabilities are classified as current when any of
following criteria are satisfied:
i. expects to settle the liability in its normal
operating cycle;
ii. it holds the liability primarily for the purpose
of trading;
iii. the liability is due to be settled within twelve
months after the reporting period; or
iv. It does not have an unconditional right to defer
settlement of the liability for at least twelve months
after the reporting period. Terms of a liability that
could, at the option of the counterparty, result in
its settlement by the issue of equity instruments
do not affect its classification.
All other liabilities are classified as non-current.
2.2. Revenue recognition
Revenue from contracts with customers for sale of
goods or services is recognised when the Company
satisfies performance obligation by transferring
promised goods or services to the customer at an
amount that reflects the consideration which the
Company is expected to be entitled to in exchange for
those goods or services.
Sale of goods
Sale of goods: Revenue from sale of products is
recognized when the control on the goods have
been transferred to the customer. The performance
obligation in case of sale of product is satisfied at a
point in time i.e., when the material is shipped to the
customer or on delivery to the customer, as may be
specified in the contract.
Revenue from the sale of goods is measured at the
transaction price, which is adjusted for, net of returns
and allowances, trade discounts and volume rebates/
claims etc. Sales exclude Value added tax/sales tax /
Service Tax / Goods & Service Tax
Other Operating Income
Incentives on exports and other Government incentives
related to operations are recognised in books after due
consideration of certainty of utilization/receipt of such
incentives. For Government grant refer Para 2.3.
Interest income
Interest income from a financial asset is recognised
using effective interest rate (EIR) method.
EIR is the rate that exactly discounts the estimated
future cash payments or receipts over the expected
life of the financial instrument or a shorter period,
where appropriate, to the gross carrying amount of the
financial asset or to the amortised cost of a financial
liability. When calculating the effective interest rate,
the Company estimates the expected cash flows by
considering all the contractual terms of the financial
instrument (for example, prepayment, extension, call
and similar options) but does not consider the expected
credit losses. Interest income which are earned on
temporary investment of borrowings are deducted
from borrowing costs. Any other interest income is
recognized as interest income in profit or loss.
Dividend Income
Dividend income is recognised when the Company's
right to receive the payment has been established, which
is generally when shareholders approve the dividend.
2.3. Government Grant & Government Assistance
Government grants are not recognised until there is
reasonable assurance that the Company will comply
with the conditions attaching to them and that the
grants will be received.
Government grant are recognised in the statement of
profit and loss on a systematic basis over the periods in
which the Company recognise as expenses the related
costs for which the grants are intended to compensate.
The Capital Subsidy under Technology Up-gradation
Fund Scheme (TUFS) Government on specified
machinery and Duty saved under EPCG is recognized
on a systematic and rational basis by adopting
Deferred Income Approach. Such allocation to income
is done prospectively over the remaining useful life
of the respective assets and is adjusted against the
depreciation in the Statement of Profit and Loss.
Pending the utilization of the grant received, the same
is presented as 'Deferred Income'.
2.4. Inventories
Inventories including goods-in-transit are measured
at lower of cost and estimated net realisable value.
However, Raw materials and other items held for use
in the production of inventories are not written down
below cost if the finished products in which they will be
incorporated are expected to be sold at or above cost.
Raw materials, embellishment, stores & spares and
packing material:
Cost includes cost of purchase and other costs
incurred in bringing the inventories to their present
location and condition. Cost is determined on
weighted average basis.
Finished goods and work in progress:
Cost includes cost of direct materials (net of realizable
value of waste / by product) and labour and a
proportion of manufacturing overheads based on the
normal operating capacity but excluding borrowing
costs and selling expenses.
Traded goods:
Cost includes cost of purchase and other costs
incurred in bringing the inventories to their present
location and condition. Cost is determined on
weighted average basis.
Waste:
Valued at Net realisable value. Net realisable value is
the estimated selling price in the ordinary course of
business, less estimated costs of completion and the
estimated costs necessary to make the sale.
2.5. Property, Plant and Equipment (PPE)
Recognition and measurement:
Property, plant and equipment (PPE) are carried at
cost less accumulated depreciation and accumulated
impairment losses, if any.
The cost of Property, plant and equipment (PPE)
comprises its purchase price including any import
duties and non-refundable taxes and net of any trade
discounts and rebates. It also includes any directly
attributable expenditure on making the asset ready for
its intended use, other incidental expenses, present
value of decommissioning costs (where there is a
legal or constructive obligation to decommission) and
interest on borrowings attributable to acquisition of
qualifying assets up to the date the asset is ready for
its intended use.
The company identifies and determines the cost of
each component/ part of the asset separately, if the
component / part has a cost which is significant to the
total cost of asset and has useful life that is materially
different from that of remaining assets.
Items of stores and spares that meet the definition
of property, plant & equipment are capitalised at
cost and depreciated over the useful life of asset.
Otherwise such items are classified as inventories.
Capital work-in-progress
Projects under which property, plant and equipment are
not yet ready for their intended use are carried at cost
less any recognised impairment loss. Cost comprises
direct cost, related incidental expenses and borrowing
cost. Depreciation of these assets, on the same basis
as other property assets, commences when the assets
are ready for their intended use.
Depreciation
Depreciation is recognised for Property, Plant and
Equipment (PPE) so as to write-off the cost less
residual values over their estimated useful lives.
The estimated useful lives, residual values and
depreciation method are reviewed at the end of
each reporting period, with the effect of any changes
in estimate accounted for on a prospective basis
taking into account commercial and technological
obsolescence as well as normal wear and tear.
Depreciation on tangible assets is provided on straight
line method (SLM) over the useful life of the assets.
For following class of assets, based on technical
evaluation by chartered engineer and internal
assessment, the management has reassessed the
useful lives as different from the useful lives indicated
under Part C of Schedule II of the Companies Act 2013.
Management believes that the useful lives as given
below, best represent the period over which these
assets are expected to be used.
Residual value in respect of vehicles, furniture's,
computers, provided under the company employee
benefit scheme is considered in accordance with the
said scheme and is higher than 5% of the original
cost of the assets.
Depreciation commences when the assets are
available for intended use and is being calculated
on monthly basis.
Free hold land is not depreciated.
Leasehold improvements are amortised over the
primary period of lease.
Impairment
Property, plant and equipment are tested for impairment
whenever events or changes in circumstances indicate
that an asset may be impaired. If an impairment loss
is determined, the remaining useful life of the asset is
also subject to adjustment.
An impairment loss is recognised in the Statement of
Profit and Loss to the extent, asset's carrying amount
exceeds its recoverable amount. The recoverable
amount is higher of an asset's fair value less cost
of disposal and value in use. Value in use is based
on the estimated future cash flows, discounted to
their present value using pre-tax discount rate that
reflects current market assessments of the time value
of money and risk specific to the assets.
The impairment loss recognised in prior accounting
period is reversed if there has been a change in the
estimate of recoverable amount.
Derecognition of PPE
An item of property, plant and equipment and any
significant part initially recognised is derecognized
upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or loss
arising on de-recognition of the asset (calculated as
the difference between the net disposal proceeds
and the carrying amount of the Property, Plant and
Equipment) is recognized in profit or loss when the
Property, Plant and Equipment is derecognized.
2.6. Biological Assets
Biological assets comprise of livestock.
Biological assets are measured at fair value less cost
to sell. Changes in fair value of biological assets is
recognised in the statement of profit or loss.
2.7. Intangible assets
Recognition and measurement
An Intangible Assets is recognised when it is probable
that the expected future economic benefits that are
attributable to the asset will flow to the entity; and the
cost of the asset can be measured reliably. All other
expenditure is expensed as incurred.
Intangible assets with finite useful lives that
are acquired separately are carried at cost less
accumulated amortisation and accumulated
impairment losses.
The cost of a separately acquired intangible asset
comprises of its purchase price, including import
duties and non-refundable purchase taxes, after
deducting trade discounts and rebates; and any
directly attributable cost of preparing the asset for
its intended use.
Internally generated intangibles, excluding capitalised
development costs, are not capitalised and the related
expenditure is reflected in profit or loss in the period in
which the expenditure is incurred.
Goodwill acquired and/or arising upon business
combinations initially recognized at cost and
at subsequent period at cost less accumulated
impairment loss, if any.
Amortisation
The useful lives of intangible assets are assessed
as either finite or indefinite. The amortisation period
and the amortisation method for an intangible asset
with a finite useful life are reviewed at least at the end
of each reporting period. Changes in the expected
useful life or the expected pattern of consumption
of future economic benefits embodied in the asset
are considered to modify the amortisation period or
method, as appropriate, and are treated as changes
in accounting estimates.
Impairment
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. The amortisation expense on
intangible assets with finite lives is recognised in the
statement of profit and loss unless such expenditure
forms part of carrying value of another asset.
Intangible assets with indefinite useful lives are not
amortised, but are tested for impairment annually,
either individually or at the cash-generating unit level.
Derecognition of Intangible assets
An intangible asset is derecognised on disposal,
or when no future economic benefits are expected
from use or disposal. Gains or losses arising from
derecognition of an intangible asset, are determined
as the difference between the net disposal proceeds
and the carrying amount of the asset and recognised
in Statement of profit or loss when the asset
is derecognised.
2.8. Leases
The Company evaluates if an arrangement qualifies
to be a lease as per the requirements of Ind AS 116.
Identification of a lease requires significant judgement.
The Company uses significant judgement in assessing
the lease term (including anticipated renewals) and
the applicable discount rate.
The Company determines the lease term as the
non-cancellable period of a lease, together with both
periods covered by an option to extend the lease if
the Company is reasonably certain to exercise that
option; and periods covered by an option to terminate
the lease if the Company is reasonably certain not
to exercise that option. In assessing whether the
Company is reasonably certain to exercise an option
to extend a lease, or not to exercise an option to
terminate a lease, it considers all relevant facts and
circumstances that create an economic incentive
for the Company to exercise the option to extend the
lease, or not to exercise the option to terminate the
lease. The Company revises the lease term if there is
a change in the non-cancellable period of a lease.
The discount rate is generally based on the incremental
borrowing rate specific to the lease being evaluated or
for a portfolio of leases with similar characteristics.
(i) The Company as a lessee
The Company's lease asset classes primarily
consist of leases for land and buildings.
The Company assesses whether a contract
contains a lease, at inception of a contract.
A contract is, or contains, a lease if the contract
conveys the right to control the use of an
identified asset for a period of time in exchange
for consideration. To assess whether a contract
conveys the right to control the use of an
identified asset, the Company assesses whether:
• The contract involves the use of an
identified asset
• The Company has substantially all of the
economic benefits from use of the asset
through the period of the lease and
• The Company has the right to direct the
use of the asset.
At the date of commencement of the lease,
the Company recognizes a right-of-use asset
("ROU") and a corresponding lease liability for
all lease arrangements in which it is a lessee,
except for leases with a term of twelve months
or less (short-term leases) and low value leases.
For these short-term and low value leases, the
Company recognizes the lease payments as an
operating expense on a straight-line basis over
the term of the lease.
Certain lease arrangements includes the options to
extend or terminate the lease before the end of the
lease term. ROU assets and lease liabilities includes
these options when it is reasonably certain that they
will be exercised.
The right-of-use assets are initially recognized at
cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or
prior to the commencement date of the lease plus any
initial direct costs less any lease incentives. They are
subsequently measured at cost less accumulated
depreciation and impairment losses.
Right-of-use assets are depreciated from the
commencement date on a straight-line basis over
the shorter of the lease term and useful life of the
underlying asset. Right of use assets are evaluated
for recoverability whenever events or changes in
circumstances indicate that their carrying amounts
may not be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher of the
fair value less cost to sell and the value-in-use) is
determined on an individual asset basis unless the
asset does not generate cash flows that are largely
independent of those from other assets. In such cases,
the recoverable amount is determined for the Cash
Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized
cost at the present value of the future lease payments.
The lease payments are discounted using the interest
rate implicit in the lease or, if not readily determinable,
using the incremental borrowing rates in the country
of domicile of these leases. Lease liabilities are
remeasured with a corresponding adjustment to the
related right of use asset if the Company changes its
assessment if whether it will exercise an extension or
a termination option.
Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments
have been classified as financing cash flows.
(ii) The Company as a lessor
Leases for which the Company is a lessor is classified
as a finance or operating lease. Whenever the terms
of the lease transfer substantially all the risks and
rewards of ownership to the lessee, the contract
is classified as a finance lease. All other leases are
classified as operating leases.
When the Company is an intermediate lessor, it
accounts for its interests in the head lease and the
sublease separately. The sublease is classified as a
finance or operating lease by reference to the right-of-
use asset arising from the head lease.
For operating leases, rental income is recognized on a
straight line basis over the term of the relevant lease.
The practical expedient in paragraph 46A applies only
to rent concessions occurring as a direct consequence
of the covid-19 pandemic and only if all of the
following conditions are met:- (a) the change in lease
payments results in revised consideration for the lease
that is substantially the same as, or less than, the
consideration for the lease immediately preceding the
change; (b) any reduction in lease payments affects
only payments originally due on or before the 30th June,
2021 (for example, a rent concession would meet this
condition if it results in reduced lease payments on
or before the 30th June, 2021 and increased lease
payments that extend beyond the 30th June, 2021);
and (c) there is no substantive change to other terms
and conditions of the lease.
2.9. Foreign currencies
The Company's financial statements are
presented in INR.
Transactions and balances
In preparing the financial statements, transactions
in foreign currencies are recognised at the rates of
exchange prevailing at the dates of the transactions.
Exchange differences arising on foreign exchange
transactions settled during the period are recognised
in the Statement of profit and loss of the period.
At the end of each reporting period, monetary items
denominated in foreign currencies are translated at
the rates prevailing at that date. Exchange differences
on translation of monetary items are recognised in
profit or loss in the period in which they arise with the
exception of the following:
Monetary items that are designated as part of cash flow
hedge instrument are recognised in OCI.
Non-monetary items carried at fair value that are
denominated in foreign currencies are retranslated at
the rates prevailing at the date when the fair value was
determined. Non-monetary that are measured in terms of
historical cost in a foreign currency are translated using
the exchange rates at the dates of the initial transactions.
Derivative Financial Instruments and Hedge Accounting
The Company uses derivative instruments i.e.
forward contracts to hedge its foreign currency risks.
The Company designated these forward contracts as
cash flow hedges to mitigate the risk of foreign exchange
exposure on highly probable forecast cash transactions.
The Company has designated forward instruments on spot
to spot basis. The Company recognises the forward points
in the statement of profit and loss.
At the inception of the hedge relationship, the entity
documents the relationship between the hedging instrument
and the hedged item, along with its risk management
objectives and its strategy for undertaking various hedge
transactions. Furthermore, at the inception of the hedge and
on an ongoing basis, the Company documents whether the
hedging instrument is highly effective in offsetting changes
in fair values or cash flows of the hedged item attributable
to the hedged risk.
Fair value hedges
Changes in fair value of the designated portion of derivatives
that qualify as fair value hedges are recognised in profit or
loss immediately, together with any changes in the fair value
of the hedged asset or liability that are attributable to the
hedged risk. The change in the fair value of the designated
portion of hedging instrument and the change in the hedged
item attributable to the hedged risk are recognised in profit
or loss in the line item relating to hedged item.
Hedge accounting is discontinued when the hedging
instrument expires or is sold, terminated or exercised, or
when it no longer qualifies for hedge accounting. The fair
value adjustment to carrying amount of the hedged item
arising from the hedged risk is amortised to profit or loss
from that date.
Cash flow hedges
When a derivative is designated as a cash flow
hedging instrument, the effective portion of changes
in the fair value of the derivatives recognised in
other comprehensive income and accumulated
in the cash flow hedging reserve. Any ineffective
portion of changes in the fair value of the derivative
is recognised immediately in the statement of profit
or loss. If the hedging instrument no longer meets the
criteria for hedge accounting, then hedge accounting
is discontinued prospectively. If the hedging
instrument expires or is sold, terminated or exercised,
the cumulative gain or loss on the hedging instrument
recognised in cash flow hedging reserve till the period
hedge was effective remains in cash flow hedging
reserve until the forecasted transaction occurs.
The cumulative gain or loss previously recognised in
the cash flow hedging reserve is reclassified to the
profit or loss upon the occurrence of related forecasted
transaction. If the forecasted transaction no longer
expected to occur, then the amount accumulated in
cash flow hedging reserve is reclassified to net profit
in the statement of profit or loss.
2.10. Employee benefits
Short-term employee benefits
Short-term employee benefits obligation is measured
on undiscounted basis and are expensed as the
related service is provided. A liability is recognised
for the amount expected to be paid if the Company
has a present legal or constructive obligation to pay
this amount as a result of past service provided by the
employee and the obligation can be estimated reliably.
Defined Contribution Plan:
The Company makes defined contribution to
employee's provident fund organization, pension
fund, superannuation fund and Employees state
insurance (ESI), which are accounted on accrual
basis as expenses in the statement of Profit and Loss
in the period during which the related services are
rendered by employees.
Prepaid contribution are recognized as an assets to
the extent that a cash refund or reduction in future
payments is available.
Defined Benefit Plan:
The Group provides for gratuity, a defined benefit retirement
plan ('the Gratuity Plan') covering eligible employees of
company The Gratuity Plan provides a lump sum payment
to vested employees at retirement, death, incapacitation
or termination of employment, of an amount based on the
respective employee's salary and the tenure of employment
with the company.
Liabilities with regard to the Gratuity Plan are determined
by actuarial valuation, performed by an independent
actuary, at each balance sheet date using the projected
unit credit method.
The net interest cost is calculated by applying the discount
rate to the net balance of the defined benefit obligation and
fair value of plan assets. This cost is included in employee
benefit expense in the profit or loss.
Re-measurement gain and loss arising from experience
adjustments and change actuarial assumptions are
recognised in the period in which they occur, directly
in other comprehensive income. They are included in
retained earnings in the statement of change in equity and
in the balance sheet.
Changes in the present value of defined benefit obligation
resulting from plan amendments and curtailments are
recognised immediately in profit or loss as service cost.
Other long-term employee benefits
The Company's net obligation in respect of long-term
employee benefits is the amount of future benefit that
employees have earned in return for their service in the
current and prior periods. That benefit is discounted to
determine its present value and fair value of any related
assets is deducted. The liability for other long-term
employee benefits are provided based on actuarial
valuation as at the Balance Sheet date, based on Projected
Unit Credit Method, carried out by an independent actuary.
Re-measurements are recognised in profit or loss in the
period in which they arise.
If the benefits are not expected to be settled wholly
within twelve months of the reporting date, then they are
discounted to present value.
Termination benefits
Termination benefits are recognized as an expense in
the period in which they are incurred. The Company
recognises a liability and expense for termination
benefits at the earlier of the following dates:
(a) When the entity can no longer withdraw the offer
of those benefits; and
(b) When the entity recognises costs for a
restructuring that is within the scope of Ind AS 37
and involves the payment of termination benefits.
If the benefits are not expected to be settled wholly
within twelve months of the reporting date, then they
are discounted to present value.
2.11. Taxation
Income tax expense represents the sum of tax
currently payable and deferred tax.
Income Tax - Current & Deferred
The income tax expense or credit for the period is the tax
payable on the current period's taxable income based
on the applicable income tax rate adjusted by changes
in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.
Deferred income tax is provided in full, using the liability
method on temporary differences arising between the
tax bases of assets and liabilities and their carrying
amount in the financial statement. Deferred income
tax is determined using tax rates (and laws) that have
been enacted or substantially enacted by the end of
the reporting period and are expected to apply when
the related deferred income tax assets is realised or
the deferred income tax liability is settled.
Deferred tax assets are recognised for all deductible
temporary differences and unused tax losses, only if, it
is probable that future taxable amounts will be available
to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when
there is a legally enforceable right to offset current
tax assets and liabilities and when the deferred
tax balances relate to the same taxation authority.
Current tax assets and tax liabilities are off set where
the Company has a legally enforceable right to offset
and intends either to settle on a net basis, or to realize
the asset and settle the liability simultaneously.
Current and deferred tax is recognised in the
Statement of Profit and Loss, except to the extent that
it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also
recognised in other comprehensive income or directly
in equity, respectively
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