1. MATERIAL ACCOUNTING POLICIES
1.1 CORPORATE & GENERAL INFORMATION
Orbit Exports Limited, a Public Limited Company
incorporated under Companies Act 1956,
principally operates in three business segments:
Manufacturing of Textile, Investments and
Windmill Power Generation. The registered
office of the Company is situated at Mumbai,
Maharashtra (India). The company is the leading
novelty fabric manufacturer in India. The equity
shares of the Company are listed on Bombay
Stock Exchange and National Stock Exchange of
India Limited.
Authorisation of Standalone financial statements:
The Board of Directors have approved the financial
statements for the year ended March 31, 2025, and
authorised them for issue on April 29, 2025.
1.2 BASIS OF PREPARATION & PRESENTATION OF
FINANCIAL STATEMENT
(A) COMPLIANCE WITH IND AS
The standalone financial statements
comply in all material aspects with Indian
Accounting Standards ("Ind AS") notified
under Section 133 of the Companies Act,
2013 ("the Act"), and relevant rules issued
thereunder and the relevant provisions of the
Act. In accordance with provision to the Rule
4A of the Companies (Accounts) Rules, 2014,
the terms used in these financial statements
are in accordance with the definitions and
other requirements specified in the applicable
accounting standards.
(B) BASIS OF MEASUREMENT
The standalone financial statements have
been prepared on a historical cost basis,
except for the following:
a. certain financial assets and liabilities
(including derivative instruments) are
measured at fair value; and
b. defined benefit plans - plan assets
measured at fair value.
(C) FUNCTIONAL & PRESENTATION CURRENCY
The Financial Statements are presented in
Indian Rupee (INR), which is the functional
currency of the Company and the currency of
the primary economic environment in which
the Company operates. All amounts disclosed
in the standalone financial statement and
notes have been rounded off to the nearest
Lakhs, except where otherwise indicated.
(D) PRESENTATION OF STANDALONE
FINANCIAL STATEMENTS
The Balance Sheet, the Statement of Profit
and Loss and the Statement of change in
equity are prepared and presented in the
format prescribed in the Schedule III to
the Companies Act, 2013 ("the Act"). The
Statement of Cash Flows has been prepared
and presented as per the requirements of Ind
AS 7 "Statement of Cash flows". The disclosure
requirements with respect to items in the
Balance Sheet and Statement of Profit and
Loss, as prescribed in the Schedule III to the
Act, are presented by way of notes forming
part of the financial statements along with
the other notes required to be disclosed under
the notified Indian Accounting Standards
and the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015
(as amended).
(E) OPERATING CYCLE FOR CURRENT AND
NON-CURRENT CLASSIFICATION
The Company presents its assets and
liabilities in the Balance Sheet based on
current / non-current classification.
An asset is classified as current if it is:
a. expected to be realised or intended to be
sold or consumed in normal operating
cycle.
b. held primarily for the purpose of trading.
c. expected to be realised within twelve
months after the reporting period; or
d. the cash or cash equivalent unless
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.
A liability is classified as current if it is:
a. it is expected to be settled in normal
operating cycle.
b. it is held primarily for the purpose of
trading.
c. it is due to be settled within twelve
months after the reporting period; or
d. there is no unconditional right to defer
the settlement of the liability for at least
twelve months after the reporting period.
All other liabilities are classified as non¬
current.
Deferred tax assets and liabilities are classified
as non-current assets and liabilities.
The operating cycle is the time between the
acquisition of assets for processing and their
realisation in cash and cash equivalents. The
company has identified twelve months as its
normal operating cycle.
(F) MEASUREMENT OF FAIR VALUES
A number of the Company's accounting
policies and disclosures require the
measurement of fair values, for both financial
and nonfinancial assets and liabilities.
Fair value is the price that would be received
to sell an asset or paid to transfer a liability
in an orderly transaction between market
participants at the measurement date. The
fair value measurement is based on the
presumption that the transaction to sell
the asset or transfer the liability takes place
either:
a. In the principal market for the asset or
liability, or
b. In the absence of a principal market, in
the most advantageous market for the
asset or liability.
The principal or the most advantageous
market must be accessible by the Company.
The fair value of an asset or a liability is
measured using the assumptions that
market participants would use when pricing
the asset or liability, assuming they act in
their economic best interest. A fair value
measurement of a non-financial asset
considers a market participant's ability to
generate economic benefits either by using
the asset in its highest and best use or by
selling it to another market participant that
would use the asset in its highest and best
use.
The Company uses valuation techniques that
are appropriate in the circumstances and for
which sufficient data are available to measure
fair value, maximizing the use of relevant
observable inputs and minimizing the use of
unobservable inputs.
All assets and liabilities for which fair value
is measured or disclosed in the financial
statements are categorised within the fair
value hierarchy, described as follows, based
on the input that is significant to the fair value
measurement as a whole:
• Level 1 -Quoted (unadjusted) market
prices in active markets for identical
assets or liabilities
• Level 2 - Valuation techniques for which
the lowest level input that is significant to
the fair value measurement is directly or
indirectly observable and
• Level 3 - Valuation techniques for which
the lowest level input that is significant
to the fair value measurements
unobservable.
External valuers are involved for valuation of
significant assets & liabilities. Involvement
of external valuers is decided by the
management of the company considering the
requirements of Ind AS and selection criteria
include market knowledge, reputation,
independence and whether professional
standards are maintained.
1.3 USE OF JUDGEMENTS, ESTIMATES AND
ASSUMPTIONS
While preparing standalone financial statements
in conformity with Ind AS, the management makes
certain estimates and assumptions that require
subjective and complex judgments. These judgments
affect the application of accounting policies and the
reported amount of assets, liabilities, income and
expenses, disclosure of contingent liabilities at the
statement of financial position date and the reported
amount of income and expenses for the reporting
period. Financial reporting results rely on our estimate
of the effect of certain matters that are inherently
uncertain. Future events rarely develop exactly as
forecast and the best estimates require adjustments,
as actual results may differ from these estimates
under different assumptions or conditions. The
management continually evaluate these estimates
and assumptions based on the most recently available
information.
Revisions to accounting estimates are recognised in
the period in which the estimates are revised and in
any future periods affected. In particular, information
about significant areas of estimation uncertainty and
critical judgments in applying accounting policies
that have the most significant effect on the amounts
recognised in the standalone financial statements is
provided below:
KEY ASSUMPTIONS:
(A) FINANCIAL INSTRUMENTS:
Management uses valuation techniques
in measuring the fair value of financial
instruments where active market quotes
are not available. Details of the assumptions
used are given in the notes regarding
financial assets and liabilities. 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 prices that would be
achieved in an arm's length transaction at the
reporting date.
(B) USEFUL LIVES OF PROPERTY, PLANT AND
EQUIPMENT AND INTANGIBLE ASSETS:
The company reviews the useful life of
Property, plant and equipment at the end of
each reporting period. This reassessment
may result in change in depreciation expense
in future periods.
(C) VALUATION OF INVENTORIES:
The Company estimates the net realisable
value (NRV) of its inventories by considering
the estimated selling price, estimated cost
of completion, estimated costs necessary to
make the sale, obsolescence considering on
past trends. Inventories are written down to
NRV where such NRV is lower than their cost.
(D) ASSETS AND OBLIGATIONS RELATING TO
EMPLOYEE BENEFITS:
The cost of the defined benefit plans,
compensated absences and the present value
of the defined benefit obligations are based on
actuarial valuation using the projected unit
credit method. An actuarial valuation involves
making various assumptions that may differ
from actual developments in the future.
These inter alia include the determination
of the discount rate, future salary increases
and mortality rates. Due to the complexities
involved in the valuation and its long-term
nature, a defined benefit obligation is highly
sensitive to changes in these assumptions. All
assumptions are reviewed at each reporting
date.
(E) RECOGNITION AND MEASUREMENT OF
OTHER PROVISIONS:
The recognition and measurement of other
provisions is based on the assessment of the
probability of an outflow of resources, and on
past experience and circumstances known
at the closing date. The actual outflow of
resources at a future date may, therefore, vary
from the amount included in other provisions.
A summary of the material accounting policies
applied in the preparation of the standalone financial
statements are as given below. These accounting
policies have been applied consistently to all the
periods presented in the standalone financial
statements.
(A) REVENUE RECOGNITION
a) Revenue From Contracts with Customers
The Company derives revenues primarily from
sale of products and services. Revenue from
sale of goods is recognised net of returns and
discounts.
Revenue is recognised upon transfer of control
of promised products or services to customers
in an amount that reflects the consideration the
Company expect to receive in exchange for those
products or services.
To recognise revenues, the Company applies the
following five step approach:
1. Identify the contract with a customer.
2. Identify the performance obligations in the
contract.
3. Determine the transaction price.
4. Allocate the transaction price to the
performance obligations in the contract; and
5. Recognise revenues when a performance
obligation is satisfied.
Revenue is measured based on the consideration
specified in a contract with a customer and
excludes taxes and amounts collected on behalf
of third parties.
The Company presents revenues net of indirect
taxes in its statement of profit and loss.
a. Export incentives are accounted on accrual
basis and include the estimated value of
export incentives receivable under the Duty
Draw Back Scheme and other applicable
schemes.
b. Dividend Income is recognised when the
Company's right to receive is established
which generally occurs when the shareholders
approve the dividend.
c. Revenue from services is recognised when
all relevant activities are completed and the
right to receive income is established.
d. Revenue in respect of insurance/other claims,
commission, interest for delayed payment
etc. is recognised only when it is reasonably
certain that the ultimate collection will be
made.
e. For all financial instruments measured at
amortised cost, interest income is recorded
using the effective interest rate method (EIR).
(B) PROPERTY, PLANT AND EQUIPMENT
a) Property, Plant and Equipment is stated at cost,
less accumulated depreciation and accumulated
impairment losses. The initial cost of an asset
comprises its purchase price, non-refundable
purchase taxes and any costs directly attributable
to bringing the asset into the location and condition
necessary for it to be capable of operating in the
manner intended by management, the initial
estimate of any decommissioning obligation,
if any, and, for assets that necessarily take a
substantial period of time to get ready for their
intended use, finance costs. The purchase price
is the aggregate amount paid and the fair value
of any other consideration given to acquire the
asset.
b) The cost of an item of Property, Plant and
Equipment is recognised as an asset if, and
only if, it is probable that the economic benefits
associated with the item will flow to the Company
in future periods and the cost of the item can be
measured reliably. Expenditure incurred after
the Property, Plant and Equipment have been put
into operations, such as repairs and maintenance
expenses are charged to the Statement of Profit
and Loss during the period in which they are
incurred.
c) An item of Property, Plant and Equipment and
any significant part initially recognised is
derecognised upon disposal or when no future
economic benefits are expected from its use. Any
gain or loss arising on derecognition of the asset
(calculated as the difference between the net
realisable value and the carrying amount of the
asset) is included in the Statement of Profit and
Loss.
d) The residual values and useful lives of Property,
Plant and Equipment are reviewed at each
financial year end, and changes, if any, are
accounted prospectively.
e) Long-term lease arrangements in respect of land
are treated as Property, plant and equipment,
in case such arrangements result in transfer
of control and the present value of the lease
payments is likely to represent substantially all
the fair value of the land. Cost in respect of the
same is amortised over the period of respective
lease arrangement.
(C) INTANGIBLE ASSETS
Intangible assets acquired separately are measured
on initial recognition at cost. Following initial
recognition, intangible assets are carried at cost less
any accumulated amortisation and accumulated
impairment losses. Internally generated intangibles
are not capitalised, and the related expenditure is
reflected in the Statement of Profit and Loss in the
period in which the expenditure is incurred. Intangible
assets with finite lives are amortised on straight line
basis over their useful economic life and assessed for
impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation
period and the amortisation method for an intangible
asset with a finite useful life are reviewed at each year
end. The amortisation expense on Intangible assets
with finite lives and impairment loss is recognised in
the Statement of Profit and Loss.
(D) DEPRECIATION AND AMORTISATION
Depreciation on property, plant and equipment is
provided on a straight-line basis over the useful
lives of the assets as specified in Schedule II to the
Act except where the management, has estimated
the useful life of an asset supported by technical
assessment, external or internal, i.e., higher or lower
from the indicative useful life given under Schedule II.
The management believes that these estimated useful
lives are realistic and reflect a fair approximation of
the period over which the assets are likely to be used.
Intangible assets with finite lives are amortized on a
straight-line basis over the estimated useful economic
life. The amortization expense on intangible assets
with finite lives is recognized in the Standalone
Statement of Profit and Loss. Amortization of
intangible assets such as software is computed on a
straight-line basis, at the rates representing estimated
useful life of up to 6 years.
Depreciation is calculated on a straight-line basis
over the estimated useful lives of the assets as
follows:
(E) IMPAIRMENT OF FINANCIAL ASSETS
Carrying amount of Tangible assets and Intangible
assets, investments in Subsidiaries and Associates
(which are carried at cost) are tested for impairment
whenever events or changes in circumstances
indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the
amount by which the asset's carrying amount exceeds
its recoverable amount. The recoverable amount is
the higher of an asset's fair value less costs of disposal
and value in use.
In assessing value in use, the estimated future cash
flows are discounted to their present value using a
pre-tax discount rate that reflects current market
assessments of the time value of money and the
risks specific to the asset. In determining fair value
less costs of disposal, recent market transactions are
taken into account. If no such transactions can be
identified, an appropriate valuation model is used.
For the purposes 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 company's assets (cash-generating units). Non¬
financial assets other than goodwill that suffered an
impairment are reviewed for possible reversal of the
impairment at the end of each reporting period.
(F) INVENTORIES
Raw materials, stores and spares are valued at lower
of cost and net realisable value. However, 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. Cost in case
of Raw material and Packing material, Stores and
Spare and Traded Goods include purchase cost net
of refundable taxes and other overheads incurred
in bringing such items of inventory to its present
location and condition.
Cost of raw materials, components and stores and
spares which do not meet the recognition criteria
under Property, Plant and Equipment is determined
on a weighted average basis.
Finished goods and work-in-progress include cost of
conversion and other costs incurred in bringing the
inventories to their present location and condition.
Provision is made for the cost of obsolescence
and other anticipated losses, wherever considered
necessary.
Net realisable 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. The factors that the Company considers in
determining the allowance for slow moving, obsolete
and other non-saleable inventory in determining net
realisable value include ageing of inventory, price
changes and such other related factors.
(G) CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents in the Balance Sheet
comprises of cash at banks and in hand and short¬
term deposits with an original maturity of three
months or less, which are subject to insignificant risk
of change in value.
For the purpose of statement of cashflows, cash and
cash equivalents consist of cash, short-term deposits
as defined above, bank overdrafts and short-term
highly liquid investments that are readily convertible
to known amounts of cash and which are subject
to insignificant risk of changes in value as they are
considered as an integral part of the Company's
management.
(H) GOVERNMENT GRANT
Government grants are recognised when there is
reasonable assurance that the grant will be received
and all attached conditions will be complied with.
When the grant relates to an expense item, it is
recognised in statement of profit and loss on a
systematic basis over the periods in which the
Company recognises as expenses the related costs for
which the grants are intended to compensate.
The above criteria is also used for recognition of
incentives under various scheme notified by the
Government. When the grant relates to an asset, it is
recognised as deferred income and amortised over
the useful life of such assets.
(I) FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognised
when a Company becomes a party to the contractual
provisions of the instruments.
Initial Recognition and Measurement- Financial
Assets and Financial Liabilities
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue of
financial assets and financial liabilities (other than
financial assets and financial liabilities at fair value
through profit or loss and ancillary costs related to
borrowings) are added to or deducted from the fair
value of the financial assets or financial liabilities, as
appropriate, on initial recognition. Transaction costs
directly attributable to the acquisition of financial
assets or financial liabilities at fair value through profit
or loss are recognised immediately in the Statement
of Profit and Loss.
Classification and Subsequent Measurement:
Financial Assets
The Company classifies financial assets as
subsequently measured at amortised cost, fair value
through Other Comprehensive Income ("FVTOCI") or
fair value through profit or loss ("FVTPL") on the basis
of following:
- the entity's business model for managing the
financial assets and
- the contractual characteristics of financial asset
Amortised Cost
A financial asset is classified and measured at
amortised cost if both of the following conditions are
met:
- the financial asset is held within a business model
whose objective is to hold financial assets 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.
Fair Value Through Other Comprehensive Income
(FVTOCI)
A financial asset is classified and measured at FVTOCI
if both of the following conditions are met:
- the financial asset 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 asset give
rise on specified dates to cash flows that are
solely payments of principal and interest on the
principal amount outstanding.
Fair Value Through Profit & Loss (FVTPL)
A financial asset is classified and measured at FVTPL
unless it is measured at amortised cost or at FVTOCI.
All recognised financial assets are subsequently
measured in their entirety at either amortised cost
or fair value, depending on the classification of the
financial assets.
Impairment of Financial Assets
The Company assesses on a forward-looking basis the
expected credit loss associated with its assets carried
at amortised cost. The impairment methodology
applied depends on whether there has been a
significant increase in credit risk.
For trade receivables only, the Company applies the
simplified approach permitted by Ind AS 109 Financial
Instruments, which requires expected lifetime losses
to be recognised from initial recognition of the
receivables.
(Classification and Subsequent Measurement:
Financial Liabilities)
The Company's financial liabilities include trade and
other payables, loans and borrowings including bank
overdrafts and derivative financial instruments.
Financial Liabilities at FVTPL
Financial liabilities are classified as at FVTPL
when the financial liability is held for trading or are
designated upon Initial recognition as FVTPL.
Gains or losses on financial liabilities held for trading
are recognised in the Statement of Profit and Loss.
Other Financial Liabilities
Other financial liabilities (including borrowings and
trade and other payables) are subsequently measured
at amortised cost using the effective interest method.
The effective interest method is a method of
calculating the amortised cost of a financial liability
and of allocating interest expense over the relevant
period. The effective interest rate is the rate that
exactly discounts estimated future cash payments
(including all fees and points paid or received that
form an integral part of the effective interest rate,
transaction costs and other premiums or discounts)
through the expected life of the financial liability,
or (where appropriate) a shorter period, to the net
carrying amount on initial recognition.
Derecognition of Financial Asset and Financial
Liabilities
The Company de-recognises a financial asset when
the contractual rights to the cash flows from the
financial asset expire, or it transfers the rights to
receive the contractual cash flows in a transaction
in which substantially all of the risks and rewards
of ownership of the financial asset are transferred or
in which the Company neither transfers nor retains
substantially all of the risks and rewards of ownership
and does not retain control of the financial asset. If
the Company enters into transactions whereby it
transfers assets recognised on its balance sheet but
retains either all or substantially all the risks and
rewards of the transferred assets, the transferred
assets are not derecognised.
A financial liability is derecognised 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 is reported in the Balance Sheet where there
is a legally enforceable right to offset the recognised
amounts and there is an intention to settle on a
net basis or realise 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
Company or the counter party.
(J) FINANCIAL LIABILITIES AND EQUITY INSTRUMENTS
Classification as Debt or Equity:
Debt and equity instruments issued by the Company
are classified as either financial liabilities or as equity
in accordance with the substance of the contractual
arrangements and the definitions of a financial
liability and an equity instrument.
Equity Instruments:
An equity instrument is any contract that evidences
a residual interest in the assets of an entity after
deducting all its liabilities. Equity instruments issued
by a Company are recognised at the proceeds received.
(K) INVESTMENTS IN SUBSIDIARY AND ASSOCIATE
A Subsidiary is an entity that is controlled by another
entity. An investor controls an investee if and only if
the investor has the following:
(i) Power over the investee,
(ii) Exposure, or rights, to variable returns from its
involvement with the investee and
(iii) The ability to use its power over the investee to
affect the amount of the investor's returns.
An Associate is an entity over which the Company
has significant influence. Significant influence is the
power to participate in the financial and operating
policy decisions of the investee but is not control
or joint control over those policies. The Company's
investments in its Subsidiary and Associate are
accounted at cost.
(L) BORROWING COST
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily
takes a substantial period of time to get ready for its
intended use or sale are capitalised as part of the cost
of the asset. All other borrowing costs are expensed
in the period in which they occur. Borrowing costs
consist of interest and other costs that an entity incurs
in connection with the borrowing of funds. Borrowing
cost also includes exchange differences to the extent
regarded as an adjustment to the borrowing costs.
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