1 Corporate Information
AARVEE DENIMS AND EXPORTS LIMITED ("the company") is a public company domiciled in India and
incorporated under the provisions of the Companies Act, 2013 ("the Act" erstwhile Companies Act,
1956).The registered office of the Company is located at 191, Moje Shahwadi, Narol- Sarkhej Highway,
Ahmedabad 382 405. Its equity shares are listed on two stock exchanges in India. The company is engaged
in the manufacturing and selling of denim and non denim Fabrics. The company caters to both domestic
and international markets.
2.1 Material Accounting Policy Information
a Statement of compliance
The financial statements have been prepared in accordance with Indian Accounting Standards (“Ind AS”)
as issued under the Companies (Indian Accounting Standards) Rules, 2015.
The standalone Ind AS financial statements are presented in Indian Rupees and all values are rounded to
the nearest lakh (Rupees 00,000), except where otherwise indicated. Any discrepancies in any table
between totals and sums of the amounts listed are due to rounding off.
b Basis of preparation of Financial Statement
The financial statements have been prepared on the historical cost basis except for certain financial
instruments that are measured at fair values at the end of each reporting period, as explained in the
accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
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, regardless of whether that price is
directly observable or estimated using another valuation technique. In estimating the fair value of an asset
or a liability, the Company takes into account the characteristics of the asset or liability if market participants
would take those characteristics into account when pricing the asset or liability at the measurement date.
Fair value for measurement and/or disclosure purposes in these financial statements is determined on such
a basis, and measurements that have some similarities to fair value but are not fair value, such as net
realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3
based on the degree to which the inputs to the fair value measurements are observable and the
significance of the inputs to the fair value measurement in its entirety, which are described as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the
entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for
the asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
c Property, plant and equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative
purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated
impairment losses.
Properties in the course of construction for production, supply or administrative purposes are carried at
cost, less any recognised impairment loss. Cost includes professional fees for qualifying assets, borrowing
costs capitalised in accordance with the Company's accounting policy. Such properties are classified to the
appropriate categories of property, plant and equipment when completed and ready for intended use.
Depreciation of these assets, on the same basis as other property assets, commences when the assets are
ready for their intended use.
Freehold land is not depreciated.
Fixtures and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is recognised so as to write off the cost of assets (other than freehold land & properties under
construction) less their residual values over their useful lives, as indicated in the Companies Act, 2013, using
the straight-line method. 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. However, in respect of the following categories of assets, in whose case the life of the
assets has been assessed as under based on technical advice, taking into account the nature of the asset,
the estimated usage of the asset, the operating conditions of the asset, past history of replacement,
Depreciation on additions to / deletions from fixed assets made during the period is provided on pro-rata
basis from / up to the month of such addition / deletion as the case may be.
An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal
or retirement of an item of property, plant and equipment is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognised in profit or loss.
For transition to Ind AS, the Company has elected to continue with the carrying value of all of its property,
plant and equipment recognised as of April 1, 2016 (transition date) measured as per the previous GAAP
and use that carrying value as its deemed cost as of the transition date (except to the extent of any
adjustment permissible under other accounting standard).
Intangible Assets
Intangible Assets are stated at cost of acquisition less accumulated amortization and accumulated
impairment, if any. Amortization is done over their estimated useful life on straight line basis from the date
that they are available for intended use, subjected to impairment test.
Amortisation in respect of Intangible assets is provided on Straight Line basis over the period of under lying
contract or estimated period of its economic life.
d Impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and
intangible assets to determine whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable
amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to
which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate
assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest
group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for
impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of 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 for which
the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An
impairment loss is recognised immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating
unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment loss
been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is
recognised immediately in profit or loss.
e Non-current assets held for sale and discontinued operations.
The Company classifies non-current assets and disposal groups as held for sale if their carrying amounts
will be recovered principally through a sale rather than through continuing use. Actions required to complete
the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision
to sell will be withdrawn. Management must be committed to the sale expected within one year from the date
of classification.
The criteria for held for sale classification is considered to have met only when the assets or disposal group
is available for immediate sale in its present condition, subject only to terms that are usual and customary for
sale of such assets (or disposal groups), its sale or distribution is highly probable; and it will genuinely be
sold, not abandoned. The group treats sale of the asset or disposal group to be highly probable when:
I) The management is committed to a plan to sell the asset (or disposal group),
ii) An active programme to locate a buyer and complete the plan has been initiated (if applicable),
iii) The asset (or disposal group) is being actively marketed for sale at a price that is reasonable in relation to
its current fair value,
iv) The sale is expected to qualify for recognition as a completed sale within one year from the date of
classification, and
v) Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will
be made or that the plan will
be withdrawn.
Non-current assets held for sale and disposal groups are measured at the lower of their carrying amount
and the fair value less costs to sell. Assets and liabilities classified as held for sale/ distribution are
presented separately in the balance sheet.
Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or
amortized.
A disposal group qualifies as discontinued operation if it is a component of an entity that either has been
disposed of, or is classified as held for sale, and:
1) represents a separate major line of business or geographical area of operations,
2) is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of
operations.
Discontinued operations are excluded from the results of continuing operations and are presented as a
single amount as profit or loss after tax from discontinued operations in the statement of profit and loss.
f Inventories
Inventories are stated at the lower of cost and net realisable value. Costs of inventories are determined on a
first-in-first-out basis. Net realisable value represents the estimated selling price for inventories less all
estimated costs of completion and costs necessary to make the sale.
g Investments in Subsidiary Company
Investments in subsidiary Company is 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 subsidiary companies, the difference
between net disposal proceeds and the carrying amounts are recognised in the Statement of Profit and
Loss.
h Government Grants
Government Grants related to assets are treated as deferred income and are recognized in the statement of
profit and loss on a systematic and rationale basis over the useful life of the assets. Government Grants
related to revenue are recognized on a systematic basis in a statement of profit and loss over the period
necessary to match them with the related cost which they are intended to compensate. Specifically,
Government Grants whose primary condition is that the company should purchase, construct or otherwise
acquire non current assets are recognized as deferred revenue in the balance sheet and transferred to profit
or loss on a systematic and rational basis over the useful lives of the related assets.
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