1. SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of the significant accounting policies adopted in the preparation of
these financial statements. These policies have been consistently applied to all the years pre¬
sented, unless otherwise stated.
1.1 Basis of Preparation
1.1.1 Compliance with Ind AS
These financial statements comply in all material aspects with Indian Accounting Stan¬
dards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the "Act") [Com¬
panies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the
Act.
1.1.2 Classification of current and non-current
All assets and liabilities have been classified as current or non-current as per the
Company's normal operating cycle and other criteria set out in the Ind AS 1 - Presenta¬
tion of financial Statements and Schedule III to the Companies Act, 2013. Based on the
nature of products and the time between the acquisition of assets for processing and
their realisation in cash and cash equivalents, the Company has as certained its oper¬
ating cycle as 12 months for the purpose of current/non-current classification of as¬
sets and liabilities.
1.1.3 Historical Cost Convention
These financial statements have been prepared in accordance with the generally ac¬
cepted accounting principles in India under the historical cost convention, except for
the following :
i) certain financial assets and liabilities (including derivative instruments) that are mea¬
sured at fair value;
ii) defined benefit plans - plan assets measured at fair value;
iii) Biological assets are measured at cost incurred for their plantation.
1.2 Segment Reporting
Operating segments are defined as components of an enterprise for which discrete financial
information is available that is evaluated regularly by the chief operating decision maker, in
deciding how to allocate resources and assessing performance. The Company’s chief operat¬
ing decision maker is the Managing Director of the Company. Segment revenue, segment
expenses, segment assets andsegment liabilities have been identified to segments on the
basis of their relationship to the operating activities of the segment. Inter segment revenueis
accounted on the basis of transactions which are primarily determined basedon market / fair
value factors. Revenue, expenses, assets and liabilities whichrelate to the Company as a
whole and are not allocable to segments on areasonable basis have been included under
“unallocated revenue / expenses /assets / liabilities”.
1.3 Foreign Currency Translation
Foreign currency transactions are translated into Indian Rupee (INR) which is the functional
currency (i.e. the currency of the primary economic environment in which the entity operates)
usingyear end exchangerates as per IND AS 21.
Foreign Currency loans for financing Property, Plant and Equipment outstanding at the close
of financial year are revalorized at appropriate bank exchange at the close of the year. The
gain/loss for decrease/increase in rupee liability due to fluctuations in ratesof exchange is
adjusted to carrying amount of Property, Plant and Equipmentacquired out of said loans. In¬
come and Expenditure for the year are recorded asper prevailing bank rate on the date of
transaction/negotiation.
As per usual practice followed by the company, the export sales transaction during the year
are accounted for at Custom Rate and at the end of the year at the prevailing bank rate in
respectof outstanding debtors. Difference between actual realization at custom rateand/or
bank rate is adjusted to Exchange Difference Account in Statement of Profit & Loss.
Gain/loss on cancellation of Forward Exchange Contracts are recognized in the Statement of
Profit & Lossof the year in which they are cancelled as per IND AS109.
1.4 Revenue Recognition
Revenue is measured at the fairvalue of the consideration received or receivable. Amounts
disclosed as revenue are inclusive of Export benefits, Incentive and are net of sales return,
Goods & Service Tax, trade allowances. The Company recognises revenue when the amount
of revenue can bereliably measured, it is probable that future economic benefits will flow to the
Company and significant riskand reward incidental to sale of products is transferred to the
buyer.
Export Sales are recognised on the basis of date as mentioned in Shipping Bill/Bill of Lading.
Value of export sales is recognised at Custom Rate mentioned in the Shipping Bill.
Income and Expenditure arerecognised on accrual basis. Export entitlements are recognised
in Statement of Profit & Loss when the right to receive credit as per terms of entitlementin
respect of the exports is established.
Domestic sales are recordedon raising bills net off discounts, returns and applicable taxes.
Accounting for differential Custom Duty on wastage of Imported Raw Silk Yarn determined as
per the input/output norms for EOU is accounted as and when the demand is raised by Cus¬
toms Authorities. Revenue in respect of job charges is recognised based onthe work per¬
formed and invoiced as per terms of specific contracts.
1.5 Government Grants
Grants from the government are recognised attheir fair value where there is a reasonable
assurance that the grant will be received and the Company will comply with all attached condi¬
tions.
Government grants relating toincome are deferred and recognised in the statement of profit &
loss overthe period necessary to match them with thecosts that they are intended to compen¬
sate and presented within other operating income.
Government grants relating tothe acquisition/ construction of property, plant and equipment
are included in non-current liabilities as defer redincome and are credited to profit & loss on a
straight-line basis overthe expected lives of the related assets and presented within other op¬
erating income. However there is no such grantfor the company in the current year.
However there is no such grant for the company in the current year.
1.6 Accounting for Taxes on Income
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 changesin deferred tax
assets and liabilities attributable to temporary differencesand to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substan¬
tively enacted at the end of the reporting period.
Deferred income tax is providedin full, using the liability method, on temporary differences
arising between the tax bases of assets and liabilitiesand their carrying amounts in the finan¬
cial statements. 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 asset is realised or thedeferred income tax liability is
settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax
losses only if it is probablethat future taxable amounts will be available to utilise those tempo¬
rary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to
offsetcurrent tax assets and liabilities. Current tax assets and tax liabilities are offset where
theentity has a legally enforceable right to offset and intends either to settle on a net basis, or to
realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in statement of profit or 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 ordirectly in equity, respectively.
1.7 Cash and Cash Equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents
includes cash on hand, other short-term highly liquid investments with original maturities of
three months or less that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrow¬
ings in current liabilities in the balance sheet.
1.8 Trade Receivables
Trade receivables are recognized initially at fair value and subsequently measured at amor¬
tised cost using the effective interest method, less provision for impairment, if any.
1.9 Inventories
Inventoriesare valued as under :
a) Raw Materials : at cost which is arrived at on average cost basis.
b) Packing Materials : at average cost basis
c) Stores, Consumables & Spares : at average cost basis
d) Semi-finished Goods : at raw material cost and value added thereto upto the state of
completion
e) Finished Goods : at cost or Net Realisable Value (NRV), whichever is lower
f) Waste : at estimated realizable value
1.10 Biological Assets
The Company recognizes biological assets when it gains control over them as a result of past
events and it is probable that future economic benefits associated with these assets will flow to
the entity. In accordance with Ind AS 41
Although Ind AS 41 generally requires biological assets to be measured at fair value less costs
to sell, the Company has determined that the fair value of its planted trees cannot be measured
reliably on initial recognition due to the absence of an active market and the lack of reliable
observable inputs.
Accordingly, in line with the exception permitted under Ind AS 41, the Company measures its
biological assets at cost less accumulated depreciation and impairment losses, if any. Cost
includes expenditures directly attributable to the planting, cultivation, and maintenance of the
trees up to the point of maturity.
Expenditure incurred for day-to-day maintenance of the plantation is recognized in the State¬
ment of Profit and Loss as incurred, unless it qualifies for capitalization under another appli¬
cable Ind AS.
1.11 Investments and Other Financial Assets
1.11.1 Classification
The Company classifies its financial assets in the following measurement categories :
• those to be measured subsequently at fair value (either through other comprehen¬
sive income, or through statement of profit or loss), and
• those measured at amortised cost
The classification depends on the Company's business model for managing the finan¬
cial assets and the contractual terms of cash flows.
1.11.2 Measurement
At initial recognition, the Company measures a financial asset at its fair value. Transac¬
tion costs of financial assets carried at fair value through statement profit or loss are
expensed in statement of profit or loss.
Debt instruments
Subsequent measurement of debt instruments depends on the Company's business model
for managing the asset and the cash flow characteristics of the asset. The Company classi¬
fies its debt instruments into the following categories:
Amortised cost : Assets that are held for collection of contractual cash flows where those
cash flows represent solely payments of principal and interest are measured at amortised
cost. Interest income from these financial assets is included in finance income using the effec¬
tive interest rate method.
Fair value through other comprehensive income (FVOCI) : Assets that are held for collec¬
tions of contractual cash flows and for selling the financial assets, where the assets' cash
flows represent solely payments of principal and interest, are measured at fair value through
other comprehensive income (FVOCI). Interest income from these financial assets is included
in other income using the effective interest rate method.
Fair value through profit or loss : Assets that do not meet the criteria for amortised cost or
FVOCI are measured at fair value through statement of profit or loss. Interest income from
these financial assets is included in other income.
Equity instruments
The Company subsequently measures all equity investments (except subsidiary and associ¬
ate) at fair value through statement of profit or loss. However, where the Company’s manage¬
ment makes an irrevocable choice on initial recognition topresent fair value gains and losses
on specific equity investments in other comprehensive income, there is no subsequent reclas¬
sification of fair value gains and losses to statement of profit & loss.
1.11.3 Impairment of financial assets
The Company measures the expected credit loss associated with its assets based on histori¬
cal trend, industry practices and the business environment in which the entity operates or any
other appropriate basis. The impairment methodology applied depends on whether there has
been a significant increase in credit risk.
1.11.4 Derecognition of financial assets
A financial asset is derecognised only when
• The Company has transferred the rights to receive cash flows from the financial asset, or
• Retains the contractual rights to receive the cash flows of the financial asset, but assumes
a contractual obligation to pay the cash flows to one or more recipients.
Where the entity has not transferred substantially all risks and rewards of ownership of the
financial asset, the financial asset is not derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and
rewards of ownership of the financial asset, the financial asset is derecognised if the Company
has not retained control of the financial asset.
1.11.5 Income Recognition
Interest Income
Interest Income from debt instruments is recognised using the effective interest rate method.
Dividends
Dividendsare recognised in statement of profit & loss only when the right to receive payment is
established.
1.12 Financial liabilities
1.12.1 Initial recognition and measurement
The Company recognize s all the financial liabilities on initial recognition at fair value
minus, in the case of a financial liability not at fair value through Statement of Profit &
Loss, transaction costs that are directly attributable to the acquisition or issue of the
financial liability.
The Company’s financial liabilities include trade and other payables, loans and borrow¬
ings including bank overdrafts and derivative financial instruments.
1.12.2 Subsequent measurement
All the financial liabilities are classified as subsequently measured at amortised cost,
except forthose mentioned below.
1.12.3 Financial liabilities at fair value through statement of profit & loss
Financial liabilities at fair value through statement of profit & loss include financial liabili¬
ties held for trading and financial liabilities designated upon initial recognition as at fair
value through statement of profit & loss. Financial liabilities are classified as held for
trading if they are incurred for the purpose of repurchasing in the near term. This cat¬
egory also includes derivative financial instruments entered into by the Co. that are not
designated as hedging instruments in hedge relationships as defined by Ind AS 109.
Gains or losses on liabilities held for trading are recognised in the statement of profit &
loss.
For liabilities designated as Fair Value through statement of profit & loss, fair value
gains/ losses attributable to changes in own credit risk are recognized in Other Com¬
prehensive Income. These gains/ losses are not subsequently transferred to Profit &
Loss. However, the Company may transfer the cumulative gain & loss within other
equity. All other changes in fair value of such liability are recognised in the Statement of
Profit and Loss.
1.13 Property, Plant and Equipments
Freeholdland is carried at historical cost. All other items ofproperty, plant and equipment are
stated athistorical cost less accumulated depreciation. Historical cost includes expenditure
that is directly attributable to the acquisition of the items.
Subsequent costs are included inthe asset's carrying amount or recognised as aseparate
asset, as appropriate, only when it is probable that future economic benefits associated with
the item will flow to the Company and thecost of the item can be measured reliably. The carry¬
ing amount of any component accounted for as a separate asset is derecognised when re¬
placed. All otherrepairs and maintenance are charged to statement of profit and loss during the
reporting period in which they areincurred.
Depreciation methods, estimated useful lives andresidual value
Depreciationis calculated using the straight-line method to allocate their cost, net of their re-
sidual values on the basis of useful lives prescribed in Schedule II to the Companies Act, 2013,
which are also supported by technical evaluation. Item of Property, Plant & Equipment for
which related actual cost do not exceed Rs 0.05 Lacs arefully depreciated in the year of pur¬
chase.
The assets' residual values anduseful lives are reviewed, and adjusted if appropriate, at the
end of each reporting period.
An asset's carrying amount is written down immediately to its recoverable amount if theasset's
carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount.
These are included in statement of profit and loss within other gains/(losses).
1.14 Intangible Assets
Intangible assets are recognised if the Future Economic Benefits attributed to the assetsare
expected to flow to the company and the cost of assets can be measured reliably. No intan¬
gible assets were acquired during the year ended 31st March, 2025.
1.15 Capital work-in-progress
Capital work-in-progress isstated at cost, net of accumulated impairment losses, if any. As¬
sets in thecourse of construction are capitalized in capital work-in-progress account. Atthe
point when an assets is capable of operating in the manner intended by management, the cost
of construction is transferred to theappropriate category of property, plant and equipment.
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