3.22 Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required
to settle the present obligation at the Balance Sheet date.
If the effect of the time value of money is material, provisions are discounted to reflect its present value using a current pre-tax
rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When
discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be
confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the
Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be
required to settle the obligation or a reliable estimate of the amount cannot be made.
A contingent asset is disclosed, where an inflow of economic benefit is probable. An entity shall not recognize a contingent
asset unless the recovery is virtually certain.
3.23 Event after reporting date
Where events occurring after the Balance Sheet date provide evidence of conditions that existed at the end of the reporting
period, the impact of such events is adjusted within the Financial Statements. Otherwise, events after the Balance Sheet date
of material size or nature are only disclosed.
3.24 Law enacted but not effective
The Code on Social Security, 2020 (‘Code’) relating to employee benefits during employment and post-employment benefits
has received Indian Parliament’s approval and Presidential assent in September 2020. However, the effective dates of the
Code and final rules for quantifying the financial impact are yet to be notified. The Company will assess the impact of the Code
when it comes into effect and will record any related impact in the period the Code becomes effective.
3.25 New Standards/ Amendments notified
Ministry of Corporate Affairs (“MCA”) notifies new standards or amendments to the existing standards under Companies (Indian
Accounting Standards) Rule as issued from time to time. There is no such notification which would have been applicable to the
Company from April 01,2025.
45.1 Capital Risk Management
(a) Risk Management
The Company aims to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to
optimize returns to the shareholders.
The capital structure of the Company is based on management’s judgement of the appropriate balance of key elements in
order to meet its strategic and day-to-day needs. We consider the amount of capital in proportion to risk and manage the
capital structure in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to
maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return
capital to shareholders or issue new shares.
The Company’s policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain
investor, creditors and market confidence and to sustain future development and growth of its business. The Company will
take appropriate steps in order to maintain, or if necessary, adjust, its capital structure.
The gearing ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings less cash and
cash equivalents. Total capital is calculated as equity as shown in the balance sheet plus all other reserves attributable to
equity shareholders of the Company.
(b) The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the
requirements of the financial covenants.
45.2 Financial Risk Management
The Company’s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of
these financial liabilities is to finance and support the Company’s operations. The Company’s principal financial assets comprise
cash and bank balance, trade and other receivables and security deposits.
The risk management policies of the Company are established to identify and analysis the risks faced by the Company, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and the Company’s activities.
The Company is exposed to market risk, credit risk, liquidity risk and operational and business risk. The Company’s management
oversees the management of these risks to ensure the Company’s financial risk activities are governed by appropriate policies
and procedures and that financial risks are identified, measured and managed in accordance with Company’s policies and risk
objectives. The major risks are summarized below:
a) Market Risk
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the value
of financial instruments. The value of financial instruments may change as a result of changes in the interest rates, foreign
currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. Market risk
is attributable to all market risk sensitive financial instruments including security deposits, payables and loans and borrowings.
The Company manages market risk through a treasury department, which evaluates and exercises independent control
over the entire process of market risk management. The treasury department recommend risk management objectives
and policies, which are approved by Senior Management and the Audit Committee. The activities of this department
include management of cash resources, borrowing strategies and ensuring compliance with market risk limits and policies.
a)(i) Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in interest rates. The loan taken from the banks by the Company are linked to MCLR/Treasury Bills rate of the respective
bank which are variable.
b) Foreign Currency Risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in
foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to
import of machinery, store and spare and other materials. The Company’s foreign currency risks are identified, measured
and managed at periodic intervals in accordance with the Company’s policies. However, there is no foreign currency risk
as at March 31,2025.
c) Credit Risk
Credit risk is the risk that counterparty will default on its contractual obligations resulting in financial loss to the company.
The Company has adopted a policy of dealing with creditworthy customers.
The Company considers the probability of default upon initial recognition of asset and whether there has been a significant
increase in credit risk on an ongoing basis through each reporting period. To assess whether there is a significant increase
in credit risk the Company compares the risk of default occurring on asset as at the reporting date with the risk of default
as at the date of initial recognition. It considers reasonable and supportive forwarding-looking information such as actual or
expected significant adverse changes in business, operating results, financial or economic conditions and third-party
collateral guarantees or credit.
Financial assets are written off when there is no reasonable expectation of recovery, such as a customer failing to engage
in a repayment plan with the Company. Where loans or receivables have been written off, the Company continues to
engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognized
as income in the statement of profit and loss.
The Company measures the expected credit loss of trade receivables based on historical trend, available external and
internal credit risk factors such as financial condition, ageing of accounts receivable etc., industry practices and the business
environment in which the entity operates.
As at March 31,2025, the company did not consider there to be any significant concentration of credit risk, which had not
been adequately provided for. The carrying amount of the financial assets recorded in the financial statements, grossed up
for any allowances for losses, represents the maximum exposure to credit risk.
d) Liquidity Risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable
price. Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an
adequate amount of credit facilities to meet obligations when due. The Company’s treasury team is responsible for liquidity,
funding as well as settlement management. In addition, processes and policies related to such risks are overseen by
senior management. Management monitors the Company’s liquidity position through rolling forecasts on the basis of
expected cash flows.
(ii) The following methods and assumptions were used to estimate the fair values:
1. Fair value of cash and short-term deposits, trade and other short-term receivables, trade payables, other current
liabilities, short term loans from banks and others approximate their carrying amounts largely due to short term
maturities of these instruments.
2. Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters
such as interest rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances
are taken to account for expected losses of these receivables. Accordingly, fair value of such instruments is not
materially different from their carrying amounts.
3. For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair
values.
53.5 Amount pertaining to related parties provided for as doubtful debt or written off - Nil (March 31,2024 - Nil).
54. SEGMENT REPORTING
The Company’s primary business segment is reflected based on principal business activities carried on by the Company. Chairman
and Managing Director have been identified as being the Chief Operating Decision Maker (‘CODM’) and evaluates the Company’s
performance and allocates resources based on analysis of the various performance indicators of the Company as a single unit.
Therefore, there are no separate reportable business segments as per Ind AS 108-Operating Segments. The Company operates in
one reportable business segment i.e., manufacturing of Yarn.
55. OTHER DISCLOSURES/INFORMATION
55.1 Additional information required as per Schedule III of the Companies Act, 2013
(i) Details of benami property held
No proceedings have been initiated or are pending against the Company as at March 31,2025 for holding benami property
under the Prohibition of Benami Property Transactions Act, 1988 (as amended in 2016), as amended and rules made
thereunder.
(ii) Wilful defaulter
The company has not been declared wilful defaulter by any bank, financial institution or lender as at March 31,2025.
(iii) Relationship with struck off companies
There is no transaction during the year with or outstanding balance of the struck off companies as at March 31,2025.
(iv) Compliance with number of layers of companies
The Company does not have any subsidiary or Associate or Joint Venture company during the year.
(v) Compliance with approved scheme(s) of arrangements
During the year, no scheme of arrangements in relation to the Company has been approved by the competent authority in
terms of Section 232 to 237 of the Companies Act, 2013.
(vi) Utilisation of borrowed funds and share premium
During the year the Company has not advanced or lend or invested funds (either from the borrowed funds or share
premium or any other sources or kind of funds) to any person or entity, including foreign entity (Intermediaries) with the
understanding (whether recorded in writing or otherwise) that the Intermediary shall (a) directly or indirectly lend or invest
in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries
The Company has not received any fund from any person or entity, including foreign entity (Funding Party) with the
understanding (whether recorded in writing or otherwise) that the Company shall (a) directly or indirectly lend or invest in
other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries)
or (b) provide any guarantee, security or the like on behalf of the ultimate beneficiaries
(vii) Undisclosed income
The Company does not have any unrecorded transactions in the books of account which have been surrendered or
disclosed as Income during the year in the tax assessment under the Income Tax Act, 1961.
(viii) Transactions in crypto currency or virtual currency
The Company has not traded or invested in crypto currency or virtual currency during the year ended March 31,2025.
(ix) Revaluation of property, plant & equipment and intangible asset
The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or
both during the year ended March 31,2025.
(x) Registration of charges or satisfaction with Registrar of Companies
There are no charges or satisfaction which are pending to be registered with the Registrar of Companies as on March 31,
2025.
55.2 Other Statutory information
(i) The Company has no long-term contracts including derivative contracts having material foreseeable losses as at March
31,2025.
(ii) The Company has not received any whistleblower complaint during the year ended March 31,2025.
(iii) There is no Core Investment Company within the group as defined in the regulations made by the Reserve Bank of India.
(iv) There is neither any fraud by the Company nor on the company noticed or reported during the year.
(v) There is no amount outstanding for transfer to the Investor Education and Protection Fund by the Company under Section
125 of Companies Act, 2013 as at March 31,2025.
(vi) The Company has not given any loans or advances in the nature of loans to promoters, directors, KMPs and/ or related
parties (as defined under Companies Act, 2013), either severally or jointly with any other person, that are repayable on
demand, or without specifying any terms or period of repayment.
Definitions:
(a) Earnings available for debt services = Profit after tax non-cash items Interest on Term Loans Interest on lease liabilities
other items like gain on sale of assets etc.
(b) Debt (outstanding Liabilities) = Borrowings
(c) Debt service = Principal Repayments of term loans and lease liabilities due within one year Interest payable on term loans and
lease liabilities.
(d) Average inventory = (Opening inventory Closing inventory)/ 2
(e) Net sales = Gross sales minus Sales return.
(f) Average trade receivables = (Opening trade receivables Closing trade receivables) / 2
59. The Company is using ERP software for maintaining its books of account which has a feature of recording audit trail (edit log) facility
and the same has operated throughout the year for all relevant transactions recorded in the accounting software. However, the audit
trail feature is not enabled when using administrative access right to the ERP application for direct data changes which is restricted
to limited set of users who necessarily require this access for maintenance and administration of the database. Further, no instance
of audit trail feature being tempered with has been noticed during the year in respect of the accounting software and the audit trail
has been preserved by the Company as per the statutory requirements for record retention.
60. All amounts in the financial statements and notes have been rounded off to the nearest lakh as per requirement of Schedule III
except per share data and as otherwise stated. Figures in brackets represent corresponding previous year figures. Figures of previous
year have been regrouped/reclassified wherever considered necessary to conform to current year’s presentation.
As per our report of even date
For CHATURVEDI & PARTNERS FOR AND ON BEHALF OF THE BOARD
Chartered Accountants
Firm Registration No.307068E
LAXMI NARAIN JAIN RAJENDRA KUMAR RAJGARHIA HARI RAM SHARMA
Partner Chairman and Whole Time Director Managing Director
Membership No.072579 DIN-00141766 DIN-00178632
CHANDRA SHEKHAR VIJAY NEHA GOEL
Place : New Delhi Chief Financial Officer Company Secretary
Date : May 07, 2025 Membership No. 48053
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