3.20. Provisions and Contingencies
Provisions are recognised when the Company has a
present obligation (legal or constructive) as a result
of a past event, and 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.
The amount recognised as a provision is the best
estimate of the consideration required to settle the
present obligation at the end of the reporting period,
taking into account the risks and uncertainties
surrounding the obligation.
When the Company expects some or all of a provision to
be reimbursed from third parties, for example, under an
insurance contract, the reimbursement is recognised as
a separate asset, but only when the reimbursement is
virtually certain that reimbursement will be received and
the amount of the receivable can be measured reliably.
The expense relating to a provision is presented in the
Statement of Profit or Loss net of any reimbursement.
If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate
that reflects, when appropriate, the risks specific to the
liability. When discounting is used, the increase in the
provision due to the passage of time is recognised as a
finance cost.
A contingent liability is a possible obligation that arises
from past events whose existence will be confirmed
by the occurrence or non-occurrence of one or more
uncertain future events beyond the control of the
Company or a present obligation that is not recognised
because it is not probable that an outflow of resources
will be required to settle the obligation. A contingent
liability also arises in extremely rare cases where there
is a liability that cannot be recognised because it cannot
be measured reliably. The Company does not recognise
a contingent liability but discloses its existence in the
Financial Statements.
Contingent assets are not recognised but disclosed in
the Financial Statements when an inflow of economic
benefits is probable.
3.21. Non-current assets held for sale/ distribution to
owners and discontinued operations
The Company classifies non-current assets (or disposal
group) 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 regarded
met only when the assets is available for immediate
sale in its present condition, subject only to terms that
are usual and customary for sales of such assets, its sale
is highly probable; and it will genuinely be sold, not
abandoned. The Company treats sale of the asset to be
highly probable when:
• The appropriate level of management is committed
to a plan to sell the asset,
• An active programme to locate a buyer and
complete the plan has been initiated (if applicable),
• The asset is being actively marketed for sale at a
price that is reasonable in relation to its current fair
value,
• The sale is expected to qualify for recognition as
a completed sale within one year from the date of
classification , and
• 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 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 are presented separately in the Balance Sheet.
An impairment loss is recognised for any initial or
subsequent write-down of the assets to fair value less
cost to sell. A gain is recognised for any subsequent
increases in the fair value less cost to sell of an assets
but not in excess of the cumulative impairment loss
previously recognised, A gain or loss previously not
recognised by the date of sale of the non-current assets
is recognised on the date of de-recognition.
Property, plant and equipment and intangible assets
once classified as held for sale/ distribution to owners
are not depreciated or amortised.
A discontinued operation 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:
• Represents a separate major line of business or
geographical area of operations,
• Is part of a single co-ordinated plan to dispose of
a separate major line of business or geographical
area of operations; or
• Is a Subsidiary acquired exclusively with a view to
resale
• 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.
3.22 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.
4. Critical accounting estimates and assumptions
The preparation of the Company’s Financial Statements
requires Management to make judgements, estimates
and assumptions that affect the reported amounts
of revenues, expenses, assets and liabilities, and
the accompanying disclosures, and the disclosure
of contingent liabilities. Uncertainty about these
assumptions and estimates could result in outcomes
that require a material adjustment to the carrying
amount of assets or liabilities affected in future periods.
4.1. Estimates and assumptions
(a) Useful life of Property, plant and equipment
and Intangible Assets
Property, plant and equipment represent a
significant proportion of the asset base of the
Company. The depreciation and amortisation charge
with respect to such assets is derived based on the
estimated useful life of the asset and its residual
value. The useful life and residual value of an asset is
reviewed at the end of each reporting period.
(b) Defined benefit plans
The determination of Company’s liability towards
defined benefit obligation to employees is made
through independent actuarial valuation including
determination of amounts to be recognised in
the Statement of Profit and Loss and in other
comprehensive income. Such valuation depends
upon assumptions determined after taking into
account inflation, seniority, promotion and other
relevant factors such as supply and demand factors
in the employment market. Information about
such valuation is provided in Notes to the Financial
Statements.
Further details about defined benefit obligations
are provided in Note 34.
Note 8 : Financial Assets
8(a) Investments (Contd.)
[3] The terms of Debentures are as follows:
(i) 9% Optionally Convertible Debentures : Investment in Debenture is convertible at issuer's option.
(ii) 8% Perpetual Debentures : Investment in Perpetual Debenture is redeemable/payable at issuer's option and can be deferred indefinitely and interest is
payable at the discretion of issuer. Accordingly, it is considered as equity instrument.
(iii) 0% Compulsory Convertible Debentures : Investment in Debenture is convertible at issuer's option in fixed ratio. Accordingly, it is considered as equity
instrument.
[4] During the year, Shiprocket Limited issued bonus shares in the ratio of 1:266. Consequently, the number of equity shares outstanding increased from 37,044
shares to 98,53,704 shares.
Note 13 : Other Equity (Contd.)
The description of the nature and purpose of each reserve within equity is as follows:
(a) Capital Reserve
Capital Reserve includes forfeiture of application money received on issue of share warrants and Capital Reserves on amalgamation/Business
Combinations.
(b) General Reserve
General Reserve is a free reserve created by the Company by transfer from Retained earnings for appropriation purposes.
(c) Amalgamation Reserve
The reserve was created pursuant to scheme of amalgamation in earlier years. Amalgamation Reserve is a reserve which arose pursuant to the scheme
of amalgamation and shall not be considered to be a reserve created by the Company.
(d) Securities Premium Account
Securities premium reserve is created due to premium on issue of shares. This reserve is utilised in accordance with the provisions of the Companies Act.
(e) Capital Redemption Reserve
Capital Redemption Reserve is created for redemption of preference shares from its retained earnings. The amount in Capital Redemption Reserve
is equal to nominal amount of the preference shares redeemed. Capital Redemption Reserve may be applied by the Company in paying up unissued
shares of the Company to be issued to shareholders of the Company as fully paid bonus shares.
(f) Share-Based Payment Reserve
This reserve relates to share options granted by the Company to its employee stock option scheme. Further information about share-based payments
to employees is set out in Note 37.
(g) Equity Instruments Through OCI
The Company has elected to recognise changes in the fair value of certain investment in equity instrument in other comprehensive income. This amount
will be reclassified to retained earnings on derecognition of equity instrument.
(h) Cash Flow Hedge Reserve
The cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in the fair value of designated portion of
the hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on the changes in the fair value of the designated portion
of the hedging instruments that are recognised and accumulated under the cash flow hedge reserve will be reclassified to profit or loss only when the
hedged transaction affects the profit or loss, or included as a basis adjustment to the non-financial hedged item.
Nature of security:
Term loan of ?353.22 Crores
(i) Loans amounting to ?67.36 Crores (March 31, 2025 ?147.54) are secured by (a) exclusive charge on Immovable properties of Ankur division; (b) first pari
passu charge on all the Immovable Properties, Movable Properties, Intangible Properties and General Assets of the Company presently relating to the
Textile Plants and Garment Division at Bangalore; and all Immovable Properties, Movable Properties, Intangible Properties and General Assets acquired
by the Company at any time after execution of and during the continuance of the Indenture of Mortgage; (c) Secured by second pari passu charge on all
the Company’s Current Assets and all the current assets acquired by the Company at any time in future.
(ii) Loans amounting to ?215.98 Crores (March 31, 2025 ?84.22 Crores) are secured by (a) first pari passu charge on all the Immovable Properties, Movable
Properties, Intangible Properties and General Assets of the Company presently relating to the Naroda and Santej Plant; and all Immovable Properties,
Movable Properties, Intangible Properties and General Assets acquired by the Company at any time after execution of and during the continuance of the
Indenture of Mortgage; (b) Secured by second pari passu charge on all the Company’s Current Assets and all the current assets acquired by the Company
at any time in future. Certain land parcels aggregating ?14.45 Crores, which have been transferred to Arvind Advanced Materials Limited pursuant to the
Scheme of Arrangement. The charge on the said properties is in the process of being released.
(iii) Loans amounting to ?69.88 Crores (March 31, 2025 ?86.04 Crores) are secured by (a) first pari passu charge on all the Immovable Properties, Movable
Properties, Intangible Properties and General Assets of the Company presently relating to the Textile Plants and Garment Division at Bangalore; and all
Immovable Properties, Movable Properties, Intangible Properties and General Assets acquired by the Company at any time after execution of and during
the continuance of the Indenture of Mortgage; (b) Secured by second pari passu charge on all the Company’s Current Assets and all the current assets
aquired by the Company at any time in future.
Note 14 : Financial Liabilities
14(a) Borrowings (Contd.)
(iv) Loans amounting to ?Nil (March 31, 2025 ?24.98 Crores) are secured by (a) exclusive charge on some of the Immovable properties at Asarwa; (b) first pari
passu charge on all the Immovable Properties, Movable Properties, Intangible Properties and General Assets of the Company presently relating to the
Textile Plants and Garment Division at Bangalore; and all Immovable Properties, Movable Properties, Intangible Properties and General Assets acquired
by the Company at any time after execution of and during the continuance of the Indenture of Mortgage.
Nature of Security
Working Capital and Other Facilities from Banks
(a) Secured by first pari passu charge on all the Company’s current assets presently relating to the manufacturing locations and all the Current Assets
acquired by the Company at any time after the execution of and during the continuance of the Indenture of Mortgage.
(b) Secured by a second pari passu charge over all the Immovable and movable properties relating to textile plants, movable properties pertaining to
garment division at Bangalore and all the movable and immovable properties acquired by the Company at any time in future after execution of and
during the continuance of the Indenture of Mortgage.
Rate of Interest
Working Capital Loans from banks carry interest rates ranging from 6.30% to 8.30% per annum.
Intercorporate Deposits from Related Parties(Unsecured)
Intercorporate deposits from Subsidiary amounting to?21.01 Crores (previous year ?40.50 Crores) carries interest rate at 8.00% per annum.
Note 28 : Income tax (Contd.)
The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the
deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
The Company has unused tax capital losses amounting to ?131.89 Crores as at March 31, 2026 (March 31, 2025: ?111.85 Crores). Out of the same, tax credits
on losses of ?49.87 Crores have not been recognised on the basis that recovery is not probable in the foreseeable future. Unrecognised tax capital losses will
expire by March 31, 2034, if unutilised, based on the year of origination.
* Pursuant to amendments in the Finance (No. 2) Act 2024, Long-term capital gains tax rate was changed from 20% plus surcharge and cess (with indexation)
to 12.5% plus surcharge and cess (without indexation). In accordance with the said amendments, the deferred tax asset has been reduced by ?56.77 Crores
as a cumulative one time impact while computing the profit after tax for the year ended March 31, 2025.
The claims which are not acknowledged as debt are related to factory labour which are pending before Labour Court, Industrial Court and High Court.
Above disputed demand includes show cause notices received from various indirect tax department for various matters and in response of the same, the
Company has preferred appeals on these matters and the same are pending with various adjudicating authorities.
The Management expects that its position will likely be upheld on ultimate resolution and will not have a material adverse effect on the Company’s Financial
Statements.
The Company has received various demands / show cause notices from income tax authorities aggregating to ?5.75 Crores. As the Company had opted for
new tax regime under Section 115BAA of the Act in FY 2022-23, the Company has written off MAT credit u/s. 115JAA of the Act amounting to ?27.06 crore, which
can be offset against above demands. If the above referred issues settle against the Company, there will not be any actual tax outflow or impact on profit and
loss of the Company. Hence, no contingent liability is considered on these matters.
Details related to Financial Guarantees given has been disclosed in Note 35 (d).
Note 32 : Foreign Exchange Derivatives and Exposures not hedged
The Company holds derivative financial instruments such as foreign currency forward and option contracts to mitigate the risk of changes in exchange rates
on foreign currency exposures. The counter party for these contracts is generally a bank.
All derivative financial instruments are recognised as assets or liabilities on the Balance Sheet and measured at fair value. The accounting for changes in the
fair value of a derivative instrument depends on the intended use of the derivative and the resulting designation.
The fair values of all derivatives are separately recorded in the Balance Sheet within current and non-current assets and liabilities depending upon the
maturity of the derivatives.
The use of derivative instruments is subject to limits, authorities and regular monitoring by appropriate levels of management. The limits, authorities and
monitoring systems are periodically reviewed by Management and the Board. The market risk on derivatives is mitigated by changes in the valuation of the
underlying assets, liabilities or transactions, as derivatives are used only for risk management purposes.
Cash Flow Hedges
The Company also enters into forward exchange contracts for hedging highly probable forecast transactions and accounts for them as cash flow hedges and
states them at fair value. Subsequent changes in fair value are recognised in equity until the hedged transaction occurs, at which time, the respective gain or
loss are reclassified to the Statement of Profit or Loss. These hedges have been effective for the year ended March 31, 2026 and March 31, 2025.
The Company uses foreign exchange contracts from time to time to optimise currency risk exposure on its foreign currency transactions.
The cash flow hedges are taken out by the Company during the year for hedging the foreign exchange rate of highly probable forecast transactions.
The cash flows related to above are expected to occur during the year ended March 31, 2026 and consequently may impact the Statement of Profit or Loss for
that year depending upon the change in the foreign exchange rate movements.
Note 33 : Discontinued Operations
(A) Impact of Scheme
The Board of Directors of the Company at its meeting approved a Scheme of Arrangement (“the Scheme”) under Sections 230 to 232 and other
applicable provisions of the Companies Act, 2013, for transfer and vesting of the Advanced Materials Division (AMD) of the Company into Arvind
Advanced Materials Limited (“AAML”), a wholly owned Subsidiary of the Company, on a going concern basis.
The Scheme was subsequently sanctioned by the Hon’ble National Company Law Tribunal (“NCLT”) vide order dated August 07, 2025. The Appointed
Date of the Scheme is April 01, 2024, and the Scheme became effective on September 01, 2025, being the date on which the certified copy of the NCLT
order was filed with the Registrar of Companies (Effective Date).
Pursuant to the Scheme and in accordance with Ind AS 105 - Non-current Assets Held for Sale and Discontinued Operations, the financial results of
the Advanced Materials Division (AMD) for the year ended March 31, 2026, as well as for the comparative period ended March 31, 2025, have been
presented as discontinued operations in the Financial Statements of the Company. Further, in accordance with the terms of the Scheme, the Company
has derecognised the carrying amounts of assets and liabilities pertaining to the AMD as at the Effective Date, which have been transferred to AAML.
Note
(a) Employees of the Company receive benefits from a provident fund, which is a defined contribution plan. The eligible employees and the Company make
monthly contributions to the provident fund plan equal to a specified percentage of the employees’ salary. Amounts collected under the provident fund
plan are deposited in a government administered provident fund. The remaining portion is contributed to the government-administered pension fund.
The Company has no further obligation to the plan beyond its monthly contributions. Such contributions are accounted for as defined contribution
plans and are recognised as employee benefits expenses when they are due in the Statement of profit and loss.
(b) The Company’s Employee State Insurance Fund, for all eligible employees, is administered by ESIC Corporation. The Company is required to contribute
a specified amount to ESIC Corporation and has no further obligations to the same beyond its contribution.
Note 34 : Disclosure pursuant to Employee benefits (Contd.)
B. Defined benefit plans:
The Company has following post employment benefit plans which are in the nature of defined benefit plans:
(a) Gratuity (Funded)
The Company provides for gratuity for employees in India as per the Code on Social Securities, 2020. Employees who are in continuous service
for a period of five years are eligible for gratuity benefits. However, fixed-term employees are eligible for gratuity upon completion of one year of
continuous service.
The amount of gratuity payable on retirement/separation is
(i) Last drawn wage salary per month computed proportionately for 15 days (30 days for the employees joined before March 31, 2000 with
the grade of M2 and above at the time of retirement/termination from the date they are in Grade M2 and above) salary multiplied for the
number of years of service with maximum of ?20,00,000; or
(ii) Last drawn basic salary per month computed proportionately for 15 days (30 days for the employees joined before March 31, 2000 with
the grade of M2 and above at the time of retirement/termination from the date they are in Grade M2 and above) salary multiplied for the
number of years of service without any maximum limit
Whichever is higher.
It is capped at 20 months basic salary for the employees joined before March 31, 2000 and are in the Grade M2 and above at the time of
retirement/termination.
(b) Compensatory Pension Scheme (Unfunded)
The Company operates a post retirement pension scheme, which is discretionary in nature for certain cadres of employees who have joined
before June 30, 1983 and who have rendered not less than 31 years of service before their retirement. The plan is unfunded. Employees do not
contribute to the plan.
Liabilities with regard to the Compensatory Pension Scheme are determined by actuarial valuation, performed by an independent actuary, at
each Balance Sheet date using the projected unit credit method.
The Company recognises the net obligation of a defined benefit plan in its Balance Sheet as an asset or liability. Gains and losses through
re-measurements of the net defined benefit liability are recognised in other comprehensive income and are not reclassified to profit or loss in
subsequent periods.
(e) Terms and conditions of transactions with related parties
(1) Outstanding balances other than loan given and taken and fair value of financial guarantee contract, at the year-end are unsecured and interest free
and settlement occurs in cash.
(2) Loans in INR given to the related party carry interest rate of 8.00% (March 31, 2025: 8.00%). Loans in USD given to the related party carry an interest rate
ranging from 6.81% (March 31, 2025 : 6.18% ).
(3) Financial guarantees given to Bank on behalf of Subsidiaries carries no charge and are unsecured.
(4) Transactions/balances with related party having value equal to or exceeding 1% of total income are considered as material and have been disclosed
separately, unless already presented in Note 35 (c) .
(5) The Company has received security deposit of ?139.50 Crores from its Subsidiary, Arvind Advanced Materials Limited, pursuant to a supply arrangement
entered into for sale of products. The deposit has been received towards securing dedicated manufacturing capacities under the agreement.
(6) No repayment schedule has been fixed in case of above mentioned Loans in the nature of loans given to Subsidiary Companies and are repayable on
demand.
(f) Commitments with related parties
The Company has provided commitment of ?4.72 Crores to the related party as at March 31, 2026 (March 31, 2025: ?4.29 Crores).
(g) Transactions with key management personnel
The remuneration of key management personnel during the year was as follows :
Note 41 : Fair value disclosures for financial assets and financial liabilities (Contd.)
The Management assessed that the fair value of cash and cash equivalents, other bank balances, loans, trade receivables, other current financial assets, trade
payables and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values.
The fair value of borrowings is calculated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining
maturities.
For financial assets and financial liabilities that are measured at fair value, the carrying amounts are equal to the fair values.
(b) Fair value hierarchy
The following table provides the fair value measurement hierarchy of the Company’s assets and liabilities.
Fair value hierarchy
Level 1: Level 1 hierarchy includes financial instruments traded in active markets measured using quoted prices. This includes
listed equity instruments that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges
is valued using the closing price as at the end of the reporting period.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the-
counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as
little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the
instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This
is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.
For the valuation, income approach is applied and the Weighted Average Cost of Capital and Growth Rate have been considered
as a significant unobservable input and the movement is due to change in fair value
There are no transfers between level 1, 2 and 3 during the year.
The Company’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting
period.
Note 42 : Financial instruments risk management objectives and policies
The Company’s activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The
Company’s risk management assessment and policies and processes are established to identify and analyse the risks faced
by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk
assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the
Company’s activities.
The Company’s risk management is carried out by a Treasury department under policies approved by the Board of Directors.
The Company’s treasury identifies, evaluates and hedges financial risks in close co-operation with the Company’s operating
units. The Board provides written principles for overall risk.
(a) Market risk
Market risk refers to the possibility that changes in the market rates may have an impact on the Company’s profits or the
value of its holding of financial instruments. The Company is exposed to market risks on account of foreign exchange rates,
interest rates, underlying equity prices, liquidity and other market changes.
Future specific market movements cannot be normally predicted with reasonable accuracy.
(a1) Interest rate risk
Interest rate risk refers to the possibility that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates.
The Company is exposed to interest rate risk of short-term and long-term floating rate instruments. The Company’s
policy is to maintain a balance of fixed and floating interest rate borrowings and the proportion of fixed and floating
rate debt is determined by current market interest rates. The borrowings of the Company are principally denominated
in Indian Rupees with mix of fixed and floating rates of interest. These exposures are reviewed by appropriate levels
of Management at regular intervals.
As at March 31, 2026, 1.87% of the Company’s borrowings are at a fixed rate of interest (March 31, 2025 : 3.12%).
Interest rate sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected.
With all other variables held constant, the Company’s profit before tax is affected by the impact on floating rate borrowings as follows:
(a2) Foreign currency risk
The Company’s foreign currency risk arises from its foreign operations, foreign currency transactions and foreign
currency borrowings. The fluctuation in foreign currency exchange rates may have potential impact on the income
statement and equity, where any transaction references more than one currency or where assets/liabilities are
denominated in a currency other than the functional currency of the Company. The major foreign currency exposures
for the Company are denominated in USD and EUR.
Since a significant part of the Company’s revenue is in foreign currency and major part of the costs are in Indian
Rupees, any movement in currency rates would have an impact on the Company’s performance. Exposures on foreign
currency sales are managed through the Company’s hedging policy, which is reviewed periodically to ensure that the
results from fluctuating currency exchange rates are appropriately managed. The Company strives to achieve asset
liability offset of foreign currency exposures and only the net position is hedged. Consequently, the overall objective of
the foreign currency risk management is to minimise the short-term currency impact on its revenue and cash-flow in
order to improve the predictability of the financial performance. The Company may use forward contracts and foreign
exchange options towards hedging risk resulting from changes and fluctuations in foreign currency exchange rates.
These foreign exchange contracts, carried at fair value, may have varying maturities depending upon the primary host
contract requirements and risk management strategy of the Company. Hedge effectiveness is assessed on a regular
basis.
Note 42 : Financial instruments risk management objectives and policies (Contd.)
Foreign currency sensitivity
The foreign exchange rate sensitivity is calculated by the aggregation of the net foreign exchange rate exposure in
USD and EURO with a simultaneous parallel foreign exchange rate shift in the currencies by 2% against the functional
currency of the respective entities. The Company’s exposure to foreign currency changes for all other currencies is
not material.
(b) Credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the
Company. Credit risk encompasses both, the direct risk of default and the risk of deterioration of creditworthiness as well
as concentration of risks. Financial instruments that are subject to concentrations of credit risk materially consist of trade
receivables, investments and derivative financial instruments.
The Company is exposed to credit risk from its operating activities (primarily trade receivables and as well as from its
investing activities including deposits with banks, forex transactions and other financial instruments), for receivables,
cash and cash equivalents, financial guarantees and derivative financial instruments.
All trade receivables are subject to credit risk exposure. The Company’s exposure to credit risk is influenced mainly by the
individual characteristics of each customer. The demographics of the customer, including the default risk of the industry
and country, in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed
through established policies, controls relating to credit approvals and procedures for continuously monitoring the
creditworthiness of customers to which the Company grants credit terms in the normal course of business. Outstanding
customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of
credit. The history of trade receivables shows a negligible provision for bad and doubtful debts. Therefore, the Company
does not expect any material risk on account of non-performance by any of the Company’s counterparties. The Company
does not have significant concentration of credit risk related to trade receivables. No single third party customer
contributes to more than 10% of outstanding accounts receivable (excluding outstanding from Subsidiaries) as of March
31, 2026 and March 31, 2025.
Trade receivables are non-interest-bearing and are generally on 7 days to 180 days credit term.
With respect to derivatives, the Company’s forex management policy lays down guidelines with respect to exposure per
counter party i.e. with banks with high credit rating, processes in terms of control and continuous monitoring. The fair
value of the derivatives is credit adjusted at the period end.
Note 42 : Financial instruments risk management objectives and policies (Contd.)
(c) 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 a
reasonable price. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds
are available for use as per requirements. The Company generates cash flows from operations to meet its financial
obligations, maintains adequate liquid assets in the form of cash & cash equivalents and has undrawn short-term line
of credits from banks to ensure necessary liquidity. The Company closely monitors its liquidity position and deploys a
robust cash management system.
During the year, the Company has been regular in repayment of principal and interest on borrowings on or before due
dates. The Company did not have defaults of principal and interest as at the reporting date.
The Company requires funds both for short-term operational needs as well as for long-term investment programmes
mainly in growth projects.
Note 43 : Capital Management
For the purpose of the Company’s capital management, capital includes issued equity capital and all other equity reserves
attributable to the equity holders of the Company. The primary objective of the Company’s capital management is to ensure that
it maintains an efficient capital structure and healthy capital ratios in order to support its business and maximise shareholder
value.
The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions or its
business requirements to optimise returns to our shareholders through continuing growth. To maintain or adjust the capital
structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.
The funding requirements are met through a mixture of equity, internal fund generation and other non-current borrowings. The
Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes
within net debt, interest-bearing loans and borrowings less cash and short-term deposits (including other bank balances). The
Note 45 : Additional Regulatory Disclosures As Per Schedule III Of Companies Act, 2013
A. The Company does not have any Benami property, where any proceeding has been initiated or pending against the
Company for holding any Benami property.
B. The Company has Fund-based and Non-fund-based limits of Working Capital from Banks and Financial Institutions. For
the said facility, the revised submissions made by the Company to its lead bankers based on closure of books of accounts
at the year end, the revised quarterly returns or statements comprising stock statements, book debt statements, credit
monitoring arrangement reports, statements on ageing analysis of the debtors/other receivables, and other stipulated
financial information filed by the Company with such banks or financial institutions are in agreement with the unaudited
books of accounts of the Company of the respective quarters and no material discrepancies have been observed.
C. The Company has not been declared as a willful defaulter by any lender who has powers to declare a Company as a willful
defaulter at any time during the financial year or after the end of reporting period but before the date when the Financial
Statements are approved.
D. The Company has not entered into any transactions with companies struck off under Section 248 of the Companies Act,
2013 or Section 560 of the Companies Act, 1956.
E. The Company has complied with the number of layers prescribed under Clause (87) of Section 2 of the Companies Act
2013, read with the Companies (Restrictions on number of Layers) Rules, 2017.
F. The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities
(intermediaries), with the understanding that the intermediary shall;
i. 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
ii. Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
G. The Company has not received any funds from any person(s) or entity(ies), including foreign entities (Funding Party) with
the understanding (whether recorded in writing or otherwise) that the Company shall;
i. 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
ii. Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
H. The Company does not have any transactions which are not recorded in the books of accounts but has been surrendered
or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or
any other relevant provisions of the Income Tax Act, 1961).
I. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
J. The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or
both during the current or previous year.
K. There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory
period.
L. The borrowings obtained by the Company from banks have been applied for the purposes for which such loans were
taken.
Note 46 : Code on Social Security, 2020
The Government of India, vide Notification dated November 21, 2025, has notified The Code on Wages, 2019, The Industrial
Relations Code, 2020, The Code on Social Security, 2020, and The Occupational Safety, Health and Working Conditions Code,
2020 (collectively referred to as “The Labour Codes”), which consolidate and replace existing multiple labour legislations. In
accordance with Ind AS 19 — Employee benefits, changes to employee benefit plans resulting from the new labour codes are
treated as plan amendments, requiring immediate recognition of past service cost as expense in the Statement of Profit and
Loss. This approach is consistent with the guidance issued by The Institute of Chartered Accountants of India. In view of this,
the Company has evaluated the impact and recognised past service costs amounting to ?25.34 Crores which has been included
under “Exceptional Items” in the Standalone Financial Statements for the year ended March 31, 2026. The Company continues
to monitor developments on the rules to be notified by regulatory authorities, including clarifications/ additional guidance
from authorities and will continue to assess the accounting implications basis such developments/guidance.
Note 47 : Recent accounting pronouncements
The Ministry of Corporate Affairs (MCA) notifies new standards and amendments to the existing standards under Companies
(Indian Accounting Standards) Rules as issued from time to time. During the year, the MCA has amended the Ind AS as below:
A. For the year ended 31st March, 2026, MCA has notified following Amendment to Ind AS, applicable to the Company
w.e.f. 1st April, 2025. Based on its assessment, the Company does not expect these amendments to have a material
impact on its Standalone Financial Statements.
“Ind AS 1- Presentation of Financial Statements:
The amendment relates to classification of liabilities as current or non-current and non-current liabilities with covenants.
In the context of classifying a liability as current, it removes the requirement of the existence of a right to defer settlement
for at least 12 months after the reporting date and instead requires that the said right should exist on the reporting date
and have substance. The amendment also introduces guidance on classification of liabilities with covenants.”
“Ind AS 7- Statement of Cash Flows:
The amendments require to inform users of the Financial Statements of the existence of supplier finance arrangements
and explain the nature of the arrangements, the carrying amount of liabilities and the range of payment due dates.”
“Ind AS 107- Financial Instruments Disclosures:
The amendments to add supplier finance arrangements as a factor that may cause concentration of liquidity risk.”
“Ind AS 12- Income Taxes:
The amendments to the Pillar Two Model Rules introduce a temporary mandatory exemption from deferred tax accounting
for top-up taxes and require Companies to disclose their use of this exemption. This relief takes effect immediately and
applies retrospectively. In addition, the amendments mandate new disclosures to compensate for any potential loss of
information resulting from the exemption.”
“Ind AS 21 - The Effects of Changes in Foreign Exchange Rates:
The amendments provide guidance on determining exchangeability between currencies and estimating spot rates when
a currency is not exchangeable.”
Note 47 : Recent accounting pronouncements (Contd.)B. The following amendments to existing standards have been notified by the Ministry of Corporate Affairs but are not
yet effective and have not been early adopted by the Company:
Amendments to Ind AS 1 - ‘Presentation of Financial Statements’- Classification of Liabilities as current or non-current
and non-current liabilities with covenants. The amendment includes specific provisions that will take effect for reporting
periods beginning on or after April 1, 2026, retrospectively, as outlined below: a) Breach of material covenant for long-term
loan arrangement on or before end of reporting period with effect that liability becomes payable on demand as at the
reporting date, then it shall be classified as current liability, if lender agreed after reporting period and before approval
of Financial Statements to not demand payment as a consequence of breach. b) Classify as non-current liability, if lender
agrees by the end of reporting period to provide grace period ending at least 12 months after reporting period within which
the entity can rectify the breach provided lender does not demand immediate repayment. c) Disclose information about
the timing of settlement to understand the impact of the liability on the Financial Statements. The Company does not
expect this amendment to have an impact on its operations or Financial Statements.
C. Other Amendments
There are no other standards, amendments or interpretations issued by the Institute of Chartered Accountants of India
(“ICAI”) or notified by the MCA which, in the opinion of the Management, are expected to have a significant impact on the
Standalone Financial Statements of the Company.”
Note 48 : Segment Reporting
Up to financial period June 30, 2025, the Company has considered Advanced Material Undertaking as a separate reportable
segment in the standalone financial results. Pursuant to the aforesaid NCLT order on demerger of its Advanced Material
Undertaking, there is only one material reportable segment of the Company as at March 31, 2026. Hence, in line with the
requirements of Ind AS 108, the Company has opted to disclose segment information only in the consolidated financial results
and accordingly, no separate segment disclosure has been presented in the current results.
Note 49 : Events occurring after the reporting period
The Company evaluates events and transactions that occur subsequent to the Balance Sheet date but prior to the approval of
Financial Statements to determine the necessity for recognition and/or reporting of subsequent events and transactions in the
Financial Statements.
The Board of Directors recommended a final dividend of ?4.50 per equity share of face value of ?10 each, for the Financial Year
ended March 31, 2026, subject to the approval of shareholders in the ensuing Annual General Meeting.
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