2.13 Provisions, contingent liabilities, and contingent assets
Provisions
The Company creates a provision when there is present obligation as a result of a past event that
probably requires an outflow of resources, and a reliable estimate can be made of the amount of
obligation.
If the effect of the time value of money is material, provisions are determined by discounting the
expected future cash flows (representing the best estimate of the expenditure required to settle the
present obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments
of the time value of money and the risks specific to the liability. The unwinding of the discount is
recognised as finance cost.
Contingent liability
Contingent liabilities are possible obligations that arise from past events and whose existence will only
be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly
within the control of the Company. Where it is not probable that an outflow of economic benefits will
be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent
liability, unless the probability of outflow of economic benefits is remote.
Contingent assets
Contingent assets are possible assets that arises from past events and whose existence 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.
2.14 Property, plant and equipment (including Capital work-in-progress)
Recognition and measurement
All items of property, plant and equipment are stated at historical cost less depreciation. Freehold land
is carried at cost. All other items of property, plant and equipment are stated at cost net of recoverable
taxes (wherever applicable), which includes capitalised borrowing costs less depreciation and
impairment, if any.
Cost of an item of property, plant and equipment comprises its purchase price, including import duties
and non-refundable purchase taxes, if any, after deducting trade discounts and rebates, any directly
attributable cost of bringing the item to its working condition for its intended use and estimated costs
of dismantling and removing the item and restoring the site on which it is located.
If significant parts of an item of property, plant and equipment have different useful lives, then they are
accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in the statement
of profit and loss.
On transition to Ind AS, the Company had elected to continue with carrying value of all its property,
plant and equipment recognised as at 1 April 2016 measured as per the previous GAAP and use that
carrying value as the deemed cost of the property, plant and equipment.
Subsequent expenditure
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to
the Company and the cost of the item can be measured reliably. The carrying amount of any component
accounted for as a separate asset is derecognised when replaced.
All other repairs and maintenance are charged to the Statement of Profit and Loss during the reporting
period in which they are incurred.
Depreciation methods, estimated useful lives and residual values
Depreciation is calculated on cost of items of property, plant and equipment less their estimated residual
value over their useful life using written down value method and is recognised in the statement of profit
and loss.
The estimated useful lives of items of property, plant and equipment for the current and comparative
periods are as under and the same are equal to lives specified as per schedule II of the Act.
Based on technical evaluation and consequent advice, the management believes that its estimates of
useful lives as given above best represent the period over which management expects to use these
assets. Depreciation on addition to property, plant and equipment is provided on pro-rata basis from
the date the assets are ready for intended use. Depreciation on sale/discard from property, plant and
equipment is provided for up to the date of sale, deduction or discard of property, plant and equipment
as the case may be.
Depreciation method, useful lives and residual values are reviewed at each financial year-end, and
changes, if any, are accounted for prospectively.
2.15 Intangible assets
Recognition and measurement
An intangible asset is recognised when it is probable that the future economic benefits attributable to
the asset will flow to the Group and where its cost can be reliably measured.
Intangible assets are initially measured at cost. Such intangible assets are subsequently measured at
cost less accumulated amortisation and any accumulated impairment losses. Cost comprises the
purchase price and any cost attributable to bringing the assets to its working condition for its intended
use.
Amortisation
Amortisation is calculated to write off the cost of intangible assets over their estimated useful lives using
the straight-line method and is included in depreciation and amortisation in the statement of profit and
loss.
The useful lives of intangible assets are as follows:
Amortisation method, useful lives and residual values are reviewed at each financial year-end, and
changes, if any, are accounted for prospectively.
Losses arising from the retirement of and gain or losses arising from disposal of an intangible asset are
determined as the difference between the net disposal proceeds and the carrying amount of asset and
recognised as income or expense in the statement of profit and loss.
2.16 Financial instruments
Initial recognition and measurement
Trade receivables and debt securities issued are initially recognised when they are originated. All other
financial assets and financial liabilities are initially recognised when the Company becomes a party to
the contractual provisions of the instrument.
A financial asset or financial liability is initially measured at fair value plus, transaction costs that are
directly attributable to its acquisition or issue, except for an item recognised at fair value through profit
and loss. Transaction cost of financial assets carried at fair value through profit and loss is expensed in
the statement of profit and loss.
Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as measured at:
• amortised cost,
• Fair value through other comprehensive income (FVOCI), or
• Fair value through profit and loss (FVTPL)
The classification depends on the entity's business model for managing the financial assets and the
contractual terms of the cash flows.
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period
the Company changes its business model for managing financial assets.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not
designated as at FVTPL:
• the asset is held within a business model whose objective is to hold assets to collect
contractual cash flows; and
• the contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not
designated as at FVTPL:
• the asset is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets; and
• the contractual terms of the financial asset give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably
elect to present subsequent changes in the investment's fair value in OCI (designated as FVOCI - equity
investment). This election is made on an investment-by-investment basis.
All financial assets not classified to be measured at amortised cost or FVOCI as described above are
measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may
irrevocably designate a financial asset that otherwise meets the requirements to be measured at
amortised cost or at FVOCI or at FVTPL if doing so eliminates or significantly reduces an accounting
mismatch that would otherwise arise.
Financial assets: Business model assessment
The Company makes an assessment of the objective of the business model in which a financial asset is
held at a portfolio level because this best reflects the way the business is managed and information is
provided to management. The information considered includes:
• the stated policies and objectives for the portfolio and the operation of those policies in practice.
These include whether management's strategy focuses on earning contractual interest income,
maintaining a particular interest rate profile, matching the duration of the financial assets to the
duration of any related liabilities or expected cash outflows or realising cash flows through the
sale of the assets;
• how the performance of the portfolio is evaluated and reported to the Company's management;
• the risks that affect the performance of the business model (and the financial assets held within
that business model) and how those risks are managed;
• how managers of the business are compensated - e.g., whether compensation is based on the
fair value of the assets managed or the contractual cash flows collected; and
• the frequency, volume and timing of sales of financial assets in prior periods, the reasons for
such sales and expectations about future sales activity.
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not
considered sales for this purpose, consistent with the Company's continuing recognition of the assets
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair
value basis are measured at FVTPL.
Financial assets: Assessment whether contractual cash flows are solely payments of principal and interest
For the purposes of this assessment, 'principal' is defined as the fair value of the financial asset on initial
recognition. 'Interest' is defined as consideration for the time value of money and for the credit risk
associated with the principal amount outstanding during a particular period of time and for other basic
lending risks and costs (e.g., liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the
Company considers the contractual terms of the instrument. This includes assessing whether the
financial asset contains a contractual term that could change the timing or amount of contractual cash
flows such that it would not meet this condition. In making this assessment, the Company considers:
• contingent events that would change the amount or timing of cash flows;
• terms that may adjust the contractual coupon rate, including variable interest rate features;
prepayment and extension features; and
• terms that limit the Company's claim to cash flows from specified assets (e.g., non- recourse
features).
A prepayment feature is consistent with the solely payments of principal and interest criterion if the
prepayment amount substantially represents unpaid amounts of principal and interest on the principal
amount outstanding, which may include reasonable additional compensation for early termination of
the contract. Additionally, for a financial asset acquired at a significant discount or premium to its
contractual par amount, a feature that permits or requires prepayment at an amount that substantially
represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also
include reasonable additional compensation for early termination) is treated as consistent with this
criterion if the fair value of the prepayment feature is insignificant at initial recognition.
Financial assets: Subsequent measurement and gains and losses
Financial assets at amortised cost: These assets are subsequently measured at amortised cost using the
effective interest method. The amortised cost is reduced by impairment losses, if any. Interest income
and impairment are recognised in the statement of profit and loss. Any gain or loss on derecognition is
recognised in statement of profit and loss.
Financial assets at FVTPL: These assets are subsequently measured at fair value. Net gains and losses,
including any interest income, are recognised in the statement of profit and loss.
Debts investments at FVOCI: These assets are subsequently measured at fair value. Interest income
under the effective interest method, foreign exchange gains and losses and impairment are recognised
in profit or loss. Other net gains and losses are recognised in OCI. On Derecognition, gains and losses
accumulated in OCI are reclassified to profit or loss.
Equity investments at FVOCI: These assets are subsequently measured at fair value. Dividends are
recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the
cost of the investment. Other net gains and losses are recognised in OCI and are not reclassified to profit
or loss.
Financial liabilities: classification, subsequent measurement & gain and loss
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified
as at FVTPL if it is classified as held for trading, or it is a derivative or it is designated as such on initial
recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including
any interest expense, are recognised in the statement of profit and loss. Other financial liabilities are
subsequently measured at amortised cost using the effective interest method. Interest expense and
foreign exchange gains
and losses are recognised in the statement of profit and loss. Any gain or loss on derecognition is also
recognised in the statement of profit and loss.
Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet
when, and only when, the Company currently has a legally enforceable right to set off the amounts and
it intends either to settle them on a net basis or to realise the assets and settle the liabilities
simultaneously.
Derecognition
Financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the
financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in
which substantially all of the risks and rewards of ownership of the financial asset are transferred or in
which the Company neither transfers nor retains substantially all of the risks and rewards of ownership
and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but
retains either all or substantially all of the risks and rewards of the transferred assets, the transferred
assets are not derecognised.
Financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or
cancelled, or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows under
the modified terms are substantially different. In this case, a new financial liability based on the modified
terms is recognised at fair value. The difference between the carrying amount of the financial liability
extinguished and the new financial liability with modified terms is recognised in the statement of profit
and loss.
Impairment of financial instruments
The Company recognises loss allowances for expected credit losses on:¬
- Financial assets measured at amortised cost; and
- Financial assets measured at FVOCI- debt investments
At each reporting date, the Company assesses whether financial assets carried at amortised cost and
debt securities at FVOCI are credit impaired. A financial asset is 'credit-impaired' when one or more
events that have a detrimental impact on the estimated future cash flows of the financial asset have
occurred. Evidence that a financial asset is credit - impaired includes the following observable data:
• significant financial difficulty of the borrower or issuer;
• a breach of contract such as a default or being past due for agreed credit period;
• the restructuring of a loan or advance by the Company on terms that the Company would not
consider otherwise;
• it is probable that the borrower will enter bankruptcy or other financial reorganisation; or
• the disappearance of an active market for a security because of financial difficulties.
Expected credit loss
Loss allowances for trade receivables are always measured at an amount equal to lifetime expected
credit losses.
Lifetime expected credit losses are the expected credit losses that result from all possible default events
over the expected life of a financial instrument.
12-month expected credit losses are the portion of expected credit losses that result from default events
that are possible within 12 months after the reporting date (or a shorter period if the expected life of
the instrument is less than 12 months).
In all cases, the maximum period considered when estimating expected credit losses is the maximum
contractual period over which the Company is exposed to credit risk.
When determining whether the credit risk of a financial asset has increased significantly since initial
recognition and when estimating expected credit losses, the Company considers reasonable and
supportable information that is relevant and available without undue cost or effort. This includes both
quantitative and qualitative information and analysis, based on the Company's historical experience and
informed credit assessment and including forward looking information.
The Company assumes that the credit risk on a financial asset has increased significantly if it is more
than agreed credit period.
The Company considers a financial asset to be in default when:
• the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by
the Group to actions such as realising security (if any is held); or
• the financial asset is past due and not recovered within agreed credit period.
Measurement of expected credit losses
Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured
as the present value of all cash shortfalls (i.e., the difference between the cash flows due to the Company
in accordance with the contract and the cash flows that the Company expects to receive).
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying
amount of the assets disclosed in the Balance Sheet.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that
there is no realistic prospect of recovery. This is generally the case when the Company determines that
the debtor does not have assets or sources of income that could generate sufficient cash flows to repay
the amounts subject to the write-off. However, financial assets that are written off could still be subject
to enforcement activities in order to comply with the Company's procedures for recovery of amounts
due.
2.17 Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to
equity shareholders by the weighted average number of equity shares outstanding during the period.
The weighted average numbers of equity shares outstanding during the period are adjusted for events
such as bonus issue, share split or consolidation of shares.
For calculating diluted earnings per share, the net profit or loss for the year attributable to equity
shareholders and the weighted average number of shares outstanding during the period are adjusted
for the effects of all dilutive potential equity shares. The dilutive potential equity shares are deemed
converted into equity shares as at the beginning of the period unless they have been issued at a later
date.
2.18 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided
to the chief operating decision maker.
In accordance with Ind AS 108 - Operating Segments, the operating segments used to
present segment information are identified on the basis of internal reports used by the
Group's Management to allocate resources to the segments and assess their performance.
Segment profit is used to measure performance as management believes that such
information is the most relevant in evaluating the results of certain segments relative to other
entities that operate within these industries. Inter-segment pricing is determined on an arm's
length basis.
The operating segments have been identified on the basis of the nature of products/services.
Further:
1. Segment revenue includes sales and other income directly identifiable with /
allocable to the segment including inter-segment revenue.
2. Expenses that are directly identifiable with / allocable to segments are considered
for determining the segment result. Expenses which relate to the Group as a whole
and not allocable to segments are included under unallocable expenditure.
3. Income which relates to the Group as a whole and not allocable to segments is
included in unallocable income.
4. Segment assets and liabilities include those directly identifiable with the respective
segments. Unallocable assets and liabilities represent the assets and liabilities that
relate to the Group as a whole and not allocable to any segment.
The Board of Director(s) are collectively the Group's 'Chief Operating Decision Maker' or
'CODM' within the meaning of Ind AS 108.
30 Operating Segments
A. Basis for Segmentation
Segment information is presented in respect of the Company's key operating segments. The operating segments are based on the Company's management and internal
reporting structure. The chief operating decision maker identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are
evaluated regularly. All operating segments' operating results are reviewed regularly by the Board of Directors to make decisions about resources to be allocated to the
segments and assess their performance.
In accordance with Ind AS-108 "Operating Segments" and based on "Management Evaluation", the Chief Operating Decision Maker ("CODM) evaluates the Group's
performance and allocates resources based on the analysis of various performance indicators of business segments. Accordingly, information has been presented along these
business segments. The accounting principles used in preparation of financial results are consistently applied to compute the revenue and results of reportable segments.The
Board of Directors examines the Company's performance from business activities perspective and have identified the following reportable segments of its business:
...Continued from previous page
Fair value hierarchy
Level 1: It includes financial instruments measured using quoted prices.
Level 2: The fair value of financial instruments that are not traded in an active market 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. The fair value of financial assets and
liabilities included in Level 3 is determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from
observable current market transactions and dealer quotes of similar instruments.
The carrying amounts of trade receivables, cash and cash equivalents and other financial assets and liabilities, approximates the fair values, due to their short¬
term nature. Fair value of financial assets and financial liabilities is similar to the carrying value as there is no significant differences between carrying value and
fair value.
(ii). Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering
cash or another financial asset. The Company's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its
liabilities when they are fallen due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's
reputation.
The Company believes that its liquidity position of Rs. 16.78 Lacs (PY: 31 March 2024: Rs. 25.98 Lacs) and the anticipated future internally generated funds from
operations will enable it to meet its future known obligations in the ordinary course of business.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of
credit facilities to meet obligations when due. The Company's policy is to regularly monitor its liquidity requirements to ensure that it maintains sufficient
reserves of cash and funding from Company companies to meet its liquidity requirements in the short and long term.
The Company's liquidity management process as monitored by management, includes the following:
- Day to day funding, managed by monitoring future cash flows to ensure that requirements can be met.
- Maintaining rolling forecasts of the Company's liquidity position on the basis of expected cash flows.
(iii). Market risk
Market risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of
risk: interest rate risk, currency risk and other price risk. Since the company do not have any Loan on fluctuating interest rate from Banks and does not operate in
foreign country, hence it does not attract any market risk.
32 Capital Management
For the purpose of the Company's capital management, capital includes issued equity share capital and all other equity reserves attributable to the equity holders
of the Company.
Management assesses the Company's capital requirements in order to maintain an efficient overall financing structure. The Company manages the capital
structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.
To maintain or adjust the capital structure, the Company may return capital to shareholders, raise new debt or issue new shares.
The Company monitors capital on the basis of the debt to capital ratio, which is calculated as interest-bearing debts divided by total capital (equity attributable
to owners of the parent plus interest-bearing debts).
36 Other statutory compliances
(i) Details with respect to the Benami Properties:
No proceedings have been initiated or pending against the entity under the Benami Transactions (prohibition) Act, 1988.
(ii) Undisclosed income:
The Company does not have transaction which is not recorded in the books of accounts that 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.
(iii) Crypto currency:
The Company have not traded or invested in Crypto currency or Virtual Currency.
(iv) Struck off companies:
The Company do not have any transactions with companies struck off.
(v) The Company has not been declared as wilful defaulter by any bank or financial Institution or other lender.
(vi) The Company does not have any immovable property whose title deeds are not held in the name of the Company.
(vii) Charge Registered with Registrar of Charges (ROC):
The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period
(viii) The Company have 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:
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.
(ix) The Company does not receive any fund 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:
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.
37 The Company has used accounting softwares for maintaining its books of account for the financial year ended March 31, 2025 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 softwares. .
38 These financial statements were approved for issue by the Board of Directors on May 23, 2025.
39 Previous year's figures
Previous year's figures have been regrouped/reclassified as per the current year's presentation for the purpose of comparability.
As per our report of even date.
For NKSC & Co. For and on behalf of the Board of Directors of
Chartered Accountants Avax Apparels and Ornaments Limited
Firm Registration No. 020076N
Priyank Goyal Harish Kumar Harinderpal Singh Sodhi
Partner Whole Time Director Manging Director
Membership No.: 521986 DIN-09283531 DIN-09283654
ICAI UDIN No. 25521986BMNYPW3420
Rajesh Singla Shruti Jain
CFO Company Secretary
PAN No. CNOPS7915R M.No. 52018
Place: Delhi Place: Delhi
Date: 23-May-25 Date: 23-May-25
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