21. Other Notes Forming Part of the Financial Statements:
> Contingent Liabilities to the extent not provided for Guarantees:
Claims against company, disputed by the company, not acknowledged as debt:
Operating segments are reported in a manner consistent with the internal reporting to the chief
operating decision maker (CODM). The Chief Executive Officer of the Company being the CODM,
assesses the financial performance and position of the Company and makes strategic decisions. The
CODM primarily uses earnings before interest, tax, depreciation and amortization (EBITDA) as
performance measure to assess the performance of the operating segments. Description of Segment.
For the management purpose, the company is engaged in single business segment i.e. in
manufacturing and trading of cotton - Kapas, ginning cotton bales, raw oil and its agro by- products
and yarn.
The earning considered in ascertaining the company's EPS comprises the profit available for
shareholders i.e. profit after tax and statutory/regulatory appropriations. The number of shares
used in computing Basic EPS is the weighted average number of shares outstanding during the year
as per the guidelines of Ind AS-33.
> Capital Management
The Company manages its capital to ensure that entities in the Company will be able to continue as
going concerns while maximizing the return to stakeholders through the optimization of the debt
and equity balance. The capital structure of the Company consists of net debt (borrowings offset by
cash and bank balances) and total equity of the Company.
Fair value hierarchy
The following section explains the judgments and estimates made in determining the fair values of the
financial instruments that are recognized and measured at fair value through profit or loss. To provide an
indication about the reliability of the inputs used in determining fair value, the Company has classified its
financial investments into the three levels prescribed under the accounting standard. An explanation of
each level follows underneath the table.
Notes:
Level 1 hierarchy includes financial instruments measured using quoted prices (unadjusted) in active market
for identical assets that the entity can access at the measurement date. This represents mutual funds that
have price quoted by the respective mutual fund houses and are valued using the closing Net asset value
(NAV).
Level 2 hierarchy includes the fair value of financial instruments measured using quoted prices for identical or
similar assets in markets that are not active.
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 compound instruments.
There are no transfers between any of these levels during the year. The Company's policy is to recognize
transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.
C. Fair value of financial assets and liabilities measured at amortized cost
The Management has assessed that fair value of loans, trade receivables, cash and cash equivalents, other
bank balances, other financial assets and trade payables approximate their carrying amounts largely due to
their short-term nature. Difference between carrying amount of Bank deposits, other financial assets,
borrowings and other financial liabilities subsequently measured at amortized cost is not significant in each
of the years presented. For financial assets and liabilities that are measured at fair value, the carrying
amounts are equal to the fair values.
> Financial risk management
The Company's board of directors has overall responsibility for the establishment and oversight of the
Company's risk management framework. The board has established the Audit Committee, which is
responsible for developing and monitoring the Company's risk management policies. The Committee holds
regular meetings and report to board on its Activities. The Company's risk management policies are
established to identify and analyses 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, through its
training and management standards and procedures, aims to maintain a disciplined and constructive
control environment in which all employees understand their roles and obligations.
The audit committee oversees how management monitors compliance with the Company's risk
management policies and procedures, and reviews the adequacy of the risk management framework in
relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal
audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and
procedures, the results of which are reported to the audit committee.
This note explains the sources of risk which the entity is exposed to and how the entity manages the risk.
(a) Credit risk
Credit risk is the risk of financial loss to the company if a customer or counterparty to a financial instrument
fails to meet its contractual obligations. The company is exposed to the credit risk from its trade receivables,
unbilled revenue, investments, cash and cash equivalents, bank deposits and other financial assets. The
maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of
managing counterparty credit risk is to prevent losses in financial assets.
Trade Receivables
Trade receivables comprise a widespread customer base. Management evaluates credit risk relating to
customers on an ongoing basis. If customers are independently rated, these ratings are used. Otherwise, if
there is no independent rating, risk control assesses the credit quality of the customer, considering its
financial position, past experience and other factors.
For trade receivables, provision is provided by the company as per the below mentioned policy:
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 due, under both normal and stressed conditions, without incurring unacceptable losses or
risking damage to the Company's reputation.
Liquidity Table
The Company's remaining contractual maturity for its non-derivative financial liabilities with agreed
repayment periods is given below. The tables have been drawn up based on the undiscounted cash flows of
financial liabilities based on the earliest date on which the Company can be required to pay. The tables
include both interest and principal cash flows. The contractual maturity is based on the earliest date on which
the Company may be required to pay.
(c) Market Risk
Market risk is the risk arising from changes in market prices - such as foreign exchange rates and interest
rates - will affect the Company's income or the value of its holdings of financial instruments. The Company is
exposed to market risk primarily related to interest rate risk and the market value of the investments. Thus,
the exposure to market risk is a function of investing and borrowing activities
(d) Price Risk Exposure
The Company's exposure to securities price risk arises from investments held in mutual funds and classified in
the balance sheet at fair value through profit or loss. To manage its price risk arising from such investments,
the Company diversifies its portfolio. Further these are all debt base securities for which the exposure is
primarily on account of interest rate risk. Quotes (NAV) of these investments are available from the mutual
fund houses. Profit for the year would increase/decrease as a result of gains/losses on these securities
classified as at fair value through profit or loss.
> Others
- Balance of sundry debtors and creditors, loans and advances accepted and given in the balance
sheet are subject to confirmation.
- As informed by the management that the loans are interest free, which in our opinion is violation of
Section 186 (7) of the Companies Act, 2013.
- Above Disclosure is made after considering the principle of materiality.
- In the events of non-availability of suitable supporting vouchers, Directors have given us certificate
that these expenses are incurred mainly for the business activities of the company.
- The previous year's figures have been reworked, regrouped, rearranged and reclassified wherever
necessary. Amounts and other disclosures for the preceding year are included as an integral part of
the current year financial statements and are to be read in relation to the amounts and other
disclosures relating to the current year.
For and on behalf of the board ,
Sd/- Sd/-
Nirav Shah Rajan Parikh For GMCA & Co
Director & CEO Director Chartered Accountants
DIN 00397336 DIN 00198383 FRN :109850W
Sd/- Sd/- Sd/-
Ziral Soni Mayank Thaker C.A. Mitt S. Patel
(Company Secretary) (CFO) (Partner)
Membership No. 163940
UDIN:24163940BKADYI3343
Place : Ahmedabad
Date : 16/05/2024
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