2.14. Provisions, contingent liabilities and contingent assets
Provisions are recognised 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. When the
Company expects some or all of a provision to be reimbursed, for example, under an insurance contract,
the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually
certain. The expense relating to a provision is presented in the statement of profit and loss net of
reimbursement (if any).
Provisions are measured at the present value of management's best estimate of the expenditure required
to settle the present obligation at the end of the reporting period. The discount rate used to determine the
present value is a pre-tax rate that reflects current market assessments of the time value of money and
the risks specific to the liability. The increase in the provision due to the passage of time is recognised as
interest expense.
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 standalone
financial statements.
Contingent assets are not recognised. However, when inflow of economic benefits is probable, related
asset is disclosed.
2.15. Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity
shareholders (after deducting attributable taxes) by the weighted average number of equity shares
outstanding during the period. The weighted average number of equity shares outstanding during the
period is adjusted for events including a bonus issue.
For the purpose of 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 year are
adjusted for the effects of all dilutive potential equity shares.
Potential ordinary shares shall be treated as dilutive when, and only when, their conversion to ordinary
shares would decrease earnings per share or increase loss per share from continuing operations.
2.16. Leases
The Company's lease asset classes primarily consist of leases for showrooms taken on rent. The
Company determines the lease term as the non-cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered
by an option to terminate the lease, if it is reasonably certain not to be exercised. The Company has
several lease contracts that include extension and termination options. The Company applies judgement
in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate
the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either
the renewal or termination, including: whether there are significant penalties to terminate (or not extend);
whether any leasehold improvements are expected to have a significant remaining value; historical lease
durations; the importance of the underlying asset to the Company's operations; and the costs and
business disruption required to replace the leased asset. The Company typically exercises its option to
renew (or does not exercise its option to terminate) for the leases because there will be a negative effect
on the sale of its products if a replacement is not readily available and also due to the cost of the leasehold
improvements.
The Company assesses whether a contract is or contains a lease, at inception of a contract. A contract is,
or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of
time in exchange for consideration. To assess whether a contract conveys the right to control the use of an
identified asset, the Company assesses whether:
(i) the contract involves the use of an identified asset,
(ii) the Company has substantially all of the economic benefits from use of the asset through the period
of the lease, and
(iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognises a right-of-use asset (“ROU”) and a
corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a
term of twelve months or less (short-term leases) and leases of low value assets. For these short-term
and leases of low value assets, the Company recognises the lease payments as an operating expense on
a straight-line basis over the term of the lease.
The right-of-use assets are initially recognised at cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any
initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated
depreciation and impairment losses, if any. Right-of-use assets are depreciated from the commencement
date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.
The lease liability is initially measured at the present value of the future lease payments. The lease
payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using
the incremental borrowing rates. The lease liability is subsequently remeasured by increasing the
carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease
payments made.
A lease liability is remeasured upon the occurrence of certain events such as a change in the lease term or
a change in an index or rate used to determine lease payments. The remeasurement normally also
adjusts the leased assets.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments
have been classified as cash flows from financing activities.
2.17. Income taxes
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or
paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted, at the reporting date in the countries where the Company operates and
generates taxable income.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss
(either in other comprehensive income or in equity). Current tax items are recognised in correlation to the
underlying transaction either in OCI or directly in equity. Management periodically evaluates positions
taken in the tax returns with respect to situations in which applicable tax regulations are subject to
interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are
recognised for all deductible temporary differences, the carry forward of unused tax credits (Minimum
alternate tax credit entitlement) and any unused tax losses. Deferred tax assets are recognised to the
extent that it is probable that taxable profit will be available against which the deductible temporary
differences, and the carry forward of unused tax credits and unused tax losses can be utilised. Deferred
tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other
comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying
transaction either in OCI or directly in equity.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred
tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are
recognised to the extent that it has become probable that future taxable profits will allow the deferred tax
asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in
other comprehensive income or in equity). Deferred tax items are recognised in correlation to the
underlying transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity
and the same taxation authority.
2.18. Non-current assets or disposal group held for sale
The Company classifies non-current assets and disposal groups as held for sale/ distribution to owners if
their carrying amounts will be recovered principally through a sale/ distribution 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.
For these purposes, sale transactions include exchanges of non-current assets for other non-current
assets when the exchange has commercial substance. The criteria for held for sale classification is
regarded met only when the assets or disposal group is available for immediate sale in its present
condition, subject only to terms that are usual and customary for sales/ distribution of such assets (or
disposal groups), its sale is highly probable; and it will genuinely be sold, not abandoned. The Company
treats sale of the asset highly probable when:
• The appropriate level of management is committed to a plan to sell the asset (or disposal group),
• An active programme to locate a buyer and complete the plan has been initiated (if applicable),
• The asset (or disposal group) 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.
2.19. Government grants and subsidies
Government grants are recognised where there is reasonable assurance that the grant will be received
and all attached conditions will be complied with.
When the grant or subsidy relates to revenue, it is recognised as income on a systematic basis in the
statement of profit and loss over the periods necessary to match them with the related costs, which they
are intended to compensate. Where the grant relates to an asset, it is recognised as deferred income and
released to income in equal amounts over the expected useful life of the related asset.
2.20. Segment reporting
The Company's business operation comprises of single operating segment of manufacturing/trading of
textile garments. Operating segment has been identified on the basis of nature of products and reported
in a manner consistent with the internal reporting provided to Chief Operating Decision Maker ('CODM').
2.21. Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term
deposits with an original maturity of three months or less, which are subject to an insignificant risk of
changes in value.
2.22. Cash dividend distribution to equity holders
The Company recognises a liability to make cash distributions to equity holders when the distribution is
authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in
India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is
recognised directly in equity.
2.23. Significant accounting judgements, estimates and assumptions
In the application of the Company's accounting policies, which are described as stated above, the Board
of Directors of the Company are required to make judgements, estimates and assumptions about the
carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates
and associated assumptions are based on historical experience and other factors that are considered to
be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects only the
period of the revision and future periods if the revision affects both current and future periods.
Key sources of uncertainty
The following are the areas of estimation uncertainty and critical judgements that the management has
made in the process of applying the Company's accounting policies and that have the most significant
effect on the amounts recognised in the financial statements:
Right to recover returned goods and refund liabilities
The methodology and assumptions used to estimate expected sales return involves significant
judgments by the Management. Such estimates are monitored and adjusted regularly in the light of
contractual and legal obligations, historical trend and past experience. Once the uncertainty associated
with the expected sales returns is resolved, revenue is adjusted accordingly.
Provision for discount
At each balance sheet date, management estimates the adequacy of provision for discounts to be given
to its customers on the sales made by the Company on the basis of historical trend, past experience and
discount policies.
Defined benefit plans
The cost of the defined benefit plan and other post-employment benefits and the present value of such
obligation are determined using actuarial valuations. An actuarial valuation involves making various
assumptions that may differ from actual developments in the future. These include the determination of
the discount rate, future, salary increases, mortality rates and future pension increases. Due to the
complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly
sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
Useful lives of depreciable property, plant and equipment and intangible assets
Management reviews the useful lives of depreciable/amortisable assets at each reporting date.
As at March 31, 2025 management assessed that the useful lives represent the expected utility of the
assets to the Company.
Recoverability of advances/receivables
At each balance sheet date, management assess recoverability of advances/receivables based on
ageing and credit risk to determine the adequacy of allowances for doubtful receivables / advances.
2.24. Applicability of New and Revised Ind AS
Ministry of Corporate Affairs (“MCA”) notifies new standards or amendments to the existing standards
under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended
March 31,2025, MCA has notified Ind AS - 117 Insurance Contracts and amendments to Ind AS 116 -
Leases, relating to sale and leaseback transactions, applicable to the Company w.e.f April 1,2024. The
Company has reviewed the new pronouncements and based on its evaluation has determined that it
does not have any significant impact in its financial statements.
ii) Rights, preferences and restrictions attached to equity shares:
The Company has only one class of equity shares having par value of Rs. 10 per share. Each holder of equity
shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company, after distribution of all preferential
amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
taxes", the Company had recorded deferred tax liability on debt mutual fund and deferred tax asset on debentures as
per applicable law (taking cognisance of the Indexation benefit) on fair value gains on these investments. The Finance
(No.2) Act, 2024 withdrew the indexation benefit on long term capital gains on debt mutual funds and debentures which
were purchased prior to April 1,2023 and tax rate applicable on the said assets was changed from 20% plus surcharge
and cess (with indexation) to 12.5% plus surcharge and cess(without indexation).
Deferred tax liabilities have been remeasured at the presribed rate on account of withdrawal of the indexation benefit
and change in the tax rate, which has resulted in increase in deferred tax liabilities and corresponding deferred tax
expense by Rs. 327 Lakhs, which has been recognised in the audited financial statements for the year ended March
31,2025. The actual payment of tax would be made at the time of redemption of this asset class. The cash outflow tax
could be different at the time of redemption depending on the actual gain and prevailing tax regulations.
Note-1
Primary Charge
- First pari-passu charge on the all current assets of the Company (present and future).
Note-2
Primary Charge
- First charge created on mutual funds and first pari-passu charge created on current assets (present &
Future)
Note-3
Primary Charge
- First charge created on mutual funds and first pari-passu charge created on current assets (present &
Future)
Note-4
Primary Charge
- Residual charge over the current assets of the Borrower, both present and future
37 Employee Benefits
I) Defined Contribution Plan
The Company's contribution to Provident Fund for the year ended March 31,2025 Rs. 549 Lakhs (for the year
ended March 31,2024: Rs. 484 Lakhs) has been recognised in the Statement of Profit and Loss under the
head employee benefits expense.
ii) Defined Benefit Plan
Gratuity
a) The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972.
Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of
gratuity payable on retirement/termination is the employees last drawn basic salary per month computed
proportionately for 15 days salary multiplied for the number of years of service. Gratuity plan is a funded
plan and the Company makes contributions of funds to Life Insurance Corporation of India and Kotak Life
Insurance.
b) This plan typically exposes the Company to actuarial risks such as: interest rate risk, Salary Escalation
risk, Demographic risk and Investment risk.
Interest rate risk:
The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an
increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value
of the liability.
Salary Escalation risk:
The present value of the defined benefit plan liability is calculated by reference to the future salaries of
plan participants. As such, an increase in the salary of the plan participants will increase the plan's
liability
Demographic risk:
The Company has used certain mortality and attrition assumptions in valuation of the liability. The
Company is exposed to the risk of actual experience turning out to be worse compared to the
assumption.
Investment risk:
This may arise from volatility in asset values due to market fluctuations and impairment of assets due to
credit losses. LIC of India primarily invests in debt instruments such as Government securities and highly
rated corporate bonds wherein the risk of downward fluctuation in value is minimal.
c) Significant Actuarial Assumptions
The significant actuarial assumptions used for the purpose of the actuarial valuation were as follows:
Level 1: Quoted prices in the active market. This level of hierarchy includes financial assets that are measured by
reference to quoted prices in the active market. This category consists of debt based open ended mutual funds,
investment in debentures and bonds and investment in alternate investment fund.
Level 2: Valuation techniques with observable inputs. This level of hierarchy includes items measured using
inputs other than quoted prices included within Level 1 that are observable for such items, either directly or
indirectly. This level of hierarchy consists of debt based close ended mutual fund investments.
Level 3: Valuation techniques with unobservable inputs. This level of hierarchy includes items measured using
inputs that are not based on observable market data (unobservable inputs). Fair value determined in whole or in
part, using a valuation model based on assumptions that are neither supported by prices from observable current
market transactions in the same instruments nor based on available market data. The main item in this category
are unquoted equity instruments.
The Fair value of mutual funds, bonds and debentures is based on the net asset value (NAV) as stated by the
Asset management Company (AMC) as at the Balance sheet date.
c) Financial risk management
The Company's principal financial liabilities comprise borrowings, lease liabilities, trade payables and other
financial liabilities. The main purpose of these financial liabilities is to finance the Company's operations and to
support its operations. The Company's financial assets include Investment, trade receivables, cash and cash
equivalents, Other bank balances and Other financial asstets that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Company's senior management
oversees the management of these risks. The Company's senior management is supported by a risk
management committee that advises on financial risks and the appropriate financial risk governance framework
for the Company. This risk management committee provides assurance to the Company's senior management
that the Company's financial risk activities are governed by appropriate policies and procedure and that financial
risks are identified, measured and managed in accordance with the Company's policies and risk objectives. The
Board of Directors reviews and agrees policies for managing each risk, which are summarised as below:
(i) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of
changes in market prices. Market prices comprise three types of risk: foreign currency risk, interest rate risk, price
risk.
Foreign currency risk
The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with
respect to the US Dollar and JPY. Foreign exchange risk arises from recognised assets and liabilities
denominated in a currency that is not the functional currency of the Company. Considering the low volume of
foreign currency transactions, the Company's exposure to foreign currency risk is limited and hence the
Company does not use any derivative instruments to manage its exposure. Also, the Company does not use
forward contracts and swaps for speculative purposes.
Foreign currency risk exposure
The carrying amounts of the Company's foreign currency denominated monetary assets and monetary liabilities
at the end of year expressed in INR Lakhs are as follows:
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 market interest rates. The Company's exposure to the risk of changes in market interest rates relates
primarily to the Company's debt obligations with floating interest rates. The Company carries borrowings
primarily at variable rate.
(ii) Credit risk
Credit risk arises from the possibility that the counter party may not be able to settle their obligations. To manage
trade receivable, the Company periodically assesses the financial reliability of customers, taking into account the
financial conditions, economic trends, analysis of historical bad debts and aging of such receivables.
Financial instruments that are subject to such risk, principally consist of investments, trade receivables and loans
and advances. None of the financial instruments of the Company results in material concentration of credit risks.
(iii) Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral
obligations without incurring unacceptable losses. The Company's objective is to, at all times maintain optimum
levels of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position
and deploys a robust cash management system. It maintains adequate sources of financing including debt and
overdraft from domestic banks at an optimised cost. It also enjoys strong access to domestic capital markets
across equity.
Maturities of financial liabilities
The table below analyses the Company's all non-derivative financial liabilities into relevant maturity based on
Dividends not recognised at the end of the reporting period
The Board of Directors of Company have proposed the final dividend of Rs. 20 per share for the year ended
March 31, 2025. The proposed final dividend is subject to approval of the members at the ensuing Annual
General Meeting. The amount of such dividend proposed is in accordance with section 123 of Companies Act,
2013.
41 Capital management
The Company's capital management objectives are to ensure the Company's ability to continue as a going
concern as well as to provide an adequate return to shareholders by pricing products and services
commensurates with the level of risk. The capital structure of the Company consists of net debt (borrowings
net of cash and cash equivalents) and total equity of the Company.
The management of the Company reviews the capital structure of the Company on regular basis. As part of
this review, the Board monitors capital using capital gearing ratio, which is net debt divided by total capital
plus net debt.
44 Segment information
The Company's primary business segment is reflected based on principal business activities carried on by
the Company. Chairman and Managing Director has 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 and trading of textile garments and is primarily operating in
India and hence, considered as single geographical segment. The sale of Company's products is seasonal.
45 Additional Information
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 not been declared as wilful defaulter by any bank or financial Institution or other lender.
c) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the
statutory period.
d) The Company does not have any transactions with companies struck off.
e) The Company does not have any transaction which is not recorded in the books of account 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
f) The Company has not traded or invested in crypto currency or virtual currency during the financial year.
g) The Company does not have any long term contracts including derivative contracts for which there are any
material foreseeable losses.
h) 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:
- 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
- provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
i) The Company has not received 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:
- 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
- provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
j) The Company has availed facilities from banks on the basis of security of current assets. The revised returns
or statements filed by the company are in agreement with the books of accounts and there are no material
discrepancies.
k) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and
Protection Fund by the Company during the year ended March 31,2025.
47. As per the requirements of proviso to Rule 3(1) of the Companies (Accounts) Rules, 2024, accounting
software used by the Company should have a feature of recording audit trail of each and every transaction.
The Company has assessed all of its IT application that are relevant for maintaining books of account and
has used two accounting software for maintaining its books of account for the year ended March 31,2025.
With respect to one accounting software, audit (edit log) feature of capturing logs for transactions
processed through transaction codes (user interface) was enabled and which operated throughout the
period upto March 31,2025 for all relevant transactions recorded in the software. However, this accounting
software did not have the audit trail feature enabled for direct changes to certain tables made by users with
privilege access at application level. Further, with respect to database maintained by third party service
provider, the independent auditor's report does not cover whether the audit trail was enabled/operated, as
per the requirements of the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014.
With respect to another accounting software, audit (edit log) feature was not enabled during the year at
application level. Further, with respect to database maintained by third party service provider, the
independent auditor's report does not cover whether the audit trail was enabled/operated, as per the
requirements of the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014.
49 Approval of standalone financial statements
The standalone financial statements were approved for issue by the board of directors on May 26, 2025.
In terms of our report attached
For Deloitte Haskins & Sells
Chartered Accountants
Firm's Registration N°. 015125N For and on behalf of the Board of Directors
Rajesh Kumar Agarwal Jawahar Lal Oswal Sandeep Jain
Partner Chairman and Managing Director Executive Director
Membership No. 105546 DIN : 00463866 DIN : 00565760
Place : Gurugram Raj Kapoor Sharma Ankur Gauba
Date : May 26, 2025 Chief Financial Officer Company Secretary
Membership No. FCS10577
Place : Ludhiana
Date : May 26, 2025
|