(k) Provisions And Contingent Liabilities
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not
recognisedfor future operating losses.
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.
Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence will be confirmed
by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company or where
anypresent obligation cannot be measured in terms of future outflow of resources or where a reliable estimate of the obligation
cannot be made.
(l) Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be
reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration
received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf
of the government. The company has concluded that it is the principal in all of its revenue arrangements since it is the primary
obligor in all the revenue arrangements as it has pricing latitude and is also exposed to inventory and credit risks.
Based on the Educational Material on Ind AS 18 issued by the ICAI, the company has assumed that recovery of exciseduty flows to
the company on its own account. This is for the reason that it is a liability of the manufacturer which formspart of the cost of
production, irrespective of whether the goods are sold or not. Since the recovery of excise duty flows to the company on its own
account, revenue includes excise duty.
However, Value added tax/ Goods and Service tax (GST) is not received by the company on its own account. Rather, it is tax
collected on value added to the commodity by the seller on behalf of the government. Accordingly, it is excluded from revenue.The
specific recognition criteria described below must also be met before revenue is recognised.
Sale Of Goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to
the buyer, usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration
received or receivable, net of returns and allowances, trade discounts and volume rebates.
Rendering Of Services
Revenue from services is recognised in the accounting period in which the services are rendered..
Interest Income
Interest income from debt instruments is recognised using the effective interest rate method.
Dividends
Dividends are recognised in the Statement of Profit and Loss only when the right to receive payment is established.
(m) Employee Benefits
(i) Short-Term Obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after
the end of the period in which the employees render the related service are recognised in respect of employees' services up to
the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
(ii) Other Long-Term Employee Benefit Obligations
The liabilities for earned leave that are not expected to be settled wholly within 12 months are measured as the present
value of expected future payments to be made in respect of services provided by employees up to the end of the reporting
period using the projected unit credit method. The benefits are discounted using the Government Securities (G-Sec) at the
end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a
result of experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss.
(iii) Post-Employment Obligations
Retirement benefit in the form of provident fund is a defined contribution scheme. The company has no obligation, other
than the contribution payable to the provident fund. The company recognizes contribution payable to the provident fund
scheme as an expense, when an employee renders the related service.
The company operates defined benefits plan for gratuity for its employees. Under the plan, every employee who has completed
at least five years of service gets agratuity on departure @ 15 days last drawn salary for each completed year of service. The
scheme is funded with an insurance company in the form of qualifying insurance policy.
The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.
Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in
net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on
the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to
retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in
subsequent periods.
Past service costs are recognised in profit or loss on the earlier of:
♦ The date of the plan amendment or curtailment, and
♦ The date that the company recognises related restructuring costs"
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The company recognises
the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
♦ Service costs comprising current service costs, past-service costs, gains and losses on curtailments and nonroutine
settlements; and
♦ Net interest expense or income.
(n) Foreign currency translation
(i) Functional and presentation currency
The financial statements are presented in Indian rupee (INR), which is Company's functional and presentation currency.
(ii) Transactions and balances
Transactions in foreign currencies are recognised at the prevailing exchange rates on the transaction dates. Realised gains and
losses on settlement of foreign currency transactions are recognised in the Statement of Profit and Loss.Monetary foreign
currency assets and liabilities at the year-end are translated at the year-end exchange rates and the resultant exchange differences
are recognised in the Statement of Profit and Loss.
(o) Income Tax
The income tax expense or credit for the period is the tax payable on the current period's taxable income based on the applicable
income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax
losses
.Deferred income tax is provided in full, using the liability method on temporary differences arising between the tax bases of
assets and liabilities and their carrying amount in the financial statement. Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantially enacted by the end of the reporting period and are excepted to apply when the
related deferred income tax assets is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for
all deductible temporary differences and unused tax losses, only if, it is probable that future taxable amounts will be available to
utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and
when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are off set where the
Company has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the
liability simultaneously.
Current and deferred tax is recognised in the Statement of Profit and Loss, except to the extent that it relates to items recognised
in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or
directly in equity, respectively.“Minimum Alternate Tax credit is recognised as deferred tax asset only when and to the extent
there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at
each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a
convincing evidence to the effect that the Company will pay normal income tax during the specified period.
(p) Earnings Per Share
Basic Earnings Per Share
Basic earnings per share is calculated by dividing:
- the profit attributable to owners of the Company
- by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity
shares issued during the year and excluding treasury shares.
Diluted Earnings Per Share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
- the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and
- the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all
dilutive potential equity shares."
(q) Government Grants
Grants from the government are recognised at their fair value where there is reasonable assurance that the grant will be received
and the Company will comply with all attached conditions.Government grants relating to the purchase of property, plant and
equipment are included in non-current liabilities as deferred income and are credited to Profit and Loss on a straight - line basis
over the expected lives of related assets and presented within other income.
(r) Critical Estimates And Judgements
The preparation of financial statements requires the use of accounting estimates which by definition will seldom equal the actual
results.Management also need to exercise judgement in applying the company's accounting policies.
This note provides an overview of the areas that involved a higher degree of judgement or complexity, and items which are more
likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed.
Detailed information about each of these estimates and judgements is included in relevant notes together with information about
the basis of calculation for each affected line item in the financial statements.
The areas involving critical estimtes or judgement are:
Estimation of Defined benefit obligation - refer note 32
Estimation of current tax expenses and Payable - refer note 29
Capitalised Borrowing Costs:
The amount of borrowing costs capitalised during the year ended 31.03.2024 was ? 44.88 lakh (31.03.2023: ? 207.79 lakh). The rate
used to determine the amount of borrowing costs eligilble for capitalisation was actual rates charged to specific TLs ( March 31, 2023:
Actual rates charged to specific TLs), which is the effective interest rate of the specific borrowing.
Capital Work in progress:
Capital work in progress comprises expenditure for civil work and machinery under installation.
Total Amount of Capital Work In Progress is ? Nil (31.03.2023: ^ 2933.73)
Refer Note 30 for information on Property, plant and equipment pledged as security by the Company.
(a) TL
The term loan from State Bank of India has been sanctioned for ?12 crore carrying interest @ 10.30 % p.a. as on previous balance
sheet date(March 31, 2022: 7.80%). The loan is repayable in 36 monthly instalments of ? 10 lakh each, 48 monthly instalments of
? 17.50 lakh each starting from 30.04.2018. The loan was secured primarily by first charge on assets created under the term loan and
equitable mortgage of factory land and building at village Mangupura, Moradabad and village Amhera, Delhi Road, Amroha.
(b) Car Loans
The car loans from State Bank of India carried interest @ 7.50% to 9.40% p.a. as on balance sheet date (March 31, 2023: 7.50% -
9.40%)and were secured by hypothecation of car. The loans are payable in 60 monthly instalments.
(c) WCTL
The working capital term loan from State Bank of India has been sanctioned for ? 2 crore carrying interest @ 9.25 % p.a. as on
balance sheet date ( March 31,2023: 9.25%). The loan is repayable in 35 monthly instalments of? 5.56 lakh each and last instalment
of ? 5.40 lakh starting from September 2021. The loan is secured primarily by way of hypothecation of entire current assets/ documents
evidencing title of goods ( including all inventory and receivables) both present and future of the company.
(d) TL
The term loan from State Bank of India has been sanctioned for ? 20 crore carrying interest @ 10.15 % p.a. as on balance sheet
date ( March 31,2023: 10.15%). The loan is repayable in 83 monthly instalments of ? 23.83 lakh each and last instalment of ? 22.11
lakh starting from 1.10.2023. The loan is secured primarily by first charge on assets created under the term loan and equitable
mortgage of factory land and building at village Mangupura, Moradabad and village Amhera, Delhi Road, Amroha. During the year
the loan was converted into FCNB carrying interest rate of 6.8435 % as on the balance sheet date which was covered by way of
forward derivative contract.
(e) TL
The term loan from State Bank of India has been sanctioned for? 5 crore carrying interest @ 10.15 % p.a. as on balance sheet date
(March 31, 2023: 10.15%). The loan is repayable in 20 quarterly instalments of ? 25 lakh each starting from April 2023. The loan is
secured primarily by first charge on assets created under the term loan and equitable mortgage of factory land and building at
village Mangupura, Moradabad and village Amhera, Delhi Road, Amroha. During the year the loan was converted into FCNB
carrying interest rate of 6.7311 % as on the balance sheet date which was covered by way of forward derivative contract.
(f) WCTL
The working capital term loan from State Bank of India has been sanctioned for ? 1 crore carrying interest @ 9.25 % p.a. as on
balance sheet date ( March 31, 2023: 9.25%). The loan is repayable in 24 monthly instalments of ? 4.16 lakh each starting from
August 2023. The loan is secured primarily by way of hypothecation of entire current assets/ documents evidencing title of goods
( including all inventory and receivables) both present and future of the company.
(g) The term loan from State Bank of India has been sanctioned for? 3 crore carrying interest @ 11.15 % p.a. as on balance sheet date.
The loan is repayable in fully within 3 months. The loan is secured primarily by first charge on assets created under the term loan and
equitable mortgage of factory land and building at village Mangupura, Moradabad and village Amhera, Delhi Road, Amroha.
All the loans from State Bank of India are further secured by exclusive charge by way of EM of the properties of the company and
first charge on entire fixed assets (present and future) of the company, as collateral security. Further all the loans from State Bank
Of India have been secured by the personal guarantees of whole time directors of the company namely Mr. D.K. Gupta, Mr. V.K.
Gupta and Mr Adeep Gupta.
(i) Risk Exposure - Asset Volatility
The plan liabilities are calculated using a discount rate set with reference to bond yields; if plan assets underperform this yield, this
will create a deficit. The scheme is funded with an insurance company in the form of qualifying insurance policy."
(ii) Leave Obligations
The leave obligations cover the Company's liability for sick and earned leave.The amount of the provision of ? 20.34 lakh is pre¬
sented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations.
(iii) Defined Contribution Plans
The Company also has certain defined contribution plans. Contributions are made to provident fund in India for employees at the rate
of 12% of basic salary as per regulations. The contributions are made to EPFO. The obligation of the Company is limited to the
amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the period
towards defined contribution plan is ? 42.49 lakh (31st March, 2023 - ? 45.89 lakhs).
33 The company carries on the business of textiles under which blankets of different qualities and size are produced. Further the sale is made in
domestic markets at the same terms and conditions. Therefore, no different business or geographical segments are recognizable and reportable.
34 Related Party Disclosures
Related parties where control exists
Prahlad Industries Moradabad, Aditya Plyboard Industries Moradabad and Lgsus Industries Hapur with whom transactions took place.
Directors and key management personal and their relatives with whom transactions took place
Mr. D.K. Gupta, Mr. V.K. Gupta and Mr Adeep Gupta all whole time directors.,Mrs Rajni Gupta, non executive director, Ms Sneha
Agarwal Company Secretary & Compliance officer, Mr. Kapil Gupta, Mr. Ashish Gupta, Mrs Anita Gupta, Mr Aditya Gupta, M/s Ashish
Gupta HUF, M/s D K Gupta HUF, M/s Kapil Gupta HUF,M/s V K Gupta HUF, Mrs Shalini Gupta, Mrs Reetika Gupta and Mrs Himani
Gupta are related parties.
35 Fair Value Measurement
Financial Instrument by category and hierarchy
The fair values of the financial assets and liabilities are 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:
1. Fair value of cash and short-term deposits, trade and other short term receivables, trade payables, other current liabilities, short term loans
from banks and other financial institutions approximate their carrying amounts largely due to short term maturities of these instruments.
2. Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates
and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for expected losses of
these receivables. Accordingly, fair value of such instruments is not materially different from their carrying amounts.
The fair values for loans and security deposits were calculated based on cash flows discounted using a current lending rate. They are
classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counter party credit risk.
The fair values of non-current borrowings are based on discounted cash flows using a current borrowing rate. They are classified
as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk.
For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation
technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either
directly or indirectly.
Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable
market data.
The Company's financial risk management is an integral part of how to plan and execute its business strategies. The Company's
financial risk management policy is set by the Managing Board.
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument.
The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity
prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive
financial instruments including investments and deposits, foreign currency receivables, payables and loans and borrowings.
The Company manages market risk through a treasury department, which evaluates and exercises independent control over the
entire process of market risk management. The treasury department recommend risk management objectives and policies, which
are approved by Senior Management and the Audit Committee. The activities of this department include management of cash
resources, implementing hedging strategies for foreign currency exposures like foreign exchange forward contracts, borrowing strategies
and ensuring compliance with market risk limits and policies.
Market Risk- Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of changes in
market interest rates. In order to optimize the Company's position with regards to interest income and interest expenses and to
manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion
of fixed rate and floating rate financial instruments in its total portfolio.
According to the Company interest rate risk exposure is only for floating rate borrowings. For floating rate liabilities, the analysis is
prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50
basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents
management's assessment of the reasonably possible change in interest rates.
Credit Risk
Credit risk arises from the possibility that the counter party may not be able to settle their obligations as agreed. To manage this, the
Company periodically assesses financial reliability of customers and other counter parties, taking into account the financial condition,
current economic trends, and analysis of historical bad debts and ageing of financial assets. Individual risk limits are set and periodically
reviewed on the basis of such information.
The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in
credit risk on an ongoing basis through each reporting period. To assess whether there is a significant increase in credit risk the
Company compares the risk of default occurring on asset as at the reporting date with the risk of default as at the date of initial
recognition. It considers reasonable and supportive forwarding-looking information such as:
i) Actual or expected significant adverse changes in business,
ii) Actual or expected significant changes in the operating results of the counterparty,
iii) Financial or economic conditions that are expected to cause a significant change to the counterparty's ability to meet its obligations,
iv) Significant increase in credit risk on other financial instruments of the same counterparty,
v) Significant changes in the value of the collateral supporting the obligation or in the quality of the third-party guarantees or credit
enhancements.
Financial assests are written off when there is no reasonable expectations of recovery, such as a debtor failing to engage in a repayment
plan with the Company. Where loans or receivables have been written off, the Company continues to engage in enforcement activity to
attempt to recover the receivable due. Where recoveries are made, these are recognized as income in the statement of profit and loss.
The Company measures the expected credit loss of trade receivables and loan from individual customers based on historical trend,
industry practices and the business environment in which the entity operates.Loss rates are based on actual credit loss experience and
past trends. Based on the historical data, loss on collection of receivable is not material hence no provision considered.
Liquidity Risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through
an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic
nature of the underlying businesses, Company maintains flexibility in funding by maintaining availability under committed credit lines.
Management monitors rolling forecasts of the Company's liquidity position (comprising the undrawn borrowing facilities) and cash and
cash equivalents on the basis of expected cash flows.
For the purpose of the Company's capital management, capital includes issued equity capital, share premium and all other equity reserves
attributable to the equity holders. The primary objective of the Company's capital management is to maximise the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of
the financial covenants. 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 Company monitors capital using a gearing ratio, which is net debt divided by total
capital plus net debt. The Company's policy is to keep the gearing ratio between 20% and 40%. The Company includes within net debt,
interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents, excluding discontinued operations.
1 Usage of Internal accruals in new projects caused decline in current ratio and increase in net capital turnover ratio.
2 New Term loans for new projects/temporary working capital caused increase in the ratio.
3 Increase in inventory reduces the ratio.
4 Net profit/ loss in the current year caused improvement/decline in the ratio.
5 Increase in trade payables reduces the ratio.
6 Variance in the ratio is market driven.
As per our report of even date
For and on behalf of the board of directors
For A Anand & Co. of Prakash Woollen & Synthetic Mills Limited
Chartered Accountants
CA AJAY ANAND V. K. GUPTA D. K. GUPTA
(Partner) CFO & Whole Time Director Managing Director
Membership No. 074016 DIN -00335325 DIN-00337569
SNEHA AGARWAL
Place : Village. Amhera (Amroha) Company Secretary
Date : 27 May 2024
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