XXII) Provisions, contingent liabilities and
contingent assets
Provision:
Provision is recognized in the accounts when
there is a present obligation as a result of past
event(s) and it is probable that an outflow of
resources will be required to settle the obligation
and a reliable estimate can be made.
Contingent Liabilities:
Wherever there is a possible obligation 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 entity
or a present obligation that arises from past
events but is not recognized because
(a) It is not probable that an outflow of
resources embodying economic benefits
will be required to settle the obligation; or
(b) The amount of the obligation cannot be
measured with sufficient reliability. Show
cause notices are not considered as
Contingent Liabilities unless converted
into demand.
Contingent Asset:
Contingent asset is neither recognized nor
disclosed in the financial statements.
XXIII) Government Grant
Grants from the government are recognized
at their fair value where there is a reasonable
assurance that the grant will be received, and
the Company will comply with all attached
conditions.
Government grants receivable as compensation
for expenses or financial support are recognized
in profit or loss of the period in which it becomes
available.
Government grants relating to the purchase of
property, plant and equipment are accounted
for as deferred Income by crediting the same to
a specific reserve and are credited to profit or
loss on a straight-line basis over the expected
lives of the related assets and presented within
other income.
The reserve to these Grants is diminished every
year by a prorate portion of the depreciation
of the assets, to amortize the grant overdue
life of the assets. Where the Grants carry
conditions of specific performance, the
contingent aspect is disclosed in due notes
to the accounts.
XXIV) Operating cycle for current and non-current
classification
Operating cycle for the business activities of
the company covers the duration of the specific
product line/ service including the defect
liability period wherever applicable and extends
up to the realization of receivables within the
agreed credit period normally applicable to the
respective lines of business.
2 (ii) New and amended standards adopted by
the Company
There are no new standards that became
effective during the year. Amendments that
became effective during the year did not have
any material effect.
2 (iii) Critical estimates and judgements
The preparation of standalone financial
statements requires the use of accounting
estimates which, by definition, will seldom equal
the actual results. Management also needs to
exercise judgement in applying the Company’s
accounting policies. Estimates and judgements
are continually evaluated. They are based
on historical experience and other factors,
including expectations of future events that
may have a financial impact on the Company
and that are believed to be reasonable under
the circumstances. This note provides detailed
information of the areas that involved a higher
degree of judgement or complexity, and of items
which are more likely to be materially adjusted
due to estimates and assumptions turning out
to be different than those originally assessed.
The areas involving critical judgements are:
I. Defined benefit plans estimates
The cost of the defined benefit gratuity
plan compensated absences and other
post-employment defined benefits
(Provident Fund) 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 and mortality rates. 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.
The parameter most subject to change
is the discount rate. In determining the
appropriate discount rate for plans, the
management considers the interest
rates of government bonds in currencies
consistent with the currencies of the
post-employment benefit obligation. The
underlying bonds are further reviewed
for quality. The mortality rate is based on
publicly available mortality tables for the
specific countries. Those mortality tables
tend to change only at interval in response
to demographic changes. Future salary
increases and gratuity increases are
based on expected future inflation rates.
Further details about gratuity obligations
are given in note 32.
II. Net Realizable Value of inventory
The Company has defined policy for
provision on inventory based on obsolete,
damaged and slow-moving inventories.
The Company provides provision based
on policy, past experience, current trend
and future expectations of these materials
depending on the category of goods.
III. Leases
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 to exercise the option to renew or
terminate the lease. It considers all relevant
factors that create an economic incentive
for it to exercise either the renewal or
termination. After the commencement date,
the Company reassesses the lease term
if there is a significant event or change in
circumstances that is within its control
and affects its ability to exercise or not to
exercise the option to renew or to terminate.
IV. Provision for sales return
The Company provides for sales return
based on the Company’s return policy,
contract terms, forecast of sales volumes
and past history of quantum of return. The
Company reviews the same at regular
intervals to ensure the applicability of
the same in the changing scenario, and
based on the management’s assessment
of market conditions.
Note 11.2 Rights, preferences and restrictions attached to shares
a. Equity Shares
The Company has only one class of equity shares having a par value of ' 2 per share. Each holder of Equity Shares
is entitled to one vote per share.
The dividend if proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing
Annual General Meeting. 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.
The company has paid interim dividend of 100% (? 2 per equity share of ' 2/- each) during the year ended 31st March
2025 and 0% (? Nil per equity share of ' 2/- each) during the year ended 31st March 2024.
The Board of Directors have proposed final dividend of '0.25 per share(face value '2 each, fully paid up) for the year
ended 31st March 2025.
The Company has incurred a net cash outflow of ' 2,764 lakhs during the year ended 31st March 2025 (Previous year
31st March 2024 : ' Nil) on account of the interim dividend.
b. Preference shares
The company has issue 9% Non-cumulative compulsorily redeemable preference shares in previous year’s.
Preference shares are redeemable preferences shares with a put and call option available to the shareholders and the
issuer company for early redemption.
Same has been classified and presented under ‘current liabilities’ as ‘borrowings’ and the disclosure requirements in
this regard applicable to such borrowings has been done (Refer note no.13).
Note 11.5 There are following shares issued without payment being received in cash:
(i) During the year, the Company has alloted Bonus Shares by capitalisation of Free Reserves of the Company. (Refer
note no. 11.7)
(ii) During the F.Y. 2023-24, Pursuant to the Scheme of arrangement the Company had issued 13,82,01,900 Equity
Shares to the Shareholders of Mirza International Limited. On 31st March 2023 (Allotment date) Redtape Limited had
issued one equity share for every equity share held of Mirza International Limited on the date of 29th March 2023
(Record date) for consideration other than cash.
Note 11.6 There are no buy back of equity shares during the last four years.
Note 11.7 The Bonus Issue in the ratio of 3:1 i.e., 3 (three) new fully paid up bonus equity shares of Rs. 2/- each for every
1 (one) existing fully paid up equity share of Rs.2/- each was approved by the Members of the Company on 23rd
January 2025 in Extra-Ordinary General Meeting ("EGM"). Subsequently on 5th February, 2025, the Company
alloted 41,46,05,700 fully paid up bonus equity shares of Rs.2/- each in the ratio of 3:1 to the eligible members of
the Company whose names appeared in the Register of Members as on 4th February, 2025, (Record Date fixed
for this purpose) by capitalising ' 8,292 lakhs out of Free Reserves of the Company.
(1) HDFC Bank term loans amounting to ' 4,704 Lakh (Previous Year Rs. ' 5,091 Lakh) secured by exclusive charge
on moveable assets funded from HDFC Bank term loan and exclusive charge on industrial property measuring
2,72,646.39 square meters located in Industrial Area Unnao (Uttar Pradesh).
(2) HDFC Bank working capital loan of ' 17,532 Lakh (Previous Year Rs. ' 1,380 Lakh) is secured by Pari passu charge
on current & future stocks & book debts and exclusive charge on industrial property measuring 2,72,646.39 square
meters located in Industrial Area Unnao (Uttar Pradesh)
(3) CITI Bank working capital loan of ' 11,300 Lakh (Previous Year Rs. ' 7,400 Lakh) is secured by Pari passu charge
on present & future stocks & book debts and exclusive charge on property situated at Plot No.4,5,36&37, Sector-59,
Noida
(4) Federal Bank working capital loan of ' 3,000 Lakh (Previous Year Rs. ' 2,100 Lakh) is secured by First Pari passu
charge by way of hypothecation on entire current assets present & future stocks & book debts and exclusive charge
on property situated at Plot No.8, Sector-90, Noida
(5) Auto Loans are secured by the hypothecation of respective vehicle for which is availed.
(6) All the above secured Loans are guaranteed by Mr. Shuja Mirza (Managing Director).
(Non-cumulative) Compulsorily Redeemable Preference Shares
As per Clause 3.10 of Composite Scheme of Arrangement the pre-Scheme issued and paid-up share capital of the
Company which consists of 50,000 Equity Shares of '2 each aggregating '1,00,000, will be cancelled. 50,000 9%
Compulsorily Redeemable Preference Shares of '2 each, credited as fully paid-up, aggregating '1,00,000, will be
issued in place of such cancelled equity share capital.
50,000 9% Non-cumulative compulsorily redeemable preference shares of ' 2/- each fully paid up shall be redeemed
in terms of the provisions of the Companies Act, 2013, at Par within a period of 5 years from the date of issue
(maturity date is 30 March 2028) of such Redeemable Preference Shares with a put and call option available to the
Shareholders and the Issuer Company for early redemption.
* The business currently carried on by the Company was originally operated by M/s Mirza International Limited. Pursuant to
a Scheme of Arrangement approved by the Hon’ble National Company Law Tribunal, Allahabad Bench (“NCLT”), Prayagraj
vide its order dated 21.02.2023, the said business was demerged from M/s Mirza International Limited and vested with the
Company. The appointed date of the demerger, as per the Scheme, is 01.01.2022.
As per the terms of the NCLT-approved Scheme, the Company is entitled to the benefit of credit of taxes deducted at
source (TDS), tax collected at source (TCS), and advance tax paid under the PAN of M/s Mirza International Limited before
21.02.2023, to the extent such taxes pertain to the demerged business now carried on by the Company.
However, the credit for the above-mentioned taxes has not been reflected in the Company’s tax records for the A.Y. 2023¬
24 and demand of Rs. 3481.79 lakhs (inclusive of interest) have been raised by the Income Tax Department under Section
143(1)(a) of the Income-tax Act, 1961 (“Act”) for A.Y. 2023-24 as on 28.03.2024. In this regard, a rectification application
under Section 154 of the Income-tax Act, 1961(“Act”) has already been fled with the appropriate jurisdictional Assessing
Offcer/Authority as on 08.04.2024.
Note 32 Employee benefits
A. Defined benefit plan
-Gratuity
The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the gratuity plan, every employee who
has completed at least five years of service usually gets a gratuity on departure 15 days of last drawn basic salary for
each completed year of service. The present value of obligation is determined based on actuarial valuation using the
Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee
benefit entitlement and measures each unit separately to build up the final obligation.
(xi) Actuarial risks exposures:
Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is
exposed to various risks as follows:
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 (as shown in financial statements).
Liquidity Risk : This is the risk that the Company is not able to meet the short-term gratuity payouts. This may arise
due to non-availability of enough cash / cash equivalent to meet the liabilities or holding of illiquid assets not being
sold in time.
Salary Escalation Risk : The present value of the defined benefit plan is calculated with the assumption of salary
increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants
from the rate of increase in salary used to determine the present value of obligation will have a bearing on 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.
Regulatory Risk : Gratuity benefit is paid in accordance with the requirements of the Payment of Gratuity Act ,
1972(as amended from time to time). There is a risk of change in regulations requiring higher gratuity payouts (e.g.
Increase in the maximum limit on gratuity of Rs. 20,00,000).
The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient
to meet the obligations related to lease liabilities as and when they fall due.
Variable Lease Payment
Some leases contain variable payment terms that are linked to sales generated from a store. For some individual stores, up
to 100% of lease payments are on the basis of variable payment terms with percentages ranging from 8% to 10% of sales.
Variable payments terms are used for a variety of reasons, including minimizing the fixed costs base for newly established
stores. Variable lease payments that depend on sales are recognized in profit or loss in the period in which the condition
that triggers those payments occurs.
Expenses relating to short-term leases and expenses relating to variable lease payments not included in lease liabilities
(included in other expenses) were ' 228 Lakhs (31 March 2024- ' 432 Lakhs).
As at Balance Sheet date, the Company is not exposed to future cash flows for extension / termination options, residual
value guarantees, and leases not commenced to which lessee is committed.
Note 36 Financial Risk Management
The financial assets of the company include loans, trade and other receivables, security deposits and cash and bank
balances that derive directly from its operations. The financial liabilities of the company, other than derivatives, include
loans and borrowings, trade payables and other payables, and the main purpose of these financial liabilities is to finance
the day to day operations of the company. The Company also enters into derivative transactions.
The Company seeks to minimise the effects of these risks by using derivative financial instruments to hedge risk exposures.
The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative
purposes.
The Company’s senior management oversees the management of these risks and that advises on financial risks and the
appropriate financial risk governance framework for the Company.
The company is mainly exposed to the following risks that arise from financial instruments:
(i) Market risk (including currency risk, interest rate risk and other price risk)
(ii) Liquidity risk
(iii) Credit risk
This note explains the risks which the company is exposed to and policies and framework adopted by the company to
manage these risks:
(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 two types of risk: foreign currency risk and interest rate risk.The objective
of market risk management is to manage and control market risk exposures within acceptable parameters, while
optimising the return. The Company uses derivatives to manage market risks. Derivatives are only used for economic
hedging purposes and not as speculative investments. All such transactions are carried out within the guidelines set
by the Board of Directors.
There has been no significant changes to the Company’s exposure to market risk or the methods in which they are
managed or measured.
(a) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of
changes in foreign exchange rates. The Company undertakes transactions denominated in foreign currencies;
consequently, exposures to exchange rate fluctuations arise. The Company’s exposure to currency risk relates
primarily to the Company’s operating activities when transactions are denominated in a different currency from
the Company’s functional currency
The company imports finished goods from outside India and export finished goods. . The exchange rate
between the Indian rupee and foreign currencies has fluctuated in recent years and may fluctuate substantially
in the future. Consequently the company is exposed to foreign currency risk and the results of the company
may be affected as the rupee appreciates/ depreciates against foreign currencies. Foreign exchange risk arises
from the future probable transactions and recognized assets and liabilities denominated in a currency other
than company’s functional currency.
The company measures the risk through a forecast of highly probable foreign currency cash flows and manages
its foreign currency risk by hedging appropriately. The company manages its foreign currency risk through
the process of adjusting inward remittances in foreign currency for its payment of outward remittances (i.e.
considering it as natural hedge). The Company also holds derivative financial instruments such as foreign
exchange forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures.
During the year ended 31 March 2025 and 31 March 2024 the company has designated certain foreign exchange
contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast
cash transactions. The related hedge transactions for balance in cash flow hedge reserve as at 31 March 2025
are expected to occur and reclassified to statement of profit and loss within one year.
The company determines the existence of economic relationship between the hedging instrument and hedged
item based on the currency, amount and timings of its forecasted cash flows. Hedge effectiveness is determined
at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure
that an economic relationship exists between the hedged item and hedging instrument, including whether the
hedging instrument expected to offset changes in cash flows of hedged items.
If the hedge ratio for risk management purposes is no longer optimal but the risk management objective remains
unchanged and the hedge continues to qualify for hedge accounting, the hedge relationship will be rebalanced
by adjusting either the volume of the hedging instrument or the volume of the hedged item so that the hedge
ratio aligns with the ratio used for risk management purposes. Any hedge ineffectiveness is calculated and
accounted for in the Statement of Profit or Loss at the time of the hedge relationship rebalancing.
(b) Interest Rate Risk
The Company’s exposure to the risk of changes in market interest rates relates primarily to long term debt.
Borrowings at variable rates exposes to cash flow risk. With all other variables held constant, the following
table demonstrates composition of fixed and floating rate borrowing of the company and impact of floating rate
borrowings on company’s profitability. demonstrates composition of fixed and floating rate borrowing of the
company and impact of floating rate borrowings on company’s profitability.
(ii) Liquidity Risk
Financial liabilities of the company include borrowings, lease liabilities, trade and other payables. The company’s
principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations.
Liquidity Risk Management
The Management of the Company is responsible for liquidity risk management who has established an appropriate
liquidity risk management framework for the Company’s short, medium and long-term funding and liquidity
management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities
and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the
maturity profiles of financial assets and liabilities.
A) Trade Receivables
Sales to retail customers are required to be settled in cash or using credit cards, mitigating credit risk. There
are no significant concentrations of credit risk, whether through exposure to individual customers, specific
industry sectors and/or regions. For non-retail customers and sale through E-Commerce portal, the Company
assesses the credit quality of the customer and E-Commerce Portal, taking into account its financial position,
past experience and other factors. Individual risk limits are set based on internal or external ratings by the
management. The compliance with credit limits by customers is regularly monitored by line management.
To measure the expected credit losses, trade receivables have been grouped based on shared credit risk
characteristics and the days past due. The calculation is based on historical data. The maximum exposure
to credit risk at the reporting date is the carrying value of each class of financial assets. The credit risk to the
Company is limited in cases of retail sales since they are in nature of cash and carry and for non-retail sales,
The company has considered an allowance for doubtful debts in case of Trade receivables that are past due but
there has not been a significant change in the credit quality and the amounts are still considered recoverable.
B) Other Financial Assets
With regards to all the financial assets with contractual cashflows other than trade receivables, management
believes these to be high quality assets with negligible credit risk. The management believes that the parties
from which these financial assets are recoverable, have strong capacity to meet the obligations and where the
risk of default is negligible.
Credit risk on cash and bank balances is limited as the company generally invests in deposits with banks and
financial institutions with high credit ratings assigned by credit rating agencies.
The Company’s maximum exposure to credit risk for the components of the financial assets as at 31st March
2025 and 31st March 2024 is to the extent of their respective carrying amounts as disclosed in respective notes.
Note 37 Capital Management
The Company’s capital management objectives are:
- to ensure the Company’s ability to continue as a going concern.
- to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.
- to maintain optimum capital structure to reduce cost of capital and to maximize 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 which otherwise would permit the banks to immediately call loans and borrowings.
In order 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 calculated by dividing Net Debt from the Equity. The
Company’s gearing ratio was as follows:
Note 38 Disclosures Required Under Section 22 of The Micro, Small And Medium Enterprises
Development Act, 2006:
Micro enterprises and small enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 (as
amended till date) have been determined based on the confirmations received in response to intimation in this regard sent
by the Company to the suppliers.
Under the Micro, Small and Medium Enterprises Development Act, 2006, (MSMED) which came into force from 2 October
2006 (as amended till date), certain disclosures are required to be made relating to Micro, Small and Medium Enterprises.
No interest in terms of Section 16 of Micro, Small and Medium Enterprises Development Act, 2006 or otherwise has either
been paid or payable or accrued and remaining unpaid as at March 31,2025.
Based on the information and records available with the management, there are no outstanding dues to the Micro, Small
and Medium Enterprises development Act, 2006 beyond the statutory period of 45 days
The details of amounts outstanding to Micro, Small and Medium Enterprises under the Micro, Small and Medium Enterprises
Development Act, 2006 (MSMED Act), based on the available information with the Company are as under:
Note 40
The main business of the Company is retailing/ trading of merchandise which primarily consist of apparels and footwears.
All other operating activities of the Company are incidental to its main business. Accordingly, the Company has only one
identifiable segment reportable under Ind AS 108 “Operating Segment”. The chief operational decision maker monitors the
operating results of the entity’s business for the purpose of making decisions about resource allocation and performance
assessment.
Note 41
In accordance with the Ind AS-36 on Impairment of Assets, the Company has assessed as on the balance sheet date,
whether there are any indications with regard to the impairment of any of the assets. Based on such assessment it has been
ascertained that no potential loss is present and therefore, formal estimate of recoverable amount has not been made.
Accordingly, no impairment loss has been provided in the books of account.
Note 1: For Bank’s quarterly reporting, Certain categories of book debts were excluded in the quarterly returns filed
by the Company.
viii) The Company has never been declared as wilful defaulter by any bank or financial institution or other lenders.
ix) The company does not have any relationship with any struck off company.
x) All the charges are duly registered with the ROC within the prescribed time under the Companies Act 2013 & Rules
made there under.
xi) As at 31-Mar-2025, the Company have following subsidiary companies i.e.
i. Redtape Bangla Limited
ii. Redtape HK Limited
iii. Redtape London Limited (Step down subsidiary - Wholly Owned Subsidiary of Redtape HK Limited)
iv. Redtape (Quanzhou) Sports Goods Co. Limited (Step down subsidiary - Wholly Owned Subsidiary of Redtape
HK Limited)
The Company is in compliances of requirement of number of layer of companies.
xii) There is no scheme of Arrangement approved during the year.
xiii) 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:
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.
The Company has not received any funds from any person(s) or entity(ies), including foreign entities (Funding Party)
with the understanding (whether recorded in writing or otherwise) that the Company shall:
a. 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
b. provide any guarantee, security or the like on behalf of the ultimate beneficiaries
xiv) The company has not traded or invested in Crypto currency or Virtual currency during the financial year.
xv) There is no income that has been surrendered or disclosed as income during the year in Tax Assessments under
Income Tax Act,1961.
Events after the Reporting Period
Note 46 The Board of Directors have proposed final dividend of '0.25 per share(face value '2 each, fully paid up) for the
year ended March 31,2025.
Note 47 The company has complied with the provisions of Section 186(4) of the companies act, 2013 in respect of
investments made (Refer note no:5)
Note 48 Previous year figures have been regrouped/recasted/rearranged wherever necessary to confirm to its
classification of the current year.
Note 49 Figures in bracket indicate deductions.
As per our report of even date attached
For Ashwani & Associates For and on behalf of the Board of Directors
Chartered Accountants
Firm Registration Number 000497N
Aditya Kumar Shuja Mirza Arvind Verma
Partner (Managing Director) (Whole Time Director)
M.No. 506955 DIN: 01453110 DIN: 09429834
Noida Noida
CA Abhinav Jain CS Akhilendra Bahadur Singh
(Chief Financial Officer) (Company Secretary)
Place : Noida M.No. 514284 M.No. 54305
Date : 27th May 2025 Noida Noida
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