2.16 Provisions, Contingent Liabilities and Contingent Assets:
Provisions : Provisions are recognised when there is a present legal or constructive obligation 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 there is a reliable estimate of the amount of the obligation. Provisions are measured using the cash
flows estimated to settle the present obligation at the Balance sheet date. .
Contingent Liabilities : Contingent liabilities are disclosed when there is a possible obligation arising from past
events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain
future events not wholly within the control of the Company or a present obligation that arises from past events where it
is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot
be made.
Contingent Assets : Contingent assets are disclosed, where an inflow of economic benefits is probable.
2.17 Cash and cash equivalents:
Cash and Cash equivalents include cash, cheques on hand, cash at bank and short term deposits with banks having
original maturity of three months or less, which are subject to insignificant risk of changes in value.
2.18 Non-current Assets held for sale:
The Company classifies non-current assets as held for sale if their carrying amounts will be recovered principally
through a sale rather than through continuing use of the assets and actions required to complete such sale indicate
that it is unlikely that significant changes to the plan to sell will be made or that the decision to sell will be withdrawn.
Also, such assets are classified as held for sale only if the management expects to complete the sale within one year
from the date of classification.
Non-current assets classified as held for sale are measured at their carrying amount as current market valuation is not
available. Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or
amortised.
2.19 Statement of Cash Flows:
Cash flows are reported using the indirect method whereby profit / (loss) is adjusted for the effects of transactions
of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are seggregated based on the available information.
2.20 Earnings per Share:
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders
by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted
earnings per share, the net profit or loss for the period attributable to equity shareholders and weighted average
number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
2.21 Critical accounting judgements and key sources of estimation uncertainty:
The preparation of financial statements in conformity with Ind AS requires that the management of the Company
makes judgments, estimates and assumptions that affect the reported amounts of income and expenses of the period,
the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of
the financial statements. The judgments, estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to significant accounting estimates include useful lives and impairment of property, plant and equipment,
allowance for doubtful debts/advances, deferred tax assets, future obligations in respect of retirement benefit plans,
expected cost of completion of contracts, allowances for inventories, etc. Difference, if any, between the actual results
and estimates is recognised in the period in which the results are known.
(i) Useful lives and Impairment of property, plant and equipment
The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This
re-assessment may result in change in depreciation expense in future periods.
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If
any such indication exists, or when annual impairment testing for an asset is required, the Company makes an
estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of its fair value less
costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate
cash inflows that are largely independent of those from other assets or groups of assets and the asset's value
in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part
of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit
exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to
its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense
categories consistent with the function of the impaired asset.
(ii) Allowance for doubtful debts/advances
When determining the lifetime expected credit losses for trade receivables, the Company considers reasonable
and supportable information that is relevant and available without undue cost or effort. This includes both
quantitative and qualitative information and analysis, based on the Company's historical experience and credit
assessment and including forward-looking information.
(iii) Deferred tax assets
Significant management judgment is required to determine the amount of deferred tax assets that can be
recognised, based upon the likely timing and the level of future taxable profits. The amount of total deferred tax
assets could change if estimates of projected future taxable income or if tax regulations undergo a change.
(iv) Employee Benefit Obligations
Employee benefit obligations 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, employee benefit obligation is highly sensitive to changes in these assumptions. All
assumptions are reviewed at each reporting date.
(vi) Allowance for Inventories
An inventory provision is recognised for cases where the realisable value is estimated to be lower than the
inventory carrying value. The inventory provision is estimated taking into account various factors, including
prevailing sales prices of inventory item and losses associated with obsolete / non-moving inventory items.
2.22 Recent Accounting Developments:
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 31st March, 2025, MCA has not
notified any new standards or amendments to the existing standards applicable to the Company.
Nature & purpose of Reserve:
a) Capital Reserves (Other than Capital Contribution)
Created on forfeiture of equity shares and transfer of Debenture redemption reserve. It shall be utilised as per
provision of the Companies Act, 2013.
b) Equity Component of Compound Financial Instruments
Equity Component of Compound Financial Instruments represent residual amount after deducting liability
component from the fair value of the compound financial instrument.
c) Securities Premium Account
Created on conversion of convertible debenture and issue of equity shares. It shall be utilised as per provision
of the Companies Act, 2013.
d) General Reserve
General Reserve is created out of the profit earned by the company by way of transfer from surplus in the
statement of profit and loss. The company can use this reserve for payment of dividend and issue of fully paid
up shares. As general reserve is created by transfer from surplus in the statement of profit and loss and is not
an item of other comprehensive income, item included in general reserve will not be reclassified to statement of
profit and loss.
a) Provident fund
In accordance with the Employee's Provident Fund and Miscellaneous Provisions Act, 1952 eligible
employees of the Company are entitled to receive benefits in respect of provident fund, a defined
contribution plan, in which both employees and the Company make monthly contributions at a specified
percentage of the covered employees' salary. The contributions, as specified under the law, are made to
the provident fund administered and managed by Government of India (GOI). The Company has no further
obligations under the fund managed by the GOI beyond its monthly contributions which are charged to the
Statement of Profit and Loss in the period they are incurred. The benefits are paid to employees on their
retirement or resignation from the Company.
Contribution to Defined Contribution Plans, recognised in the Statement of Profit and Loss for the year
under employee benefits expense, are as under :
(2) Defined Benefit Plans:
The Defined Benefit Plan is as below:
Gratuity (unfunded)
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. The obligation for compensated absences is
recognised in the same manner as gratuity.
The plan typically exposes the Company to actuarial risks such as: investment risk, interest rate risk, longevity
risk and salary risk.
Investment risk
The Probability or likelihood of occurrence of losses relative to the expected return on any particular investment. .
Interest risk
If the Discount Rate i.e the yield on the Government Bonds decrease in future, the Actuarial Liability will increase
and vice versa.
The quantum of increase in valuation liability corresponding to specific decrease in the Discount Rate and vice
versa, has been shown in the annexure containing the sensitivity Analysis of Key Actuarial Assumption. .
Longevity risk
If the Mortality rate experienced by the staff of a particular company is higher than what is assumed in mortality
Table used in the valuation, the valuation liability will increase.
However, it will be very cumbersome to measure the quantum of increase for assumed reduction of Mortality
rates as can be done in case of changes in salary Growth Rate and Interest Rate.
Salary risk
If the salary Growth Rate over the future years of services is increased, the Actuarial Liability will increase and vice
versa. The quantum of increase in the valuation liability corresponding to specific increase in the salary growth
rate and vice versa has been shown in the annexure containing Sensitivity Analysis of key Actuarial Assumption.
H. Sensitivity Analysis
The Sensitivity Analysis below has been determined based on reasonably possible change of the respective
assumptions occurring at the end of the reporting period, while holding all other assumptions constant. These
sensitivities show the hypothetical impact of a change in each of the listed assumptions in isolation. While each of
these sensitivities holds all other assumptions constant, in practice such assumptions rarely change in isolation
and the asset value changes may offset the impact to some extent. For presenting the sensitivities, the present
value of the Defined Benefit Obligation has been calculated using the projected unit credit method at the end of
the reporting period, which is the same as that applied in calculating the Defined Benefit Obligation presented
above. There was no change in the methods and assumptions used in the preparation of the Sensitivity Analysis
from previous year.
33 Disclosure pursuant to Indian Accounting Standard (Ind AS) - 107 : Financial Instruments: Disclosures
Financial instruments and Risk management
33.1 Capital management
The capital structure of the Company consists of net debt (borrowings offset by cash and bank balances) and total
equity of the Company. The Company trying to manages its capital to ensure that the Company will be able to continue
as going concern. The Company's management reviews it's capital structure considering the cost of capital, the risks
associated with each class of capital and the need to maintain adequate liquidity to meet its financial obligations when
they become due.
33.3 Financial risk management
The financial risks emanating from the Company's operating business include market risk, credit risk and liquidity
risk. These risks are managed by the Company using appropriate financial instruments. The Company has laid down
written policies to manage these risks.
33.3.1 Market risk management
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 risk comprises of Currency risk, Interest rate risk and other price risk.
A. Foreign currency risk management
The Company is exposed to foreign currency risk arising mainly on import, export (of finished goods) and the
foreign currency loan. Foreign currency exposures are managed within approved policy parameters.
The carrying amounts of the Company's foreign currency denominated financial assets at the end of the reporting
period are as follows:
A. 1 Foreign currency sensitivity analysis
The Company's exposure to Foreign Currency changes is not material.
B. Interest rate risk management
The Company does not have interest rate risk exposure on its outstanding loans as at the year end as all the
loans are assigned to ARC as term loans on fixed interest rate basis.
C. Other price risks
The Company is exposed to price risks arising from its investments in mutual funds and equity.
Equity price risk is related to change in market reference price of investments in equity shares held by the
Company. The fair value of quoted investments held by the Company exposes it to equity price risks. In general,
these investments are not held for trading purposes.
The Company manages the surplus funds majorly through investments in mutual fund schemes. The price of
investment in these mutual funds Net Asset Value (NAV) declared by the Asset Management Company on daily
basis as reflected by the movement in the NAV of invested schemes. The Company is exposed to price risk on
such Investment schemes.
Mutual fund investments are susceptible to market price risk, mainly arising from changes in the interest rates or
market yields which may impact the return and value of such investments. However, due to the very short tenor
of the underlying portfolio in the liquid schemes, these do not hold any significant price risks.
C.1 Mutual fund price sensitivity analysis
The sensitivity analysis below has been determined based on Mutual Fund Investment at the end of the reporting
period. If NAV had been 1% higher / lower, the profit for year ended 31st March, 2025 would have increased/
decreased by ' 90.64 lakhs (2022-23: increase/decrease by ' 23.06 lakhs) as a result of the changes in fair
value of mutual funds.
33.3.2 Credit risk management
Credit risk arises from the possibility that a counter party's inability to settle its obligations as agreed in full and in time.
The maximum exposure to credit risk in respect of the financial assets at the reporting date is the carrying value of
such assets recorded in the financial statements net of any allowance for losses.
A. Trade Receivables
The Company's trade receivables consist of a large and regular base customers. Hence the Company is not
exposed to concentration and credit risk.
B. Other Financial Assets
The Company maintains exposure in cash and cash equivalents, time deposits with banks, investments in mutual
funds and Non Convertible Debentures. Investment of surplus funds are made only with approved counter parties.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets.
33.3.3 Liquidity risk management
The objective of liquidity risk management is to maintain sufficient liquidity to meet financial obligations of the Company
as they become due. The Treasury Risk Management Policy includes an appropriate liquidity risk management
framework for the management of the short-term, medium-term and long term funding and cash management
requirements. The Company manages the liquidity risk by maintaining adequate cash 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.
33.3.3.1 Liquidity risk table
The following table details the Company's remaining contractual maturity for its non-derivative financial liabilities
with agreed repayment periods. 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 principal cash
flows along with interest.
41 Exceptional items for the year ended 31st March, 2025 represent foreign exchange fluctuation on advance to Soma
Textiles FZC (Overseas associate company) in earlier years, Profit on Sale of Assets & Balance Written off for
Receivables and Payables.
42 Other statutory information
i) The Company does not have any benami property, where any proceeding has been initiated or pending against
the Company for holding any benami property.
ii) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
iii) 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.
iv) 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:
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.
v) The Company does not have any such transaction which is not recorded in the books of accounts that has been
surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961
(such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
vi) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read
with the Companies (Restriction on number of Layers) Rules, 2017.
vii) The Company is not declared wilful defaulter by and bank or financial institutions or lender during the year.
viii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the
statutory period.
ix) The Company does not have borrowings from banks/financial institutions on the basis of security of current
assets during the year ended 31st March, 2025 and 31st March, 2024.
x) The title deeds of all the immovable properties, (other than immovable properties where the Company is
the lessee and the lease agreements are duly executed in favour of the Company) disclosed in the financial
statements included in property, plant and equipment are held in the name of the Company as at the balance
sheet date.
xi) The Company does not have any transactions with the companies struck off under section 248 of the Companies
Act, 2013 or section 560 of the Companies Act, 1956 during the year ended 31st March, 2025 and 31st March,
2024.
xii) The Company has not entered into any scheme of arrangement approved by the Competent Authority in terms
of sections 230 to 237 of the Companies Act, 2013 which has an accounting impact during the year ended 31st
March, 2025 and 31st March, 2024.
xiii) The Company is not required to spend towards Corporate Social Responsibility (CSR) as per Section 135 of the
Companies Act, 2013, since there is no average profit in the last 3 years calculated as per the provisions of the Act.
43 Based on information available with the company, there are no suppliers who are registered as micro, small or
medium enterprise under "The Micro, Small and Medium Enterprise Development Act, 2006" (Act) till 31st March,
2024. Accordingly, no disclosure is required to be made under said act.
44 Company has entered into a Registered Development Agreement on 20th November, 2012, with Shayona Land
Corporation for development of Part Leasehold Land owned by Company, by putting up construction of commercial
units on the said land situated at Rakhial (sim), Taluka City, in the Registration District , Ahmedabad and Sub District,
Ahmedabad No. 7 (Odhav), bearing final Plot No.80, admeasuring about 10648 square yards equivalent to 8903
square meters of town planning scheme No.10 (Rakhial).
45 The Code on Social Security, 2020('Code') relating to employee benefits during employment and post - employment
benefits received Indian Parliament approval and Presidential assent in September 2020. The code has been
published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The
Company will assess the impact of the Code when it comes into effect and will record any related impact in the period
the Code becomes effective.
46 The figures for the previous year have been regrouped / reclassified, wherever necessary, to make them comparable
with the figures for the current year.
As per our report of even date attached
For PIPARA & CO. LLP For and on behalf of the Board
CHARTERED ACCOUNTANTS
(Firm Reg. No. 107929W/W100219)
SURESH GANDHI S. K. SOMANY A. K. SOMANY
PARTNER Chairman Managing Director
Membership No. 046284
Place : Ahmedabad SHRIKANT BHAT REENA PRASAD
Date : 30th May, 2025 Chief Financial Officer Company Secretary
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