5.10 Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a
result of a past event, it is probable that the Company will be required to settle the obligation, and a
reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle
the present obligation at the end of the reporting period, taking into account the risks and uncertainties
surrounding the obligation. When a provision is measured using the cash flows estimated to settle
the present obligation, its carrying amount is the present value of those cash flows (when the effect
of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered
from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement
will be received and the amount of the receivable can be measured reliably.
5.11 Statement of Cash Flows
Cash flows are reported using the indirect method, whereby profit / (loss) before tax 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 based on classification made in a manner considered most appropriate to Company's business.
Key Accounting estimates and judgments
5.12 Use of Estimates
The preparation of financial statements in conformity with Ind AS requires management to make
judgments, estimates and assumptions that affect the application of the accounting policies and
the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and expenses during the
year. Actual results could differ from those estimates.
5.13 Changes in estimates
The estimates and underlying assumptions are reviewed on an ongoing basis. The effect of change
in an accounting estimate is recognized prospectively by including it in profit or loss in (a) the period
of the change if the change affects only that period; or (b) the period of the change and future periods,
if the change affects both.
However, the change in an accounting estimate that gives rise to changes in assets and liabilities,
or relates to an item of equity, is recognized by adjusting the carrying amount of the related asset,
liability or equity item in the period of the change.
5.14 Key sources of estimation uncertainty
Key assumption concerning the future, and other key sources of estimation uncertainty at the end of
the reporting period that may have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year is as given below.
a. Actuarial valuation
The determination of Company's liability towards defined benefit obligation to employees is made
through independent actuarial valuation including determination of amounts to be recognized in the
Statement of Profit and Loss and in Other Comprehensive Income. Such valuation depends upon
assumptions determined after taking into account inflation, seniority, promotion and other relevant
factors such as supply and demand factors in the employment market. Information about such
valuation is provided in the Notes to the financial statements.
b. Claims, Provisions and Contingent Liabilities
The Company does not have any ongoing litigations with tax and regulatory authorities and third
parties. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome
of the dispute can be made based on management's assessment of specific circumstances of
each dispute and relevant external advice, management provides for its best estimate of the liability.
GENERAL RESERVE
The general reserve is the profit transferred from retained earnings from time to time. There is no policy of
regular transfer.
SECURITIES PREMIUM RESERVE
Represents excess of share subscription money received over par value of shares issued.
FVTOCI RESERVE
Fair value through other comprehensive income reserve represents the balance in equity for items to be
accounted in other comprehensive income (OCI). The company has opted to recognise the changes in the fair
value of certain investments in equity instruments. The company transfers amount from this reserve to retained
earnings in case of loss / gain on actaul sale.
RETAINED EARNINGS
Represents the portion of net income / (loss) of the company that has been retained / carried over by the
company.
NOTE:
a) The Vehicle Loan from IOB is secured by exclusive first charge by hypothecation of vehicles purchased out
of the loans and personal gurantee of promoter directors
b) Term Loan from NBFC is secured by exclusive first charge on the Windmill assets located at Udayathoor
village, Radhapuram taluk, Tirunelveli district, Tamil Nadu comprising land measuring 2 acres, Building
and Windmill Machinery; by way of Equitable Mortgate of land and building and Hypothecation of machinery
c) Term Loan from IOB is secured by exclusive first charge on the Solar Power System assets located at
Ragunathapuram village, Arni taluk, Tiruvannamalai district, Tamil Nadu comprising Solar Power Machinery;
by way of Equitable Mortgate of Hypothecation of machinery
Note on Security Created
The open loan, Bills discounting **, and letter of Credit limits for Working Capital** from Indian Overseas
Bank, Esplanade Branch, Chennai - 600 108 and Open loan, Bills discounting** and letter of Credit Limits
for working capital** from State Bank of India, Leather and International Branch, Chennai - 600 002 are
secured as under:
1. Primary Security:
Hypothecation on entire Current assets, both present and future, which include raw materials, stock in process,
finished goods, consumables etc., book debts on first pari passu basis and bills discounting limits are
additionally secured by documents of title to goods.
2. Collateral Security
a) Equitable Mortgage on first pari passu basis of company's factory land and buildings in Arni Taluk,
Tamilnadu, and Registered Office land and building in Chennai.
b) Hypothecation on first pari passu basis of all movable fixed assets, exculding assets which are charged on
exclusive basis.
and
3) Personal Guarantee
Personal Guarantee of Promoter Directors Sri Balakrishna S, Managing Director
and Sri R.Padmanaban, Joint Managing Director.
** Details of Bills discounted but not realized and letters of credits issued not crystallized are disclosed under
NOTE NO. 36 (B).
1. The fair value of investment in quoted equity shares measured at quoted price on the reporting date.
2. In case of trade receivables, cash and cash equivalents, trade payables, short term borrowings and other
financial assets and liabilities it is assessed that the fair values approximate their carrying amounts largely
due to the short-term maturities of these instruments.
3. The fair values of the financial assets and financial liabilities included above have been determined in
accordance with generally accepted pricing models based on a discounted cash flow analysis, with the most
significant inputs being the discount rate that reflects the credit risk of counterparties.
The carrying amount of financial assets and financial liabilities measured at amortised cost in the financial
statements are a reasonable approximation of their fair values since the Company does not anticipate that
the carrying amounts would be significantly different from the values that would eventually be received or
settled.
Sensitivity analysis presented above may not be representative of the actual change in the defined benefit
obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of
the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, 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 liability recognised in the balance sheet.
There was no change in the methods of assumptions used in preparing the sensitivity analysis from prior
years.
The Board of Directors (BOD) has overall responsibility for the establishment and oversight of the Company's
risk management framework and thus established a risk management policy to identify and analyze the
risk faced by the Company. Risk Management systems are reviewed by the BOD periodically to reflect
changes in market conditions and the Company's activities. The Company, through its training and
management standards and procedures, develops a disciplined and constructive control environment in
which all employees understand their roles and obligations. The Audit Committee oversees how
management monitors compliance with the Company's risk management policies and procedures and
reviews the risk management framework. The Audit committee is assisted in the oversight role by Internal
Audit. Internal Audit undertakes reviews of the risk management controls and procedures, the results of
which are reported to the Audit Committee.
Credit Risk is the risk of financial loss to the Company if the customer or counterparty to the financial instruments
fails to meet its contractual obligations and arises principally from the Company's receivables, treasury
operations and other operations that are lease.
Receivables
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer.
The Company extends credit to its customers in the normal course of business by considering the factors
such as financial reliability of customers. The Company evaluates the concentration of the risk with respect to
trade receivables as low, as its customers are in several jurisdictions and operate in largely independent
markets. I n the case of Corporate / Export Customer, credit risks are mitigated by way of enforceable securities.
However, unsecured credits are extended based on creditworthiness of the customers on a case-to-case
basis.
Trade receivables are written off when there is no reasonable expectation of recovery, such as a debtor
declaring bankruptcy or failing to engage in a repayment plan with the company and where there is a probability
of default, the company creates a provision based on Expected Credit Loss.
Financial Instruments and Cash deposits
Investments of surplus funds are made only with the approved counterparties. The Company is presently
exposed to counter party risk relating to short-term and medium-term deposits placed with Banks for margin
money held for the purpose of LC. The Company places its cash equivalents based on the creditworthiness
of the financial institutions.
Liquidity Risk
Liquidity Risks are those risks that the Company will not be able to settle or meet its obligations on time or at
a reasonable price. In the management of liquidity risk, the Company monitors and maintains a level of cash
and cash equivalents deemed adequate by the management to finance the company's operations and to
mitigate the effects of fluctuations in cash flows. Due to the dynamic nature of the underlying business, the
Company aims at maintaining flexibility in funding by keeping both committed and uncommitted credit lines
available. The Company has laid well defined policies and procedures facilitated by robust information
system for timely and qualitative decision making by the management including its day-to-day operations.
The Company's exposure in USD and other foreign currency denominated transactions in connection with the
import of cotton, capital goods & spares, besides exports of finished goods in foreign currency, gives rise to
exchange rate fluctuation risk. The Company has following policies to mitigate this risk:
Decisions regarding borrowing in Foreign Currency and hedging thereof, and the quantum of coverage is
driven by the necessity to keep the cost comparable. Foreign Currency loans, imports and exports transactions
are hedged by way of forward contract after taking into consideration the anticipated foreign exchange inflows/
outflows, timing of cash flows, tenure of the forward contract and prevailing foreign exchange market conditions.
Interest rate risk arises from short-term borrowings with variable rates which exposed the Company to cash
flow interest rate risk. The Company is exposed to the evolution of interest rates and credit markets for its
future refinancing, which may result in a lower or higher cost of financing, which is mainly addressed through
the management of the fixed/floating ratio of financial liabilities. The Company constantly monitors credit
markets to strategize a well-balanced maturity profile to reduce both the risk of refinancing and large fluctuations
of its financing cost.
Note: (i) No funds have been advanced or loaned or invested (either from borrowed funds or share premium
or any other sources or kind of funds) by the Company to or in any other person(s) or entity(s),
including foreign entities (“Intermediaries”) with the understanding, whether recorded in writing or
otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company
(Ultimate Beneficiaries).
(ii)The Company has not received any fund from any party(s) (Funding Party) with the understanding
that the Company shall whether, directly or indirectly lend or invest other persons or entities identified
by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like
on behalf of the Ultimate Beneficiaries.”
/ BY ORDER OF THE BOARD /
BALAKRISHNA S RAMACHANDRAN REVATHI R.pADMANABAN
Managing Director & Company Secretary Jomt Managmg Doctor &
Chief Executive Officer Chief Financial Officer
DIN: 00084524 DIN: 00084579
for M/s. S B S B and Associates
CHARTERED ACCOUNTANTS
Firm No.012192S
Place: Chennai (D.SHARAT HIIUK)
Date : May 21, 2025 Member Ship .No^HN
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