The sensitivity analysis has been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
The 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 method as applied in calculating the defined benefit obligation as recognised in the balance sheet.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.
Risks associated with defined benefit plan
Gratuity is a defined benefit plan and company is exposed to the Following Risks:
Interest rate risk: A fall in the discount rate which is linked to the G.Sec. Rate will increase the present value of the liability requiring higher provision.
Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in salary of the members more than assumed level will increase the plan’s liability.
Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Company has to manage pay- out based on pay as you go basis from own funds.
Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.
(G) Foreign Currency: [Ind AS 21]
Functional and presentation currency
The financial statements are presented in Indian Rupees (INR), which is the company’s functional and presentation currency.
Foreign currency transactions
• Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Realised gains and losses on settlement of foreign currency transactions are recognised in the Standalone 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 Standalone Statement of Profit and Loss.
• Non-monetary items, which are carried in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of transaction.
• Exchange difference arising on settlement of monetary items or reporting monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expense in the year in which they arise.
(H) Finance Cost: [Ind AS 23]
Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of such asset. A Qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Interest income earned on the temporary investment of specific borrowing pending their expenditure on qualifying asset is deducted from the
borrowing cost eligible for capitalization. All Other borrowing costs are charged to statement of profit and loss for the period in which they are incurred
(J) Separate Financial Statements: [Ind AS 27]
Measurement Options:
Ind AS 27 allows a parent company to account for its investments in subsidiaries, joint ventures, and associates in its separate financial statements either:
-At Cost, or
-At Fair Value through Profit or Loss (FVTPL) or Fair Value through Other Comprehensive Income (FVOCI)(As per Ind AS 109).
Disclosure:
The method used (Cost or fair value) must be consistently applied and disclosed in the separate financial statements.
(K) Earnings Per Share: [Ind AS 33]
Basic and Diluted earnings/(loss) per share are calculated by dividing the net profit / (loss) for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average numbers of equity shares outstanding during the period are adjusted for any share splits and bonus shares issues including for changes effected prior to the approval of the financial statements by the board of directors.
*The fair value of cash and cash equivalents, trade receivables, borrowings, trade payables, other current financial assets and liabilities approximate their carrying amount largely due to the short-term nature of these instruments. The Company's long-term debt and investment in fixed deposit have been contracted at market rates of interest. Accordingly, the carrying value of such instruments approximates their fair value.
(L) Provisions and Contingent Liabilities: [Ind AS 37]
A provision is recognised when the company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on best estimates required to settle the obligation at the balance sheet date.
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably.
Contingent Liabilities:
The details of outstanding demands of Goods & Service Tax and Tax Deducted at Source, based on records available on the GST and Traces portal, are summarized in the table below. However, the same is not treated as contingent liability considering the company had filed proceedings under the Insolvency and Bankruptcy Code, 2016 and the order of National Company Law Appellate Tribunal (NCLAT) dated 05/04/2024 approved the resolution plan. The resolution plan provides that “After the payment of the dues to the creditors, as per the resolution plan, all the liabilities/claims of the said stakeholders shall stand extinguished and other claims including Government/Statutory Authority, whether lodged during CIRP or not, shall stand extinguished after approval of the resolution plan. ”
(M) Intangible assets (Excluding Goodwill): [Ind AS 38]
Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the assets can be measured reliably.
Intangible Assets are stated at cost of acquisition net of recoverable taxes, trade discount and rebates less accumulated amortization/depletion and impairment loss, if any. Such cost includes purchase price, borrowing costs, and any cost directly attributable to bringing the asset to its working condition for the intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.
(N) Segment reporting: [Ind AS 108]
Ind AS 108 establishes standards for the way public business enterprises report information about operating segments and related disclosures about product, services, geographic areas, and major customers.
Operating segment
Operating segments are defined as components of a company for which discrete financial information is available that is evaluated regularly by Chief Operating Decision Maker ("CODM"), in deciding how to allocate resources and assessing performance. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The operations of the company are limited to one segment viz. Yarn manufacturing.
(O) Financial instruments: [Ind AS 109]
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets:
Classification
The Company classifies its financial assets in the following measurement categories:
• those to be measured subsequently at fair value (either through other comprehensive income, or through the Statement of Profit and Loss), and
• those measured at amortized cost.
The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows.
Initial recognition and measurement
Financial assets are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through Profit and Loss, transaction costs that are attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through Profit and Loss are expensed in the Statement of Profit and Loss.
Subsequent measurement
After initial recognition, financial assets are measured at:
• fair value (either through other comprehensive income or through Profit and Loss), or
• amortized cost.
Amortised cost:
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost is recognized in the Standalone Statement of Profit and Loss when the asset is derecognized or impaired. Interest income from these financial assets is included in other income using the effective interest rate method.
Fair Value through Other Comprehensive Income (FVOCI):
Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets, cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in the Standalone Statement of Profit and Loss. When the financial asset is derecognized, the cumulative gain or loss previously recognised in OCI is reclassified from equity to Standalone Statement of Profit and Loss and recognised in other gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.
Fair Value through Profit and Loss (FVTPL):
Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVTPL. A gain or loss on a debt investment that is subsequently measured at FVTPL is recognised in Standalone Statement of Profit and Loss in the period in which it arises. Interest income from these financial assets is recognised in the Standalone Statement of Profit and Loss.
Equity instruments
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company decides to classify the same either as at FVTOCI or FVTPL.
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the company changes its business model for managing financial assets.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in Other Comprehensive Income (OCI). There is no recycling of the amounts from OCI to Standalone Statement of Profit and Loss, even on sale of such investments.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the Standalone Statement of Profit and Loss.
Debt instruments
Debt instruments are subsequently measured at amortized cost on the basis of :
(i) the entity's business model for managing the financial assets and
(ii) the contractual cash flow characteristics of the financial asset.
De-recognition
A financial asset shall be derecognized only when:
(a) the contractual rights to the cash flows from the financial asset expire, or
(b) it transfers the financial asset and the transfer qualifies for derecognition.
(c) On de-recognition of a financial asset, the difference between:
a. the carrying amount (measured at date of derecognition); and
b. the consideration received shall be recognized in Standalone Statement of Profit and Loss.
Note:
On subsequent measurement of Investments the cumulative balance of OCI account related to those investments is been transferred to OCI Reserve
The fair values of the investments are adjusted as per closing rate quoted in active market through Other Comprehensive Income based on the assessment of the management. Further, investment in Unquoted shares are assessed at cost.
In regards to the market Value of Questfin Ltd. and Zylog Systems Ltd, the management is not receiving any communication from the company and hence the value has been recorded at cost due to lack of data from the party.
During the year, the management identified, based on company records, that 1,400 equity shares of Garware Hi-Tech Films Limited are held in physical form, though the original certificates are currently untraceable. The Company has initiated the process of reclaiming ownership. A dividend of Rs. 14,000/- was received during the year, confirming continued ownership. Accordingly, the investment has been recognized at fair market value as on 31st March 2025 and classified as FVTOCI in accordance with Ind AS 109. The corresponding unrealized gain has been routed through Other Comprehensive Income and presented under equity as FVTOCI.
Financial liabilities:
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. In the case of a financial liability not at FVTPL, transaction costs that are directly attributable to the issue/origination of the financial liability.
Preference Shares being redeemable at fixed date and having right of cumulative dividend are considered as financial liability.
Optionally Convertible Preference shares are considered as equity.
Subsequent measurement
Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held for trading, or it is a derivative or it is designated as such an initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in standalone statement of profit and loss.
Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in Standalone Statement of Profit and Loss. Any gain or loss on de-recognition is also recognized in Standalone Statement of Profit and Loss.
De-recognition
A financial liability is derecognized when the obligation specified in the contract is discharged, cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the standalone statement of profit or loss.
Offsetting of financial instruments:
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
(P) Fair value measurement [Ind AS 113]
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on
the lowest level input that is significant to the fair value measurement as a whole.
• Level 1 - Quoted (unadjusted) prices in active market for identical assets or liabilities. Investments in Quoted Shares are valued as per quoted price in active market.
• Level 2 -(Inputs other than quoted prices included in Level 1) Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
• Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
For financial assets and liabilities maturing within one year from the Balance Sheet date and which are not carried at fair value, the carrying amount approximates fair value due to the short maturity of these instruments.
(Q) Revenue from Contracts with Customers: [Ind AS 115]
> Revenue from contract with customer is recognized when control of Goods or services are transferred to the buyer as per the terms of the contract; the entity retains neither continuing managerial involvement nor effective control over the goods sold; the amount of revenue can be measured reliably; it is probable that the economic benefits associated with the transaction will flow to the entity; and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
> Revenue is measured at fair value of the consideration received or receivable, after deduction of any trade discounts, volume rebates and any taxes or duties collected on behalf of the government which are levied on sales.
> Export sales are accounted when the goods have left the premises or when the goods are received by the customers and incoterms are fulfilled at the exchange rate prevailing on the date
of invoice. These are net of commission and do not include freight wherever applicable as per the terms of the sales contract.
> Dividend income is recognized when the right to receive the dividend is established by the reporting date, which is generally when shareholders approve the dividend.
> Interest income is recognized using the effective interest method (EIR) and accounted on accrual basis. EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of a financial liability or a financial asset to their gross carrying amount.
(R) Cash and cash equivalents:
For the purpose of presentation in the Statement of Cash Flows, Cash and Cash Equivalents includes Cash on hand, balance with banks and demand deposits with banks and other short term highly liquid investments that are readily convertible into cash and which are subject to an insignificant risk of changes in value.
25. Corporate Insolvency Resolution Process (CIRP)
The Company was under Corporate Insolvency Resolution Process (CIRP) during the preceding financial period in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016. The NLCAT vide order dated 30.05.2024 for the appeal no. Company Appeal (AT) (Insolvency) No. 922 of 2024 [Arising out of order dated 05.04.2024 passed by the Adjudicating Authority (National Company Law Tribunal, Ahmedabad Bench, Court - II), in I.A. No. 1394 of 2023 in C.P. (IB) No.38 of 2020] accepted the resolution plan submitted by the SRA. For the implementation of the approved Resolution Plan and in compliance with applicable Ind AS, the following accounting treatments have been made during the current financial year:
i) Non-realisation from Debtors - Quantity Discounts
Amounts under-recovered from trade receivables, arising during the CIRP period and not claimed by the Company as part of the insolvency process, have been recognised as quantity discounts. In accordance with Ind AS 115, these amounts have been reflected as a reduction in revenue in the Statement of Profit and Loss.
ii) Write-off of Obsolete Inventory
Inventories pertaining to the period prior to CIRP commencement and identified as obsolete during the valuation exercise under the Resolution Plan have been written off in the Statement of Profit and Loss. This treatment is in line with the requirements of Ind AS 2 - Inventories, which mandates valuation at the lower of cost and net realisable value.
iii) Write-off of Related Party Unsecured Loans
As per the Resolution Plan, no settlement amount is payable to related parties or entities connected with the erstwhile promoter group. Consequently, unsecured loans from:
Somani Overseas Pvt. Ltd. - Rs. 1,105.91 Lakhs/-Ganga Devi Somani - Rs. 1,613.22 Lakhs/-
have been derecognised and credited to the Statement of Profit and Loss under “Other Income.” In accordance with Ind AS 109, the extinguishment of these liabilities has been accounted as a gain, and the same is considered taxable as business income.
iv) Corporate Guarantee Claims - Not Admitted
Claims filed by lenders in respect of corporate guarantees given on behalf of related parties (viz. Sitaram Prints Pvt. Ltd. and Somani Overseas Pvt. Ltd.) were not admitted under the CIRP. As per Ind AS 109 and Ind AS 37, no liability has been recorded, and the extinguishment of potential obligations has not resulted in any accounting impact.
v) Extinguishment of NCRPS
Non-Convertible Redeemable Preference Shares (NCRPS) were extinguished under the approved Resolution Plan without any payout to the holders. As these instruments were classified as financial liabilities, the Company has derecognised the same in accordance with Ind AS 109, and the resulting gain has been recognised in the Statement of Profit and Loss.
vi) Capital Reduction and Reorganisation As part of the capital restructuring:
a. The equity share capital held in demat form was reduced in the ratio of 4 shares for every 77 shares.
b. Total no. of equity shares post reduction is 52,65,136.
c. Physical shares (22,88,515) were cancelled as per the Resolution Plan.
d. New capital of Rs. 1,000.00 Lakhs was introduced by the Successful Resolution Applicant (SRA) for 1,00,00,000 equity shares, resulting in total post-resolution number of equity shares of 10,52,65,136.
e. The condition of maintaining minimum 5% shareholding by existing public shareholders has been complied with.
f. The reduction of equity share capital does not involve return of funds to shareholders and has been accounted by adjusting against general reserves. No Capital Redemption Reserve (CRR) has been created, in line with Ind AS 32.
vii) Settlement and Write-off of Financial Liabilities-
Financial liabilities were settled through a mix of cash, preference shares, and pre-CIRP cash balances. Gains arising from settlement and remaining write-offs were recognised through the Realisation Account in accordance with Ind AS 109.
viii) Accounting for Operational Creditors and Pre-CIRP Items
Claims of operational creditors not previously recorded have been recognised through a Claim Account and paid as per the Resolution Plan. The unpaid portion and non-recoverable pre-CIRP receivables/payables have been written off through the Realisation Account, in line with Ind AS 109.
ix) Impairment of Investment in Subsidiary
Based on the CIRP valuation report, impairment loss has been recognised against investment in a subsidiary as the fair value was NIL, in accordance with Ind AS 36.
27. The Interest payable as per section 16 of MSMED Act 2006 has not been ascertained and not provided for by the company.
29. As at the reporting date, the Company has an unclaimed public deposit of ?2.90 lakhs in IDBI Bank disclosed under Other Financial Liabilities. An equivalent amount has been placed in a fixed deposit in IDBI Bank and recognised under Other Financial Assets. Interest accrued pertaining to previous financial years of ?2.15 lakhs has been recognised as both Interest Receivable and Interest Payable in accordance with Ind AS 1 and Ind AS 109. The amounts shall be released upon valid claims by the deposit holders.
30. Previous year’s figures have been regrouped and recasted wherever necessary.
31. Additional regulatory information required by Schedule III of Companies Act, 2013
(i) The Company has not revalued its property, plant and equipment during the current or previous year.
(ii) No proceedings have been initiated or are pending against the Company for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made there under.
(iii) The Company has no transactions with struck off companies during the year.
(iv) The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies beyond the statutory period.
(v) The Company has not entered into any scheme of arrangement in terms of sections 230 to 237 of the Companies Act, 2013, which has an accounting impact on current or previous financial year.
(vi) The Company has not advanced or loaned funds to any persons or entities, 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.
(vii) 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
(viii) There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.
(ix) The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.
32. The figures have been rounded off to the nearest lakhs of rupees upto two decimal places.
See accompanying notes to the financial statements for and on behalf on Board of Directors
As per our report of even date
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