3.15 Provisions and Contingencies
Provisions:
A provision is recorded when the Company has a present legal or constructive obligation as a result of
past events, it is probable that an outflow of resources will be required to settle the obligation and the
amount can be reasonably estimated. The estimated liability for product warranties is recorded when
products are sold based on technical evaluation.
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 because notices are not considered as Contingent Liabilities unless converted into
demand.
Contingent Assets
Contingent assets are neither recognized nor disclosed in the financial statements.
3.16 Segment Reporting
The operating segments used to present segment information are identified on the based on the
information reported to the Board of Directors who is chief operating decision maker (CODM) for the
purposes of resources allocation and assessment of segment performance. The operating segments
have been identified on the basis of the nature of products / services. Revenue directly attributable to
the segments is considered as segment revenue. Expenses directly attributable to the segments and
common expenses allocated on a reasonable basis are considered as segment expenses.
3.17 Leases
Determination whether a contract contains a lease
The company assesses whether a contract is, or contains, a lease at the inception of a contract.
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified
asset for a period of time in exchange for consideration.
At inception or on reassessment of the arrangement that contains a lease, the payments and other
consideration required by such an arrangement are separated into those for the lease and those for
other elements on the basis of their relative stand-alone prices.
Where the Company is the lessee
Initial Recognition and Measurement
The Company recognizes right to use asset and a lease liability at the lease commencement date.
Right to use asset is initially measured at cost, which comprises the initial amount of the lease liability
adjusted for any lease payments made at or before the commencement date, plus any direct costs
incurred and an estimate of costs to dismantle and remove the underlying asset or restore the
underlying asset or the site on which it is located, less any incentives received.
Lease liability is initially measured at the present value of the lease payments that are not paid at the
commence date, discounted using the interest rate implicit in the lease of, if that rate cannot be readily
determined, the company's incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise the following:
i. Fixed payments, including in-substance fixed payments;
ii. Variable lease payments that depend on an index or a rate, initially measured using the index or rate
as at the commencement date;
iii. Amounts expected to be payable under a residual value guarantee; and
iv. The exercise price under a purchase option that the company is reasonably certain to exercise, lease
payments in an optional renewal period if the company is reasonably certain to exercise an extension
period, and penalties for early termination of a lease unless the company is reasonably certain not to
terminate early.
Subsequent Measurement
Right to use asset is subsequently depreciated using the written-down value method from the
commencement date to the earlier of end of useful life of the right to use asset or the end of the lease
term. The estimated useful lives of right to use assets are determined on the same basis as those of the
property, plant and equipment. In addition, the right to use asset is periodically reduced by impairment
losses, if any, and adjusted for certain remeasurement of the lease liability.
The lease liability is measured at amortized cost using the effective interest method. It is remeasured
when there is a change in the future lease payments arising from a change in an index or rate, if there
is a change in company's estimate of the amount expected to be payable under a residual value
guarantee, or if the company changes its assessment of whether it will exercise a purchase, extension
or termination option.
Upon remeasurement of lease liability as above, corresponding adjustment is made out to the carrying
amount of the right to use asset, or is recorded in the statement of profit & loss, when the carrying
amount of the right to use asset is reduced to zero.
Where the Company is the lessor
The company determines at inception whether each lease is a finance lease or an operating lease.
Where the lease transfers substantially all of the risks and rewards incidental to ownership of the
underlying asset, it is classified as a finance lease. If not, then as an operating lease. The lease payments
received under operating leases as income on a straight-line basis over the lease term.
In case of a finance lease, at the commencement date, the company recognizes the assets held under a
finance lease in its balance sheet and present them as a receivable at an amount equal to the net
investment in the lease. Finance income will be recognized over the lease term, based on a pattern
reflecting a constant periodic rate of return on the company's net investment in the lease.
(i) Title deeds of all the immoveable property held by the company are in the name of the demerged company.
(ii) The company has not classified any of its properties as investment properties and hence the necessity of
valuation does not arise.
(iii) The company has not revalued any of its property, plant and equipment.
(iv) There are no intangible assets and hence the necessity of valuation does not arise.
(v) The company has not granted any loans to promoters, directors, KMPs and the related parties either
severally or jointly with any other person that are repayable on demand or without specifying any terms
and conditions of repayment
(vi) There is no Capital work in progress during the year.
(vii) "here are no Intangible assets under development.
(viii) There are no proceedings initiated or pending against the company for holding any benami property under
the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder.
(ix) The company has not borrowed any monies from banks or financial institution on the basis of security as
current assets.
(x) The Company has not been declared as a wilful defaulter by any bank or financial institution.
(xi) The company has not transacted with companies struck of under section 248 of the Companies Act, 2013 or
section 560 of the Companies Act, 1956.
(xii) There are no charges or satisfaction yet to be registered with ROC beyond the statutory period.
(xiii) 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.
(xv) The company has not entered into any scheme of arrangement during the year.
(xvi) A. The company has not advanced or loaned or invested funds to any other persons or entities including
foreign entities (Intermediaries) with 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 beneficiary) or ;
(b) provide any guarantee, security or like to or on behalf of the ultimate beneficiaries.
B. The company has not received any funds from any persons or entities including foreign entities
(Intermediaries) with 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 beneficiary) or ;
(b) provide any guarantee, security or like to or on behalf of the ultimate beneficiaries.
(xiv) Ratios
Basis for Ratios
a) Current Ratio = Current Assets / Current Liabilities
b) Debt - Equity Ratio = Total Debt (Current Non-Current) / Equity
c) Debt Services Coverage Ratio = Profit before Interest depreciation and Tax/ Debt service
d) Return on equity Ratio = Profit (or) Loss for the year / Equity
e) Inventory Turnover Ratio = COGS / Average Inventory
f) Trade Receivables Turnover Ratio = Turnover/ Average Trade Receivables
f) Trade Payables Turnover Ratio = Purchase/ Trade payables
h) Net Capital Turnover Ratio = Turnover/ Working capital
i) Net Profit Ratio = Net Profit/ Turnover
j) Return on Capital Employed = Profit / (Loss) before Tax/ Capital employed
d) Return on equity Ratio
The Variance is due to profit earned during the current year as compared to the loss in the previous
financial year.
i) Net Profit Ratio
The variance is due to profit earned during the current year as compared to the loss in the previous
financial year.
j) Return on Capital Employed
The variance is due to profit earned during the current year as compared to the loss in the previous
financial year.
k) Return on Investment
The variance is due to profit earned during the current year as compared to the loss in the previous
financial year.
B. Risk Management
(i) Credit Risk
Credit risk primarily arises from cash and cash equivalents, trade receivables and investments carried at
amortised cost. The Company considers the probability of default upon initial recognition of asset and
whether there has been a significant increase in credit risk on an ongoing basis throughout each
reporting period. To assess whether there is a significant increase in credit risk the Company compares
the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date
of initial recognition. It considers available reasonable and supportive forward looking information.
a. Cash and Cash Equivalents
Credit risk on cash and cash equivalents is limited as the Company generally invests in deposits with
banks with high credit ratings assigned by domestic credit rating agencies.
b. Trade Receivables:
The maximum exposure to the credit risk at the reporting date is primarily from trade receivables. Trade
receivables are typically unsecured and are derived from revenue earned from customers primarily
located in India. The Company does monitor the economic environment in which it operates. The
Company manages its credit risk through credit approvals, establishing credit limits and continuously
monitoring credit worthiness of customers to which the Company grants credit terms in the normal
course of business.
The Company establishes an allowance for impairment that represents its expected credit losses in
respect of trade receivable and other financial assets. The management uses a simplified approach (i.e.
based on lifetime ECL) for the purpose of impairment loss allowance, the company estimates amounts
based on the business environment in which the Company operates, and management considers that
the trade receivables are in default (credit impaired) when counterparty fails to make payments for
receivable more than 2 years past due. However, the Company based upon historical experience
determine an impairment allowance for loss on receivables.
(II) Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated
with its financial liabilities that are settled by delivering cash or another financial asset. The Company's
approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to
meet its liabilities when they are fallen due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Company's reputation.
The Company believes that its liquidity position, including total cash and cash equivalent and bank
balances other than cash and cash equivalent of Rs 29.58 lakh as at 31.03.2026 (481.39 lakh as at
31.03.2025), anticipated future internally generated funds from operations, enable it to meet its future
known obligations in the ordinary course of business. However, if a liquidity needs were to arise, the
Company believes it has access to financing arrangements, value of unencumbered assets, which should
enable it to meet its ongoing capital, operating, and other liquidity requirements. The Company will
continue to consider various borrowing or leasing options to maximize liquidity and supplement cash
requirements as necessary.
The Company's liquidity management process as monitored by management includes the following:
I. Day to day funding, managed by monitoring future cash flows to ensure that requirements
can be met.
II. Maintaining rolling forecasts of the Company's liquidity position on the basis of expected
cash flows.
III. Market Risk
Market risk is the risk that the future cash flows of a financial instrument will fluctuate because of
changes in market prices. Market risk comprises two types of risk: 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.
a. Currency Risk
Currency risk is the risk that the future cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates. The Company is not exposed to the effects of fluctuation in the
prevailing foreign currency exchange rates on its financial position and cash flows as there is no foreign
currency exposure.
b. Interest Rate Risk
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The company has not borrowed any funds from banks/financial
institutions/other and thereby there is no foreseeable risk due to change in interest rates.
24. Capital Management:
For the purpose of the Company's capital management, capital includes issued equity share capital and
all other equity reserves attributable to the equity holders of the Company.
The company's objectives when managing capital are to:
I. safeguard their ability to continue as a going concern, so that they can continue to provide
returns for shareholders and benefits for other stakeholders, and
II. maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends
paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Company monitors capital on the basis of the debt to capital ratio, which is calculated as interest¬
bearing debts divided (total borrowings net of cash and cash equivalents) by Total Equity (equity
Pursuant to the scheme of demerger of erstwhile Binny Limited as approved by the Hon'ble High
Court of Madras, the amounts payable by M/s Padmadevi Sugars Ltd to erstwhile Binny Limited
amounting to Rs. 21.34 crore was allocated to S V Global Mill Limited as treated as recoverable from
M/s Padmadevi Sugars Ltd.
M/s Padmadevi Sugars Ltd has been referred to the National Company Law Tribunal by its creditors.
Considering the proceedings before the NCLT, the management by way of abundant caution during
the financial year 2018-19 provided for the entire amount recoverable from M/s Padmadevi Sugars
Ltd.
Pending further developments in the matter, the Impairment allowance is retained at the same level
and capital advance is presented net off impairment allowance.
The erstwhile Binny Limited could not operate the Bangalore Woollen, Cotton and Silk Mills, Bangalore
and the factory declared a lock out during the period 26.12.1988 to 05.08.1989. Consequently, the
dispute regarding wages during lock out period arose and Industrial Tribunal vide I.D. 9/1990 dated
03.11.1990 passed an award against Binny Ltd for payment of wages and other benefits for the lock out
period.
Against the order of the Industrial Tribunal, a Writ Appeal was filed before the Hon'ble High Court of
Karnataka, by erstwhile M/s Binny Ltd which was dismissed. Against the order of the Hon'ble High Court
of Karnataka a Special Leave Petition was filed by erstwhile M/s Binny Ltd before the Hon'ble Supreme
Court of India which was also dismissed. Thereafter, the matter was referred back to the Deputy Labour
Commissioner (DLC), Division - I, Bangalore for determination settlement payable to the labourers. In
the meanwhile, as per the Scheme of demerger approved by the Hon'ble High Court of Madras, M/s. SV
Global Mill Ltd has taken over this dispute.
During the financial year 2017-18, the Deputy Labour Commissioner ordered to settle the amounts to
the respective labourers covered by the order and accordingly the company during the year has paid an
amount of NIL (previous year Rs. 4,89,616) and the same has been treated as Exceptional Item in the
Statement of Profit and Loss for the year ended 31st March 2025.
Out of the total payable of Rs. 5,68,42,280 as result of the order, the company has settled an amount of
Rs. 2,95,21,742 till 31st March 2026. The balance amount of Rs. 2,78,10,154 is expected to be settled as
and when the claim is lodged by those entitled to it.
30. Claims not acknowledged as debt
During the financial year 2016-17, the company has received legal notices from various statutory
authorities pertaining to the affairs of Binny Limited. As the company is not involved in the
allegations/disputes, the company has challenged the issue of notices on M/s. S V Global Mill Limited.
The Wealth Tax Authorities has reassessed the wealth tax for the FY 2010-11 to FY 2014-15 resulting in
the demand of Rs.13.33 crores. Against the orders passed by the wealth tax authorities, the company
has filed appeals before the commissioner of Wealth Tax (Appeals) which is pending. Pending appeals,
the company has paid an amount of Rs.2.52 crores in aggregate under protest for the aforesaid FYs.
31. Appeal for enhanced compensation on compulsory acquisition
Lands to the extent of 3 acres and 16 guntas was compulsorily acquired during the year 2013-14, by the
Special Land Acquisition Officer (SLOA), Government of Karnataka for public purpose. In respect of the
compulsory acquisition, the Company during the financial year 2014-15 received compensation under
the Right to Fair Compensation & Transparency in Land Acquisition, Rehabilitation and Resettlement
Act, 2013 (LARR 2013).
The award was accepted under protest with regard to the determination of market value, the manner
and the method of computation of compensation and an application requesting enhancement of
compensation was filed.
In the meanwhile, against order enhancing the compensation for compulsory acquisition, the
Government of Karnataka filed an appeal before the Hon'ble High Court of Karnataka. An appeal of the
Government of Karnataka against the order of the Civil Court was dismissed by the Hon'ble High Court
of Karnataka against which a SLP was filed before the Hon'ble Supreme Court of India. The Hon'ble
Supreme Court of India on 10th August 2021 remitted back the review petition to the Hon'ble High Court
of Karnataka for order on merits. The Hon'ble High Court of Karnataka vide its order dated 21st October
2022 dismissed the review petition as not maintainable against the order. Against the order, the
Government of Karnataka has filed an SLP before the Hon'ble Supreme Court of India, which was
pending before the Hon'ble Supreme Court of India was disposed off vide its final judgement order
dated 9th Feb 2026 and the matter was remanded back to the Hon'ble High Court of Karnataka.
Following a request for reference to mediation, the High Court has referred the case to Karnataka
Mediation Centre on 6th April 2026.
Pending finality of the matter, the enhanced compensation is not recorded in the books of accounts
32. Undisclosed Income
There was no transaction that were 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
33. Corporate Social Responsibility
The company has not exceeded the threshold limits specified under sub section 1 of section 135 of the
Companies Act 2013 and as a result there is no requirement for spending on CSR Activities
34. Details of Crypto Currency or Virtual Assets
The company has not traded or invested in crypto currency or virtual currency during the financial year.
35. Disclosure as required by Micro, Small and Medium Enterprises Development Act, 2006: The
company has not received any information from suppliers regarding their status under the Micro, Small
and Medium Enterprises Development Act, 2006 and hence disclosures if any relating to amounts
unpaid as at the yearend together with interest paid / payable as required under the said Act have not
been made.
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