1. Leases

This note provides information for leases where the Company is a lessee. The Company leases various premises, where the rental contracts are generally short term except in case of lease hold land where it is upto 99 years.

Land lease

Leasehold land represents land taken on lease under long term multi-decade lease term, capitalised at the present value of the aggregate future minimum lease payments(which include annual lease rentals in addition to the initial payment made at the inception of the lease) .There are no contingent payments.

The total cash outflow for leases including interest and short term leases for the year ended 31 March 2023 was Rs. 71.65 lakhs (31 March 2022 Rs. 68.43 lakhs).

(iii) Variable lease payments

The Company does not have any leases with variable lease payments.

(iv) Extension and termination options

There are no extension and termination options available in the lease contracts.

(v) Residual value guaranteed

There are no residual value guaranteed in the lease contracts.

(vi) For maturity analysis of lease liabilities refer note 43 (B).(vii) For disclosure regarding principal and interest payments, refer note 16.

Note: There are no projects as on each reporting period end where activity has been suspended. Also, there are no projects as on the reporting period end which has exceeded cost as compared to its original plan or where completion is overdue.also, no projects in progress are temporarily suspended.

a) The carrying amount of trade receivables approximates their fair value is included in note 42.

b) The Company's exposure to credit and currency risks, and impairment allowances related to trade receivables is disclosed in note 43.

c) The Company provide 0-180 days credit period for trade receivables with no significant financing component.

d) Includes amounts due, in the ordinary course of business, from Companies in which directors of the Company are also directors, (refer note 40):

Mayur Uniquoters Corp., USA Futura Textiles Inc., USA Mayur Uniquoters SA (PTY) LTD

Mayur Tecfab Private Limited, India (Wholly Owned Subsidiary) w.e.f 4 May 2022

(i) There are no repatriation restrictions with regard to cash and cash equivalents except as disclosed in note (ii) below.

(ii) As at 31 March 2022, the deposits reperesents an amount of Rs. 1,015.63 lakhs deposited in an escrow account with a lien in favour of the buyback manager for the purpose of completion of the buyback of equity shares proposed during the year [refer note 14(d)]. As required by the SEBI Regulations, these have been utilised for buyback of equity shares during the current year.

(iii) Out of which deposits pledged with bank as margin money Rs. 234.69 lakhs (31 March 2022 : Rs.32.72 lakhs).

(b) Rights, preferences and restrictions attached to shares

Equity shares: The Company has one class of equity shares having a par value of Rs. 5.00 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the board of directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their share holding.

Nature and purpose of reserves

(a) General reserve

General reserve are free reserves of the Company which are kept aside out of the Company's profit to meet the future requirements as and when they arise.

(b) Capital redemption reserve

Statutory reserve created on buyback of shares equivalent to face value of the equity shares bought back under the provisions of the Act. Such reserve could be used for issue of bonus shares.

(c) Retained earnings

All the profits or losses made by the Company are transferred to retained earnings from Statement of Profit and Loss, and are available for distribution to shareholders of the Company.

(i) Liquid investments: Liquid investments represent current investments, being the Company's financial assets and fixed deposits held by the Company.

(ii) The Company has used the borrowings from banks for the specific purpose for which it was taken at the balance sheet date.

(iii) The Company had sanctioned borrowing limits in relation to which the quarterly returns of current assets filed by the Company with banks are in agreement with the books of accounts for the respective periods.

(iv) The information about the Company's exposure to interest rate, foreign currency and liquidity risks is included in note 43.

(v) The Company has complied with the debt covenants as per the terms of borrowing facilities throughout the reporting period and there have been no default in repayment of interest and loans in the current year.

(A) Compensated absences

The entire amount of the provision of Rs.108.36 lakhs (31 March 2022: Rs.98.64 lakhs ) is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. The following amounts reflect leave that is not expected to be taken or paid within the next 12 months.

The Company contributes to the compensated absences fund managed by the Life Insurance Corporation of India under its Group Leave Encashment Scheme. The liability for compensated absences is determined on the basis of independent actuarial valuation done at year end. plan assets are measured at fair value as at balance sheet date.

(B) Defined contribution plans

The Company has defined contribution plan for its employees' retirement benefits comprising Provident Fund & Employees' State Insurance Fund. The Company and eligible employees make monthly contribution to the above mentioned funds at a specified percentage of the covered employees salary. The obligation of the Company is limited to the amount contributed and it has no further contractual or any constructive obligation. The expense recognised during the year towards provident fund is Rs. 89.54 lakhs (31 March 2022: Rs. 81.56 lakhs). The expense recognised during the period towards Employees' State Insurance is Rs. 9.06 lakhs (31 March 2022: Rs.10.12 lakhs).

(C) Post-employment obligations Defined benefit plans- Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to fund managed by the Life Insurance Corporation of India.

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

(vi) Risk exposure

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below:

Interest rate risk: The plan exposes the Company to the risk of fall in the interest rates. A fall in the 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)

Salary escalation risk: The present value of the defined benefit plan is calculated with 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 assumption in valuation of the liability. The Company is exposed to the risk of the actual experience turning out to be worse.

Regulatory risk: Gratuity benefit is paid in accordance with the requirement of the Payment of Gratuity Act, 1972 (as amended from time to time). There is a risk of change in regulation requiring higher gratuity payouts.

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.

Asset liability mismatching or market risk: The duration of the liability is longer compared to duration of assets, exposing the Company to market risk for volatilities/ fall in interest rate.

Investment risk : The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

(vii) Defined benefit liability and employer contributions

The Company's best estimate of contribution towards post-employment benefit plans for the year ended 31 March 2024 are Rs. 217.68 lakhs (year ended 31 March 2023 are Rs.160.59 lakhs).

The weighted average duration of the defined benefit obligation is 8 years (31 March 2022: 8 years ). The expected maturity analysis of undiscounted gratuity is as follows:

Note: Against the total demand of Rs. 710.94 lakhs, the Company has filed appeals before various tax authorities. Based on management assessment and upon consideration of advice from the independent legal counsels, the management believes that the Company has reasonable chances of succeeding before the tax authorities and does not foresee any material liability. Pending the final decision on this matter, no adjustment has been made in the standalone financial statements.

It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings.

Note: Dues to micro and small enterprises (MSME) have been determined to the extent such parties have been identified on the basis of information collected by the management.

* The interest has not been provided in the accounts.

38. Corporate social responsibility expenditure

The Company has incurred expenditure on CSR activities like promoting health care including preventing health care, employment enhancing vocational skill and promotion of education. Such direction and guidance has been driven by principled approach, under which the Company spends for CSR activities.

Particulars of investments made as required by clause (4) of Section 186 of the Companies Act, 2013 and as required by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 has been given under the investment schedule. Refer note 4.

Terms and conditions

All transactions were made on normal commercial terms and conditions and at market rates. All outstanding balances are unsecured and are repayable in cash.

Note: Government grants are related to investments of the Company in property, plant and equipment of the manufacturing plant set up at Dhodsar. There are no unfulfilled conditions or other contingencies attached to this grant.

* The fair values of the investments is measured using quoted prices or NAV declared by mutual funds and are classified as level 1 fair values in the fair value hierarchy.

(i) Fair value hierarchy

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, traded debentures and mutual funds that have quoted price. The fair value of all equity instruments (including debentures) which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing NAV.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

There are no transfers between levels 1 and 2 during the year.

The Company's policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

(ii) Fair value of financial assets and liabilities measured at amortised cost

The carrying amounts of trade receivables, trade payables, cash and cash equivalents, other bank balances, other financial assets, other financial liabilities, short term borrowings, lease liabilities are considered to be the same as their fair values, due to their short-term nature.

Majorly the security deposits and fixed deposits are redeemable on demand and bonds are redeemable at par hence the fair values of security deposits and bank deposits are approximately equivalent to the carrying amount.

The Non-current borrowings and lease liabilities are carried at amortised cost. There is no material difference between carrying amount and fair value of non-current borrowings as at 31 March 2023 and 31 March 2022.

Other note:

The investment in equity shares of subsidiaries are measured at cost. Refer note 4 for further details.

43. Financial risk management

The Company's activities expose it to market risk, liquidity risk and credit risk.

The Company's board of directors has overall responsibility for the establishment and oversight of the Company's risk management framework.

(A) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counter party to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from customers. The carrying amounts of financial assets represent the maximum credit risk exposure.

A default on a financial asset is when the counter party fails to make contractual payments as per agreed terms. This definition of default is determined by considering the business environment in which entity operates and other macro-economic factors.

Assets are written off when there is no reasonable expectation of recovery.

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 year. 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 forwarding-looking information.

Trade and other receivables

Credit risk refers to the risk of default on its obligation by the counter party resulting in financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivable amounting to Rs. 19,451.52 lakhs , Rs. 15,621.95 lakhs as at 31 March 2023 and 31 March 2022 , respectively. The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate. The Company has a credit risk management policy in place to limit credit losses due to non-performance of financial counter parties and customers. The Company monitors its exposure to credit risk on an ongoing basis at various levels. Outstanding customer receivables are regularly monitored. The Company closely monitors the acceptable financial counter party credit ratings and credit limits and revise where required in line with the market circumstances.

Due to the geographical spread and the diversity of the Company's customers, the Company is not subject to any significant concentration of credit risks at balance sheet date.

On account of adoption of Ind AS 109, the Company uses a simplified approach (lifetime expected credit loss model) for the purpose of computation of expected credit loss for trade receivables.

The Company calculates expected credit loss on its trade receivables using 'allowance matrix' and also takes into account 'delay risk' on trade receivables.

Significant estimates: The impairment provisions for financial assets disclosed above are based on assumptions about risk of default and expected loss rates. The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on the Company's past history, existing market conditions as well as forward looking estimates at the end of each reporting year. For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109, "Financial Instruments", which requires expected lifetime losses to be recognised from initial recognition of the receivables.

Management judgment is required for assessing the recoverability of trade receivables and the valuation of the allowances for impairment of trade receivables. The Company makes impairment allowance for trade receivables based on an assessment of the recoverability of trade receivables. Allowances are applied to trade receivables where events or changes in circumstances indicate that the balances may not be collectible. The impairment allowance is estimated by management based on historical experience and current economic environment, The Company assesses the expected credit losses by calibrating historical experience with forward-looking estimates. This may include information regarding the industry in which debtors are operating, historical and post year-end payment records, as well as creditworthiness of debtors.

Cash & cash equivalents and bank deposits

Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits accounts in different banks across the country.

Other financial assets measured at amortised cost

Other financial assets measured at amortised cost includes security deposits, investment in subsidiaries and other investments. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously.

(B) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding to meet obligations when due. Management monitors rolling forecasts of the Company's liquidity position and cash and cash equivalents on the basis of expected cash flows.

Maturities of financial liabilities

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments and exclude the impact of netting agreements.

(C) Market risk

(i) Foreign currency risk

The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD, GBP, ZAR ,CNY and EUR. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company's functional currency (INR). The Company maintains EEFC bank account for export sales realisation which is generally used for repayment of import obligations (arising out of purchase of raw materials, services and capital goods), therefore, the risk is not a material risk to the Company.

(iii) Price risk

The Company's exposure to price risk arises from investements held by the Company and classified in the Balance Sheet as fair value through Profit and Loss. To manage its price risk arising from investments, the Company diversifies its portfolio.

Sensitivity

The table below summarises the impact of increases/decreases of the Company's profit for the year. The analysis is based on the assumption that the fair value of investments had increased by 5% decreased by 5% with all other variables held constant.

Commodity price risk

Commodity price risk arises due to fluctuation in prices of key raw materials. The Company has a risk management framework aimed at prudently managing the risk arising from the volatility in commodity prices and freight costs. The Company's commodity risk is managed centrally through well-established control processes. Further, selling price of finished goods are adjusted due to fluctuation in market prices of key raw materials and the Company expects that the net impact of such fluctation would not be material.

44. Events occurring after the reporting year

The Board of Directors has recommended final dividend of Rs. 2.00 (i.e. 40%) per Equity Share of Rs.5.00 each aggregating to Rs. 879.05 lakhs, which is subject to the approval of shareholders in the ensuing Annual General Meeting.

45. Capital management

The Company's objectives when managing capital are to:

• 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

• 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. No changes were made in the objectives, policies or processes for managing capital during the year ended 31 March 2023 and 31 March 2022.

The Company has complied with the debt covenants as per the terms of borrowing facilities throughout the reporting period.

46. Impairment of non-financial assets

In accordance with Ind AS 36 "Impairment of Assets", the Company has identified Gwalior Plant (the 'Plant') as a separate cash generating unit (CGU) for the purpose of impairment review. Management periodically performs an impairment assessment of the CGUs basis internal and external indicators, in order to determine whether the recoverable value is below the carrying amount as at 31 March 2023.

The Company has considered its property, plant and equipment, inventory, trade receivables and other attributable assets and liabilities of the Gwalior Plant as a single CGU. As at 31 March 2023, carrying value of CGU is Rs. 13,237.80 lakhs.

The Plant has incurred operating losses during the current and previous years and the economic performance of the plant, has been significantly lower than the budgets. Therefore, basis these indicators, the plant has been assessed for recoverability as at 31 March 2023 as to whether, the carrying value exceeds the recoverable value of the plant. Recoverable amount is value in use of CGU computed based upon projected cash flows from operations, over balance lease term, discounted at rate (determined by an independent registered valuer).

The Company has carried out the impairment assessment of the plant for existence of impairment indicators with the help of an external valuation expert using the discounted cashflow method, which requires management to make significant estimates and assumptions related to forecast of future cash flow projections based on business plans including growth rates and selection of the discount rates to determine the recoverable value to be considered for impairment testing of the carrying value of the aforesaid balances.

Based on above, recoverable value calculated as at 31 March 2023 is Rs. 16,426.00 lakhs.

Key assumptions used in determining the recoverable value are:

(a) Weighted avergae cost of capital (discount rate) : 14.50%

(b) Perpetuity growth rate : 4.50%

If in case, discount rate is increase by 0.50% and perpetuity growth rate is decreased by 0.50%, the recoverable value will still exceed the carrying value of the plant significantly. Hence, no impairment required to be recognized.

47. Capitalisation of expenditure incurred during construction period (refer note 3a)

The costs that are directly attributable to the acquisition or construction of property, plant and equipment have been apportioned to certain property, plant and equipment on reasonable basis. details of such costs capitalised is as under :-

49. Additional regulatory information required by schedule III of Companies Act, 2013

(i) Details of benami property:

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 thereunder.

(ii) Utilisation of borrowed funds and share premium:

(A) The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (intermediaries) with the understanding (whether recorded in writing or otherwise) 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.

(B) 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 to or on behalf of the ultimate beneficiaries.

(iii) Compliance with approved scheme(s) of arrangements:

No scheme of arrangement has been approved by the Competent Authority in terms of Sections 230 to 237 of the Companies Act, 2013, hence, this is not applicable.

(iv) Undisclosed income:

There are no transactions not recorded in the books of account that have been surrendered or disclosed as income during the current or previous year in the tax assessments under the Income-tax Act, 1961.

(v) Details of crypto currency or virtual currency:

The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

(vi) Valuation of property, plant and equipment and intangible assets:

As the Company has chosen cost model for its property, plant and equipment (including right-of-use assets) and intangible assets, the question of revaluation does not arise.

(vii) Loans or advances to specified persons:

The Company has not granted any loans or advances in the nature of loans to promoters, directors, KMPs or the related parties (as defined under Companies Act, 2013,) either severally or jointly with any other person.

(viii) Borrowings secured against current assets:

The Company had sanctioned borrowings limits as disclosed in note 16. The quarterly returns/ statements of current assets filed by the Company with the bank were in agreement with the books of account for the year ended 31 March 2023.

(ix) Willful defaulter:

The Company has not been declared willful defaulter by any bank or financial institution or government or any government authority.

(x) Transaction with struck off Companies:

The Company has not entered into any transaction with the struck off Companies.

(xi) Registration of charges or satisfaction with registrar of Companies:

There are no charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period.

(xii) Compliance with number of layers of Companies:

The Company complies with the number of layers prescribed under clause (87) of Section 2 of the Act read with

Companies (Restriction on number of Layers) Rules, 2017.

(xiii) Utilisation of borrowings availed from banks and financial institutions:

The borrowings obtained by the Company have been utilised for the purpose for which the same was obtained.

50. Per transfer pricing legislation under section 92-92F of the Income-tax Act 1961, the Company is required to use certain specific methods in computing arm's length price of international transactions with associated enterprises and maintains adequate documentation in this respect. The legislations require that such information and documentation to be contemporaneous in nature. The Company has appointed independent consultants for conducting the Transfer Pricing Study to determine whether the transactions with associated enterprises undertake during the financial year are on an "arm's length basis". The Company is in the process of conducting a transfer pricing study for the current financial year and expects such records to be in existence latest by the due date as required by law. However, in the opinion of the management the update would not have a material impact on these financial statements. Accordingly, these financial statements do not include any adjustments for the transfer pricing implications, if any.