m) Provisions and Contingencies
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 an outflow
of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Provisions are reviewed at each reporting period and are adjusted to reflect the current best estimate.
Contingencies
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises
from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be
made. Information on contingent liability is disclosed in the Notes to the Financial Statements. Contingent assets are not recognized in financial
statements but are disclosed, if any.
n) Employee benefits
All employee benefits payable wholly within twelve months of rendering the services are classified as short term employee benefits, which include
benefits like salaries, wages, short term compensated absences, performance incentives, etc. and are recognized as expenses in the period in which
the employee renders the related service and measured accordingly.
Defined Contribution Plan
Employee benefits in the form of Provident Fund (with Government Authorities) are considered as defined contribution plan and the contributions
are charged to the statement of Profit & Loss of the year when the contributions to the respective funds are due.
Defined Benefit Plan
Retirement benefit in the form of Gratuity is considered as defined benefit obligations and are provided for on the basis of an actuarial valuation,
using the projected unit credit method, as at the date of the Balance Sheet.
Actuarial Gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized immediately in the balance sheet
with a corresponding debit or credit to retained earnings through other comprehensive income (OCI) in the period in which they occur. Re¬
measurements are not reclassified to profit or loss in subsequent periods.
All other expenses related to defined benefit plans are recognized in Statement of Profit and Loss as employee benefits expense.
Other long-term employee benefits
All employee benefits (other than postemployment benefits and termination benefits) which do not fall due wholly within twelve months after the
end of the period in which the employees render the related services are determined based on actuarial valuation or discounted present value method
carried out at each balance sheet date. The expected cost of accumulating compensated absences is determined by actuarial valuation performed by
an independent actuary as at 31st March every year using projected unit credit method on the additional amount expected to be paid / availed as a
result of the unused entitlement that has accumulated at the balance sheet date. Expense on non-accumulating compensated absences is recognised in
the period in which the absences occur.
o) Financial instruments - initial recognition, subsequent measurement and impairment
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.
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All the
financial assets and liabilities are recognized at fair value on initial recognition. Transaction costs that are directly attributable to the acquisition or
issue of financial assets and financial liabilities that are not at fair value through profit or loss, are added to the fair value on initial recognition.
Subsequent measurement
i. Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect
contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal outstanding. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs
that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss.
ii. Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is
achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified
dates that are solely payments of principal and interest on principal amount outstanding. Further in cases where the Company has made an irrevocable
election based on its business model, for its investments which are classified as equity instruments the subsequent changes in fair value are recognized
in other comprehensive income.
iii. Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories are subsequently fair value through profit or loss.
Financial liabilities
Financial liabilities include long term and short-term loan and borrowings, trade and other payables and other eligible current and non-current
liabilities.
All financial liabilities recognized initially at fair value and, in the case of loans and borrowing and other payable, net of directly attributable
transaction costs. After initial recognition, financial liabilities are classified under one of the following two categories:
i) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading. The Company has not designated any financial
liabilities upon initial measurement recognition at fair value through profit or loss. Financial liabilities at fair value through profit or loss are at each
reporting date at fair value with all the changes recognized in the Statement of Profit and Loss.
ii) financial liabilities measured at amortised cost
After initial recognition, such financial liabilities are subsequently measured at amortized cost by applying the Effective Interest Rate (EIR) method
to the gross carrying amount of financial liability. The EIR amortization is included in finance expense in the profit and loss.
De-recognition of financial instruments
The company derecognizes a financial-assets when the contractual rights to the cash flows from the financial assets expire or it transfers the financial
assets and the transfer qualifies for de-recognition under Ind AS 109. A financial liability is de-recognised when the obligation under the liability is
discharged or cancelled or expires.
p) Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss attributable to equity holder of the Company by the weighted average number
of equity shares outstanding during the year. Partly paid equity shares are treated as a fraction of an equity share to the extent that they are entitled to
participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding
during the year is adjusted for events such as bonus issue.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders of the Company and the
weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
1.4 Significant accounting judgements, estimates and assumptions
The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported
amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about
these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in
future periods.
a) Property, plant and equipment
Useful lives of property plant and equipment are based on the life prescribed in Schedule II of the Companies Act, 2013. In cases, where the useful
lives are different from that prescribed in Schedule II for plant and machinery, they are based on technical advice, taking into account the nature of
the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes,
manufacturers’ warranties and maintenance support. External adviser and internal technical team assessed the useful lives, residual value and fair
value of property, plant and equipment as on 1st April 2016. Management believes that the assigned useful lives and residual value are reasonable.
b) Income taxes
Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying values of assets and
liabilities and their respective tax bases, and unutilized business loss and depreciation carry-forwards and tax credits. Deferred tax assets are
recognized to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused
tax losses, depreciation carry-forwards and unused tax credits could be utilized.
c) Provisions and Contingencies
Provisions and liabilities are recognised in the period when it becomes probable that there will be a future outflow of funds resulting from past
operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires
the application of judgement to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities
are reviewed regularly and revised to take account of changing facts and circumstances.
d) Insurance claims
Insurance claims are recognised when the Company have reasonable certainty of recovery. Subsequently any change in recoverability is provided
for.
e) Recoverability of trade receivables
Judgements are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is
required. Factors considered include the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the
risk of non-payment.
f) Impairment of financial assets
The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgement
in making these assumptions and selecting the inputs to the impairment calculation, based on Company’s past history, existing market conditions as
well as forward looking estimates at the end of each reporting period.
g) Fair value measurement of financial instruments
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 using valuation techniques including the DCF model. 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.
1.5 Recent Pronouncements
Ministry of Corporate Affairs (“MCA”) notifies new standards or amendments to the existing standards under Companies (Indian Accounting
Standards) Rules as issued from time to time. On August 13, 2025, MCA amended the Companies (Indian Accounting Standards) Second Amendment
Rules, 2025, as below:
Ind AS 1 - Presentation of Financial Statements:
The amendment refines the requirements for classification of liabilities as current or non-current, particularly in cases where the entity’s right to defer
settlement is subject to compliance with covenants. It clarifies that the classification of liabilities shall be based on rights existing at the reporting date
and not on management’s expectations or intentions. The Company has evaluated the amendment and the impact of the amendment i s not expected
to be significant to its standalone financial statements.
Ind AS 7 - Statement of Cash Flows and Ind AS 107 - Financial Instruments: Disclosures:
The amendments introduce additional disclosure requirements for supplier finance arrangements (also referred to as supply chain finance
arrangements) to enhance transparency about the entity’s exposure to liquidity risks arising from such arrangements. The Company has evaluated the
amendment and concluded that it has no impact on its standalone financial statements.
Ind AS 12 - Income Taxes:
The amendment incorporates certain exceptions relating to the recognition and disclosure of deferred tax arising from the implementation of the
OECD Pillar Two model rules. The Company has evaluated the amendment and concluded that it has no impact on its standalone financial statements.
i. The Company has only one class of shares referred to as equity shares having par value of Rs 5/- each. The holder of equity shares is entitled to one
vote per share.
ii. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after
distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number
of equity shares held by the shareholders.
iii. Shares in respect of each class in the company held by its holding company, ultimate holding company including shares held by or by subsidiaries
or associates of the holding company or the ultimate holding company in aggregate : KHL Finance Limited (Formerly known as HWL Traders
Limited) - 1,33,77,797 Equity Shares (March 31, 2025: 1,33,77,797 Equity Shares).
iv. Shares reserved for issue under options and contracts/commitments for the sale including the terms and amounts: NIL
v. There is no bonus issue or buy back of equity shares during the period of five years immediately preceding the reporting date.
1. The above term loans include term loans from Axis Bank are secured by hypothecation of the entire movable fixed assets of the Company, both
present and future, and by equitable mortgage of the Company's Factory situated at Block Nos. 229 and 230, Village V althera, Taluka Dholka, District
Ahmedabad - 382225, Gujarat.
2. The term loan-1 from Axis Bank carries interest rate of repo rate 3.10% i.e. 8.35% as at year end and payable in 33 equal monthly instalments of
Rs. 2.27 lakh each from the date of first disbursement.
3. The term loan-2 from Axis Bank carries interest rate of repo rate 3.10% i.e. 8.35% as at year end and payable in 57 equal monthly instalments of
Rs. 3.50 lakh each from the date of first disbursement.
4. Term Loans include Vehicle Loans which are secured by way of hypothecation of specific Vehicles.
5. The Vehicle Loans from HDFC Bank carries interest rate of 8.30% to 8.80% and payable in 39 to 60 EMIs from the date of first disbursement.
A. The operations of the Company are limited to only one segment viz. Polymeric compound and Masterbatches. Revenue from contract with customers is
from sale of manufactured goods. Sale of goods are made at a point in time and revenue is recognised upon satisfaction of the performance obligations
which is typically upon dispatch / delivery. The Company has a credit evaluation policy based on which the credit limits for the trade receivables are
established. There is no significant financing component as the credit period provided by the Company is not significant.
(1) The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the
deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
(2) Significant management judgment is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of
deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income in which the relevant entity operates
and the period over which deferred income tax assets will be recovered.
B. Defined Benefit Plans - General Description
Gratuity (Funded with L.I.C as group gratuity policy):
The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, employees who have completed five years of service are entitled to specific
benefit. The level of benefit provided depends on the member's length of service and salary retirement age. The employee is entitled to a benefit equivalent to
15 days salary last drawn for each completed year of service or part thereof in excess of six months. The same is payable on termination of service or retirement
or death whichever is earlier.
The present value of the obligation under such defined benefit plan is determined based on an actuarial valuation as at the reporting date using the projected unit
credit method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to
build up the final obligation. The obligations are measured at the present value of the estimated future cash flows. The discount rate used for determining the
present value of the obligation under defined benefit plans is based on the market yields on Government bonds as at the date of actuarial valuation. Actuarial
gains and losses (net of tax) are recognised immediately in the Other Comprehensive Income (OCI).
1) Fair valuation of trade receivables, Cash and cash equivalents, other bank balances, loans & advances, trade payables and other current financial assets
and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
2) Fair value of borrowings from banks, are estimated by discounting future cash flows using rates currently available for debt on similar terms and
remaining maturities.
3) For Security Deposits received, the valuation model considers present value of expected payments discounted using an appropriate discounting rate
4) Fair value of security deposits given approximates the carrying value and hence, the valuation technique and inputs have not been given.
Fair value hierarchy
All financial instruments for which fair value is measured in the financial statements are categorised within the fair value hierarchy, described as follows:-
Level 1: This level of hierarchy includes financial assets that are measured by reference to quoted (unadjusted) prices in active markets for identical assets or
liabilities.
Level 2: This level of hierarchy includes financial assets that are measured using inputs, other than quoted prices included within level 1, that are observable for
such items, directly or indirectly.
Level 3: This level of hierarchy includes items measured using a valuation model based on assumptions that are neither supported by prices from observable
current market transactions in the same instruments nor based on available market data.
* Management has assessed that trade receivables, Cash and cash equivalents, other bank balances, loans & advances, trade payables and other current financial
assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
38. Financial risk management objectives and policies
The Company’s principal financial liabilities comprise of borrowings from banks, trade payables and other payables. The main purpose of these financial
liabilities is to finance the Company’s operations and to provide guarantees to support its operations. The Company’s principal financial assets include trade and
other receivables, other bank balances and cash and cash equivalent that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks. The
Company’s senior management is responsible to ensure that Company’s financial risk activities which are governed by appropriate policies and procedures and
that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives.
In the event of crisis caused due to external factors such as caused by recent pandemic “COVID-19”, the management assesses the recoverability of its assets,
maturity of its liabilities to factor it in cash flow forecast to ensure there is enough liquidity in these situations through internal and external source of funds.
The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
(a) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of change in market price. Market risk comprise of
interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk.
The sensitivity analysis in the following sections relate to the position as at March 31, 2026 and March 31, 2025.
(i) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The
Company’s exposure to changes in market interest rates primarily arises from its floating rate debt obligations, including Cash Credit facilities. For floating rate
borrowings, a sensitivity analysis is performed assuming a 0.5% change in the interest rate on the average borrowings during the year. During the current year,
the Company’s borrowings comprised of vehicle loans carrying fixed interest rates, which do not expose it to interest rate risk, and Cash Credit facilities with
variable interest rates, which are subject to such risk.
Sensitivity Analysis
A reasonably possible strengthening (weakening) of the foreign Currency against the Indian Rupee at 31st March would have affected the measurement of
financial instruments denominated in foreign currencies and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other
variables, in particular interest rates, remain constant.
tin) Commodity price risk
The Company is affected by the price volatility of certain commodities. Its operating activities require the purchase of raw material therefore, requires a
continuous supply of certain raw materials. To mitigate the commodity price risk, the Company has an approved supplier base to get competitive prices for the
commodities and to assess the market to manage the cost without any comprise on quality.
(b) Credit Risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company
is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks. Management
has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit
over a certain amount.
Trade receivables
Trade receivables are subject to credit limits, controls and approval processes. Basis the historical experience, the risk of default in case of trade receivables is
low. Provision is made for doubtful receivables on individual basis depending on the customer ageing, customer category, specific credit circumstances and the
historical experience of the Company.
Liquidity risk
The Company monitors its risk of a shortage of funds doing a liquidity planning exercise. The Company’s objective is to maintain a balance between continuity
of funding and flexibility through the use of short term borrowing facilities like export packing credit and cash credit facility. The Company’s treasury function
reviews the liquidity position on an ongoing basis. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be
low. The Company has access to a sufficient variety of sources of funding and surplus cash and cash equivalent on the basis of expected cash flow. The table
below summarises the maturity profile of the Company's financial liabilities based on contractual undiscounted payment :
The Company’s policy is to maintain an adequate capital base so as to maintain creditor and market confidence and to sustain future development. Capital
includes issued capital and all other equity reserves attributable to equity holders. The primary objective of the Company’s capital management is to maintain
an optimal structure so as to maximize the shareholder’s value. In order to strengthen the capital base, the company may use appropriate means to enhance or
reduce capital, as the case may be.
The Company is not subject to any external imposed capital requirement. The company monitors capital using a gearing ratio, which is net debt divided by total
capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings less cash and cash equivalents.
40. Segment information
As per Ind AS 108 identification of segment is based on the manner in which the entity's Chief Operating decision makers' (CODM) review the business
components regularly to make decisions about allocating resources to segment and in assessing its performance.
The Chief Operating decision maker reviews business performance at an overall Company level as one segment "Polymeric compounds business".
b) Summary of non- current assets by geographical location is as follows:
All non-current assets of the Company are located in India.
c) Revenue from major customers
The Company has no customer (March 31, 2025: two customers) who contributed more than 10% of the Company's total revenue during the current year. The
revenue from such major customers aggregated to Nil (March 31, 2025: ?1362.57 lakhs).
43 Other Statutory Information
a) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami
property.
b) There are no transactions and / or balance outstanding with companies struck off under section 248 of the Companies Act, 2013.
c) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
d) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the
understanding that the Intermediary shall:
• 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
• provided any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
e) 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 Group shall:
• 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
• provided any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
f) The Company does not have any such transactions which are not recorded in the books of accounts that have been surrendered or disclosed as income
during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act,
1961).
g) The company does not have any investments through more than two layers of investment companies as per section 2(87) (d) and section 186 of Companies
Act, 2013.
h) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
44. Previous year figures have been regrouped / reclassified wherever necessary to correspond with the current year’s classification / disclosure.
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