xiv. Provisions, contingent liabilities and contingent
assets
Provisions

Provisions are recognised 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 reliably estimated. Provisions are not recognised
for future operating losses.

Provisions are measured at the present value of
management's best estimate of the expenditure
required to settle the present obligation at the end of the
reporting period. The discount rate used to determine
the present value is a pre-tax rate that reflects current
market assessments of the time value of money and
the risks specific to the liability. The increase in the
provision due to the passage of time is recognised as
interest expense.

Contingent liabilities

Contingent liabilities are disclosed in respect of
possible obligations that arise from past events but
their existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events
not wholly within the control of the Company or where
any present obligation cannot be measured in terms of

future outflow of resources or where a reliable estimate
of the obligation cannot be made.

Contingent assets

Contingent assets are not recognised in the standalone
financial statements. Contingent assets are disclosed
in the standalone financial statements to the extent
it is probable that economic benefits will flow to the
Company from such assets.

xv. Borrowing cost

General and specific borrowing costs that are directly
attributable to the acquisition, construction or production
of a qualifying asset are capitalised during the period of
time that is required to complete and prepare the asset
for its intended use or sale. Qualifying assets are assets
that necessarily take a substantial period of time to get
ready for their intended use or sale.

Investment income earned on the temporary investment
of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs
eligible for capitalisation.

Other borrowing costs are expensed in the period in
which they are incurred. Borrowing cost also includes
exchange differences to the extent regarded as an
adjustment to the borrowing costs.

xvi. Employees benefits

(i) Short term employee benefits: Liabilities for wages
and salaries, including non-monetary benefits that are
expected to be settled wholly within 12 months after the
end of the period in which the employees render the
related service are recognised in respect of employees'
services up to the end of the reporting period and are
measured at the amounts expected to be paid when the
liabilities are settled.

(ii) Other long-term employee benefits obligations:

The liabilities for earned leave and sick leave that are
not expected to be settled wholly within 12 months
are measured as the present value of expected future
payments to be made in respect of services provided
by employees up to the end of the reporting period
using the projected unit credit method. The benefits are
discounted using the discount rates for Government
Securities (G-Sec) at the end of the reporting period that
have terms approximating to the terms of the related

obligation. Remeasurement as a result of experience
adjustments and changes in actuarial assumptions
are recognised in the standalone statement of profit
and loss.

(iii) Post-employment benefits: The Company operates
the following post-employments schemes:

(a) defined contribution plans- provident fund; and

(b) defined benefit plans- gratuity

(a) Defined contribution plan
Provident fund

The Company makes payment to statutory fund in
accordance with the Employees Provident Fund and
Miscellaneous Provisions Act, 1952 which is a defined
contribution plan. The Company has no further payment
obligations once the contributions have been paid. The
contributions are accounted for as defined contribution
plans and the contributions are recognised as employee
benefit expense in the standalone statement of profit
and loss as and when they are due.

(b) Defined benefit plans

Gratuity

The liability or asset recognised in the standalone
balance sheet in respect of defined benefit gratuity
plan is the present value of the defined benefit
obligation at the end of the reporting period less the
fair value of plan assets. The defined benefit obligation
is calculated annually by actuaries using the projected
unit credit method.

The present value of the defined benefit obligation is
determined by discounting the estimated future cash
outflows by reference to market yields at the end of the
reporting period on government bonds that have terms
approximating to the terms of the related obligation.

The net interest cost is calculated by applying the
discount rate to the net balance of the defined benefit
obligation and the fair value of plan assets. This cost is
included in employee benefit expense in the standalone
statement of profit and loss.

Remeasurement gains and losses arising from
experience adjustments and changes in actuarial
assumptions are recognised in the period in which they
occur, directly in other comprehensive income. They
are included in retained earnings in the standalone
statement of changes in equity and in the standalone
balance sheet.

xvii. Foreign currency translations

(i) Functional and presentation currency

The standalone financial statements are presented in
Indian rupee (INR), which is Company's functional and
presentation currency.

(ii) Transaction and balances

Transactions in foreign currencies are recognised at
the prevailing exchange rates on the transaction dates.
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 that are measured at fair value in
a foreign currency are translated using the exchange
rates at the date when the fair value was determined.
Translation differences on assets and liabilities carried
at fair value are reported as part of the fair value gain
or loss.

Foreign exchange differences regarded as an
adjustment to borrowing costs are presented in the
standalone statement of profit and loss, within finance
cost. All other foreign exchange gains/ losses are
presented in the standalone statement of profit and loss
on net basis.

xviii. Income tax

The income tax expense or credit for the period is the tax
payable on the current period's taxable income based
on the applicable income tax rate adjusted by changes
in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.

Deferred income tax is provided in full, using the liability
method on temporary differences arising between the

tax bases of assets and liabilities and their carrying
amount in the standalone financial statement. Deferred
income tax is determined using tax rates (and laws)
that have been enacted or substantially enacted by the
end of the reporting period and are excepted to apply
when the related deferred income tax asset is realised
or the deferred income tax liability is settled. Deferred
tax assets are recognised for all deductible temporary
differences and unused tax losses, only if, it is probable
that future taxable amounts will be available to utilise
those temporary differences and losses.

Deferred tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate
to the same taxation authority.

Current tax assets and tax liabilities are off set where
the Company has a legally enforceable right to offset
and intends either to settle on a net basis, or to realise
the asset and settle the liability simultaneously.

Current and deferred tax is recognised in the standalone
statement of profit and loss, except to the extent that
it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also
recognised in other comprehensive income or directly
in equity, respectively.

Minimum alternate tax credit is recognised as deferred
tax asset only when and to the extent there is convincing
evidence that the Company will pay normal income tax
during the specified period. Such asset is reviewed at
each Balance Sheet date and the carrying amount of
the MAT credit asset is written down to the extent there
is no longer a convincing evidence to the effect that
the Company will pay normal income tax during the
specified period.

xix. Leases

On inception of a contract, the Company (as a lessee)
assesses whether it contains a lease. A contract is, or
contains a lease when it conveys the right to control
the use of an identified asset for a period of time
in exchange for consideration. To assess whether
a contract conveys the right to control the use of an
identified asset, the Company assesses whether: (i) the
contract involves the use of an identified asset (ii) the
Company has substantially all of the economic benefits

from use of the asset through the period of the lease
and (iii) the Company has the right to direct the use of
the asset.

At the date of commencement of the lease, the
Company recognises a right-of-use asset (“ROU”) and a
corresponding lease liability for all lease arrangements
in which it is a lessee, except for leases with a term of
twelve months or less (short-term leases) and low value
leases. For these short-term and low value leases,
the Company recognises the lease payments as an
operating expense on a straight-line basis over the term
of the lease.

The right-of-use assets are initially recognised at
cost, which comprises the initial amount of the lease
liability adjusted for initial direct costs incurred, lease
payments made at or before the commencement date,
any asset restoration obligation, and less any lease
incentives received. They are subsequently measured
at cost less accumulated depreciation and impairment
losses. Right-of-use assets are also adjusted for any re¬
measurement of lease liabilities. Unless the Company
is reasonably certain to obtain ownership of the leased
assets or renewal of the leases at the end of the lease
term, recognised right-of-use assets are depreciated
to a residual value over the shorter of their estimated
useful life or lease term.

The lease liability is initially measured at the present
value of the lease payments to be made over the lease
term. In calculating the present value of lease payments,
the Company uses its incremental borrowing rate at the
lease commencement date if the interest rate implicit in
the lease is not readily determinable.

The lease term includes periods subject to extension
options which the Company is reasonably certain to
exercise and excludes the effect of early termination
options where the Company is not reasonably certain
that it will exercise the option. Minimum lease payments
include the cost of a purchase option if the Company is
reasonably certain it will purchase the underlying asset
after the lease term.

Lease liabilities are re-measured with a corresponding
adjustment to the related right-of-use asset if the
Company changes its assessment if whether it will

exercise an extension or a termination option and any
lease modification.

Lease liability and ROU asset have been separately
presented in the Standalone Balance Sheet and lease
payments are presented as follows in the Company's
standalone statement of cash flows:

• short-term lease payments, payments for leases
of low-value assets and variable lease payments
that are not included in the measurement of the
lease liabilities are presented within cash flows from
operating activities;

• payments for the interest element and principal
element of recognised lease liabilities are presented
within cash flows from financing activities

xx. Segment reporting

I n accordance with Ind AS 108, operating segments
are reported in a manner consistent with the internal
reporting provided to the chief operating decision
maker, who is responsible for allocating resources and
assessing performance of the operating segments. The
business activities of the Company predominantly fall
within a single reportable operating segment, i.e., Textile
(spinning). The Board of Directors is the Company's
‘Chief Operating Decision Maker' or ‘CODM' within the
meaning of Ind AS 108.

xxi. Cash and cash equivalents

Cash and cash equivalent in the standalone balance
sheet comprise cash at banks and on hand and short¬
term deposits with an original maturity of three months
or less, which are subject to an insignificant risk of
changes in value.

For the purpose of presentation in the standalone
statement of cash flows, cash and cash equivalents
includes cash on hand, deposits held at call with
financial institutions, other short-term, highly liquid
investments with original maturities of three months or
less that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of
changes in value, and bank overdrafts. Bank overdrafts
are shown as borrowings under financial liabilities in the
standalone balance sheet.

xxii. Cash flow statement

Cash flows are reported using indirect method in
accordance with the Indian Accounting Standard (Ind
AS) - 7 “Statement of Cash flows”. The cash flows from
regular revenue generating, financing and investing
activities of the Company are segregated. Cash and
cash equivalents in the cash flow comprise cash at bank,
cash/cheques in hand and short-term investments with
an original maturity of three months or less.