3.14 Provisions, Contingent Liabilities and Contingent Assets
3.14.1. Provisions
Provisions are recognized when there is a present obligation (legal or constructive) as a result of a past event and 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 determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.
> Onerous Contracts:
Present obligations arising under onerous contracts are recognized and measured as provisions. An onerous contract is considered to exist when a contract under which the unavoidable costs of meeting the obligations exceed the economic benefits expected to be received from it.
3.14.2. Contingent Liabilities
Contingent liability is a possible obligation arising from past events and 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 but is not recognized because it is not possible that an outflow of resources embodying economic benefit will be required to settle the obligations or reliable estimate of the amount of the obligations cannot be made. The Company discloses the existence of contingent liabilities in Other Notes to Financial Statements.
3.14.3. Contingent Assets
Contingent assets usually arise from unplanned or other unexpected events that give rise to the possibility of an inflow of economic benefits. Contingent Assets are not recognized though are disclosed, where an inflow of economic benefits is probable.
3.15 Intangible Assets Recognition and Measurement
Intangible Assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortised on a straight line basis over their estimated useful economic lives.
Subsequent Expenditure
Subsequent costs are included in the asset's carrying amount, only when it is probable that future economic benefits associated with the cost incurred will flow to the Company and the cost of the item can be measured reliably. All other expenditure is recognized in the Statement of Profit & Loss.
Disposal
Gains or losses arising from the retirement or disposal of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and recognised as income or expense in the Statement of Profit & Loss.
Intangible Assets under Development
Intangible Assets under development is stated at cost which includes expenses incurred in connection with development of Intangible Assets in so far as such expenses relate to the period prior to the getting the assets ready for use.
3.16 Operating Segment
The identification of operating segment is consistent with performance assessment and resource allocation by the chief operating decision maker (CODM). An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses including revenues and expenses that relate to transactions with any of the other components of the Company and for which discrete financial information is available. Based on assessment of CODM in terms of Indian Accounting Standard - 108, the Company is predominantly engaged in a single segment of Garments & Hosiery goods and related services. The analysis of geographical segments is based on the areas in which customers of the Company are located.
3.17 Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
3.18 Measurement of Fair Values
A number of the Company's accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
> In the principal market for the asset or liability, or
> In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the input that is significant to the fair value measurement as a whole:
> Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
> Level 2 — Inputs other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
> Level 3 — Inputs which are unobservable inputs for the asset or liability.
External valuers are involved for valuation of significant assets & liabilities. Involvement of external valuers is decided by the management of the company considering the requirements of Ind AS and selection criteria include market knowledge, reputation, independence and whether professional standards are maintained
3.19 Critical accounting judgements, estimates, assumptions and Key Sources of estimation uncertainty:
Information about critical accounting judgements, estimates, assumptions and Key Sources of estimation uncertainty made in applying accounting policies that have the most significant effects on the amounts recognized in the financial statements is included in the following notes:
> Recognition of Deferred Tax Assets: The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company's future taxable income against which the deferred tax assets can be utilized. In addition, significant judgement is required in assessing the impact of any legal or economic limits.
> Useful lives of depreciable/ amortisable assets (tangible and intangible): Management reviews its estimate of the useful lives of depreciable/ amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to actual normal wear and tear that may change the utility of plant and equipment.
> Extension and termination option in leases : Extension and termination options are included in many of the leases. In determining the lease term the Management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option.
This assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within the control of the Company
> Defined Benefit Obligation (DBO): Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, medical cost trends, anticipation of future salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate. However, any changes in these assumptions may have a material impact on the resulting calculations.
> Provisions and Contingencies: The assessments undertaken in recognising provisions and contingencies have been made in accordance with Indian Accounting Standards (Ind AS) 37, 'Provisions, Contingent Liabilities and Contingent Assets'. The evaluation of the likelihood of the contingent events is applied best judgement by management regarding the probability of exposure to potential loss.
> Impairment of Assets (Investment in Subsidiaries) - Ind AS 36 requires the Company reviews its carrying value of investments in subsidiaries carried at cost annually, or more frequently when there is indication of impairment. If recoverable amount is less than its carrying amount, the impairment loss is accounted for. The values in use (considering discounted cash flows) have been determined by external valuation experts based
on management's financial projections. The determination of the value in use / fair value involves significant management judgement and estimates on the various assumptions including relating to growth rates, discount rates, terminal value, etc.
> Allowances for Doubtful Debts: The Company makes allowances for doubtful debts through appropriate estimations of irrecoverable amount. The identification of doubtful debts requires use ofjudgment and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying value of the trade and other receivables and doubtful debts expenses in the period in which such estimate has been changed.
> 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 Discounted Cash Flow model. The input to these models are taken from observable markets where possible, but where this 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.
Note:
1. There is no default as on the balance sheet date in the repayment of borrowings and interest thereon.
2. Terms & conditions
a) Term Loan with opening balance of ' 62.51 lakhs has been entirely repaid and carried interest @ 8.90% to 9.15% per annum (March 31, 2023: @ 8.90% to 9.15% per annum). The said Term Loan had sanction limit of ' 1150.00 lakhs was secured by first charge by way of hypothecation of specific plant and machinery funded by bank.
b) Term Loan with a balance of ' 305.77 Lakhs (March 31,2023: ' 432.30 Lakhs) is repayable in 29 equal monthly installments of ' 10.54 Lakhs and carries interest @ 9 % per annum (March 31, 2023: 9%). The said Term Loan having sanction limit of ' 1445.00 lakhs is secured by first charge by way of hypothecation of specific plant and machinery funded by bank.
c) Term Loan with a balance of ' 131.65 Lakhs (March 31, 2023: ' 307.17 Lakhs) is repayable in 2 equal quaterly installments of ' 43.88 Lakhs and one quartely installment of ' 41.88 Lakhs and last installment of ' 2.00 Lakhs and carries interest @ 8.85 % per annum (March 31,2023: 8.85%). The said Term Loan having sanction limit of ' 800.00 lakhs is secured by exclusive charge by way of hypothecation of specific Plant & Machinery funded by bank.
d) Term Loan with a balance of ' 123.35 Lakhs (March 31, 2023: ' 178.18 Lakhs) is repayable in 9 equal quaterly installments of ' 13.71 Lakhs and carries interest @ 8.85 % per annum (March 31,2023: 8.85%). The said Term Loan having sanction limit of ' 300.00 lakhs is secured by first charge by way of hypothecation of specific plant and machinery funded by bank .
e) Term Loan with a balance of ' 459.90 Lakhs (March 31, 2023: ' 613.20 Lakhs) is repayable in 12 equal quarterly instalments of ' 38.33 Lakhs and carries interest @ 7.35 % per annum (March 31,2023: 7.35%). The said Term Loan having sanction limit of ' 740.00 lakhs is secured by first charge by way of hypothecation of specific plant and machinery funded by bank .
49. Capital Management
The Company's objective to manage its capital is to ensure continuity of business while at the same time provide reasonable returns to its various stakeholders but keep associated costs under control. In order to achieve this, requirement of capital is reviewed periodically with reference to operating and business plans that take into account capital expenditure and strategic investments. Apart from internal accrual, sourcing of capital is done through judicious combination of equity and borrowing, both short term and long term. Refer Note No. 52 for ratios monitored for capital management.
50. Disclosure on Financial Instrument
This section gives an overview of the significance of financial instruments for the Company and provides additional information on balance sheet items that contain financial instruments
The details of material accounting policies, including the criteria for recognition, the basis of measurement and the basis
The Company determines its liquidity requirement in the short term and long term. The Company manages its liquidity risk in a manner so as to meet its financial obligations without any significant delay or stress. Such risk is managed through ensuring operational cash flow while at the same time maintaining adequate cash and cash equivalent position. The management has arranged for diversified funding sources and adopted a policy of managing assets with liquidity monitoring future cash flow and liquidity on a regular basis. Besides, it generally has certain undrawn credit facilities which can be assessed as and when required; such credit facilities are reviewed on a regular basis.
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: interest rate risk and foreign currency risk. Financial instruments affected by market risk include borrowings, trade receivable and trade payable.
(i) Interest rate risk: Interest rate risk is the risk that the fair value or future cash flows of the Company's financial instruments will fluctuate because of changes in market interest rates.
The Company is exposed to risk due to interest rate fluctuation on borrowings. Such borrowings are based on fixed as well as floating interest rate. Interest rate risk is determined by current market interest rates, projected debt servicing capability and view on future interest rate. Such interest rate risk is actively evaluated and is managed through portfolio diversification and exercise of prepayment/refinancing options where considered necessary.
The Company is also exposed to interest rate risk on surplus funds parked in fixed deposits . To manage such risks, such investments are done mainly for short durations, in line with the expected business requirements for such funds.
53. Other Statutory Information
(a) Relationship with Struck off Companies
The Company do not have any transactions with company's struck off during the current and previous financial year.
(b) Disclosure in relation to undisclosed income
The Company have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the current and previous financial 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).
(c) Details of Benami Property held
The Company does not have any Benami property. Further, there are no proceedings initiated or are pending against the Company for holding any benami property under the Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.
(d) Registration of charges or satisfaction with Registrar of Companies (ROC)
The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period as at 31st March, 2024.
(e) Details of Crypto Currency or Virtual Currency
The Company have not traded or invested in Crypto currency or Virtual Currency during the current and previous financial year.
(f) Utilisation of Borrowed Fund & Share Premium
i) The Company have 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: (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.
ii) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall: (a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or (b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(g) Disclosure for no wilful default
The Company has not been declared as a wilful defaulter by any bank or financial institution or any other lender
(h) Compliance with number of layers of Companies
The company has complied 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.
(i) During the year ended March 31, 2024 the Company did not provide any loans or advances which is outstanding
(repayable on demand or without specifying any terms or period of repayment) to specified persons (NIL as on March 31, 2023)
54. The Company has used various accounting software(s) for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software(s), except that audit trail feature is not enabled at the database level insofar as it relates to two accouting software(s). Further, during the year there were no instances of the audit trail feature being tampered with.
55. Previous year figures have been reclassified/regrouped wherever considered necessary, to conform the current period's classification.
The accompanying notes are the integral part of the Standalone Financial Statements
As per our report of even date For and on behalf of the Board of Directors
For Singhi & Co.
Chartered Accountants Prahlad Rai Agarwala Ghanshyam Prasad Agarwala Kunj Bihari Agarwal
Firm Registration No. 302049E ,,
Chairman Vice - Chairman Managing Director
(Shrenik Mehta) DIN: 00847452 DIN: 00224805 DIN: 00224857
Partner
Membership No. 063769 Ramesh Agarwal Sumit Khowala Manish Agarwal
Place: Kolkata Whole-time Director Chief Financial Officer Company Secretary
Date: May 23, 2024 DIN: 00230702 Membership No.A29792
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