I Provisions, Contingent Liabilities and Contingent Assets

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. The amount
recognized as a provision is the best estimate of the consideration required to settle the present obligation at
the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. If
the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that
reflects, when appropriate, the risks specific to the liability.

When discounting is used, the increase in the provision due to the passage of time is recognised as a finance
cost.

When the Company expects some or all of a provision to be reimbursed, for example, under an insurance
contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually
certain. The expense relating to a provision is presented in the statement of profit and loss net of any
reimbursement.

Contingent liabilities are not recognised but are disclosed in the notes.

Contingent assets are not recognised but are disclosed in the notes where an inflow of economic benefits is
probable.

j Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects
of transactions of non- cash nature and any deferrals or accruals of past or future cash receipts or
payments. The cash flows from operating, investing and financing activities of the Company are segregated
based on the available information.

k Operating Cycle

Based on the nature of products / activities of the Company and the normal time between acquisition of
assets and their realisation in cash or cash equivalents, the Company has determined its operation cycles
as twelve months for the purpose of classification of assets and liabilities as current and non-current.

l Financial Instruments

Financial assets and financial liabilities are recognised when an entity becomes a party to the contractual
provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial
assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value
of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are
recognised immediately in profit or loss.

m Financial assets

Initial recognition and measurement

Financial assets are recognized when the Company becomes a party to the contractual provisions of the
instrument. On initial recognition, a financial asset is recognized at fair value. In case of financial assets
which are recognized at fair value through profit and loss (FVTPL), its transaction costs are recognized in
the Statement of Profit and loss. In other cases, the transaction costs are attributed to the acquisition value
of the financial asset.

Subsequent measurement

All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair
value, depending on the classification of the financial assets.

Effective interest method

The effective interest method is a method of calculating the amortized cost of a debt instrument and of
allocating interest income over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash receipts (including all fees and transaction costs and other premiums or
discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the
net carrying amount on initial recognition. Income is recognized on an effective interest basis for debt
instruments other than those financial assets classified as a FVTPL. Interest income is recognized in profit or
loss and is included in the "Other Income” line item.

Classification of financial assets:

Financial assets measured at amortized cost

A financial asset is measured at the amortized cost if both the following conditions are met:

a) The Company's business model objective for managing the financial asset is to hold financial assets in
order to collect contractual cash flows, and

b) 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 amount outstanding.

This category applies to cash and bank balances, trade receivables, loans and other financial assets of the
Company. Such financial assets are subsequently measured at amortized cost using the effective interest
method.

The amortized cost of a financial asset is also adjusted for loss allowances, if any.

Financial assets measured at FVTOCI

A financial asset is measured at FVTOCI if both of the following conditions are met:

a) The Company's business model objective for managing the financial asset is achieved both by collecting
contractual cash flows and selling the financial assets, and

b) 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 on the principal amount outstanding.

Financial assets measured at FVTPL

A financial asset is measured at FVTPL unless it is measured at amortized cost or at FVTOCI as explained
above.

This is a residual category applied to all other investments of the Company. Such financial assets are
subsequently measured at fair value at each reporting date. Fair value changes are recognized in the
Statement of Profit and Loss. Dividend Income on the investments in equity instruments are recognized as
‘other income' in the Statement of Profit and Loss.

Foreign exchange gains and losses

The fair value of financial assets denominated in a foreign currency is determined in that foreign currency
and translated at the spot rate at the end of each reporting period. For foreign currency denominated
financial assets measured at amortized cost and FVTPL, the exchange differences are recognized in profit
or loss except for those which are designated as hedging instruments in a hedging relationship.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of group of similar financial assets) is
derecognised (i.e. removed from the Company's Balance Sheet) when any of the following occurs:

a) The contractual rights to cash flows from the financial assets expires,

b) The company transfers its contractual rights to receive cash flows of the financial asset and has
substantially transferred all the risks and rewards of ownership of the financial asset;

c) The Company retains the contractual rights to receive cash flows but assumes a contractual obligation
to pay the cash flows without material delay to one or more recipients under a ‘pass through' arrangement
(thereby substantially transferring all the risks and rewards of ownership of the financial asset);

d) The Company neither transfer nor retains substantially all risk and rewards of ownership and does
not retain control over the financial assets.

In cases where Company has neither transferred nor retained substantially all of the risks and rewards of
the financial asset, but retains control of the financial asset, the Company continues to recognize such
financial asset to the extent of its continuing involvement in the financial asset; in that case, the Company
also recognizes an associated liability.

The financial asset and the associated liability are measured on a basis that reflects the rights and
obligations that the Company has retained.

On derecognition of a financial asset, the difference between the asset's carrying amount and the sum of the
consideration received and receivable and the cumulative gain or loss that had been recognized in other
comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would
have otherwise been recognised in profit or loss on disposal of that financial asset.

Impairment of financial assets

The Company applies expected credit losses (ECL) model for recognising impairment loss on
financial assets measured at amortised cost and trade receivables. In case of trade receivables, the
Company follows a simplified approach wherein an amount equal to lifetime ECL is measured and
recognised as loss allowance. For the purpose of measuring lifetime expected credit loss, for trade
receivables, the Company has used a practical expedient as permitted under Ind AS 109. The expected
credit loss allowance is computed based on a provision matrix which takes in to account historical credit loss
experience and adjusted for forward looking information. For recognition of impairment loss on other
financial assets and risk exposure, the company determines whether there has been a significant increase in
the credit risk since initial recognition. If the credit risk has not increased significantly, 12 month ECL is used
to provide for impairment loss. However, if the credit risk has increased significantly, then the
impairment loss is provided based on lifetime ECL. Subsequently, if the credit quality of the financial asset
improves such that there is no longer a significant increase in credit risk since initial recognition, the
Company reverts to recognizing impairment loss allowance based on 12- month ECL. ECL impairment loss
allowance (or reversal) recognised during the period is recognised as income / expenses in the Statement of
profit and loss under the head ‘Other expense'.

Financial liabilities and

equity instruments Debt
and Equity
Instruments:

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangements and the definitions of a financial liability and an
equity instruments.

Equity instruments:

An equity instruments is any contract that evidences a residual interest in the assets of an entity after
deducting all of its liabilities, Equity instruments issued by the Company are recognised at the proceeds
received, not of direct issue costs.

Financial Liabilities:

Initial recognition and measurement

Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the
instrument. Financial liabilities are initially measured at fair value.

Subsequent measurement

Financial liabilities are subsequently measured at amortised cost using the effective interest rate method.
Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in
fair value recognised in the Statement of Profit and Loss.

Financial liabilities at FVTPL

A financial liability may be designated as at FVTPL upon initial recognition if:

• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would
otherwise arise;

• the financial liability whose performance is evaluated on a fair value basis, in accordance with the
Company's documented risk management;

Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement
recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid
on the financial liability.

Foreign exchange gains and losses

For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the
end of each reporting period, the foreign exchange gains and losses are determined based on the amortised
cost of the instruments and are recognised in profit or loss.

The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency
and translated at the closing rate at the end of the reporting period. For financial liabilities that are
measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is
recognised in profit or loss.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as the derecognition of the original liability and the recognition of a new liability. The
difference between the carrying amount of the financial liability derecognized and the consideration paid is
recognized in the Statement of Profit and Loss.

n Leases

Effective 1st April 2019, the company has adopted Ind AS 116 - Leases and applied the standard to all
leases contracts existing on 01-04-2019 using the modified retrospective method. Refer Note 5 for details
on transaction to Ind AS 116 Leases.

At inception of a contract, the company assesses whether a contact is, or contains, a lease. A contact is or
contains a lease if the contract conveys the right of control the use of an identified asset for a period of time
in exchange for consideration.

The company recognised a right of use assets and a lease liabilities at the lease commencement date. The
right of use asset is initially measured at cost, which comprises the initial amount of the lease liabilities
adjusted for any lease payments made at or before the commencement date, plus any initial direct cost
incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying
asset or the site on which it is located, less any lease incentive received.

The right-of-use asset is subsequently depreciated using the straight- line method from the commencement
date to the earlier of the end of the useful life of the right of use asset or the end of the lease term. The
estimated useful lives of right of use asset are determined on the same basis as those of property and
equipment. In addition, the right of use asset is periodically reduced by impairment losses, if any, and
adjusted for certain remeasurements of the lease liabilities.

The Lease Liabilities is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or , if that rate cannot be readily
determined, company's incremental borrowing rate. Generally, the company uses its incremental borrowing
rate as the discount rate.

The lease liability is measured at amortized cost using the effective interest method. It is measured when
there is change in future lease payments arising from change in an index or rate , if there is a change in
company's estimates of the amount expected to be payable under the a residual value guarantee, or if
company changes its assessment of whether it will exercise a purchase, extension or termination option.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount
of the right of use asset, or is recorded in profit or loss if the carrying amount of right of use asset has been
reduced to zero.

The company present right - of -use asset that do meet the definition of investment property in ' Property Plant
and equipment" and lease liabilities in " loans and borrowings" in the statement of financial position.

Short - term leases and leases of low value assets

The company has elected not to recognize right-of-use assets and liabilities for short- term leases of real
estate properties that have a lease term of 12 months. The company recognises the lease payments
associated with these leases as on expense on straight line basis over the lease term.

o Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief
Operating Decision Maker (CODM) of the Company. The CODM is responsible for allocating resources and
assessing performance of the operating segments of the Company.

p Fair Value

The Company measures financial instruments at fair value in accordance with the accounting policies
mentioned above. 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

All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorized within the fair value hierarchy that categorized into three levels, described as follows, the inputs
to valuation techniques used to measure value. The fair value hierarchy gives the highest priority to quoted
prices in active markets for Identical assets or liabilities (Level 1 inputs) and the lowest priority to
unobservable inputs (Level 3 inputs).

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.

Level 3 - inputs that are unobservable for the asset or liability.

For assets and liabilities that are recognized in the financial statements at fair value on a recurring basis,
the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing
categorized at the end of each reporting period and discloses the same.

q Allowance for doubtful trade receivables

Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate
allowances for estimated irrecoverable amounts. Estimated irrecoverable amounts are derived based on a
provision matrix which takes into account various factors such as customer specific risks, geographical region,
product type, currency fluctuation risk, repatriation policy of the country, country specific economic risks,
customer rating, and type of customer, etc. Individual trade receivables are written off when the management
deems them not to be collectable.

r Revenue recognition

Revenue from sale of goods and services is measured at the fair value of the consideration received or
receivable, net of estimated customer returns, rebates and other similar allowances.

Sale of goods

Revenue from the sale of goods is recognised the significant risks and rewards of ownership of the goods
have passed to the buyer, usually on delivery of the goods and it is probable that the economic benefits
associated with the transaction will flow to the Company.

Rendering of services

Revenue from rendering of services recognised when services are rendered and related cost are incurred.
Interest income

Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to
the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis.

Export benefits

Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in
receiving the same

s Foreign currencies

In preparing the financial statements, transactions in currencies other than the entity's functional currency
are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each
reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing
at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are
retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that
are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences on
monetary items are recognised in profit or loss in the period in which they arise.

t Financial Derivatives and Commodity hedging Transactions

In respect of financial derivatives and commodity hedging contracts, premium paid, losses on restatement
and gains/losses on settlement are charged to the statement of profit and loss.

u Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which
are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are
added to the cost of those assets, until such time as the assets are substantially ready for their intended
use or sale.

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

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
v Employee benefits
Defined benefit plans

The Company has an obligation towards a defined benefit retirement plan covering eligible employees
through Group Gratuity Scheme of Life Insurance Corporation of India. The Company accounts for the
liability for the gratuity benefits payable in future based on an independent actuarial valuation carried out
using Projected Unit Credit Method considering discounting rate relevant to Government Securities at the
Balance Sheet Date.

Defined benefit costs in the nature of current and past service cost and net interest expense or income are
recognized in the statement of profit and loss in the period in which they occur. Actuarial gains and losses on
measurement is reflected immediately in the balance sheet with a charge or credit recognized in other
comprehensive income in the period in which they occur and is reflected immediately in retained earnings
and not reclassified to profit or loss. Past service cost is recognized in profit and loss in the period of a plan
amendment.

Defined Contribution plan

The Company recognize contribution payable to a defined contribution plan as an expenses in the Statement
of profit and loss when the employee render services to the Company during the reporting period.

Compensated Absences

Provisions for Compensated Absences and its classif ications between current and non-current liabilities are
based on independent actuarial valuation. The actuarial valuation is done as per the projected unit credit
method as at the reporting date.

Short term employee benefits:

They are recognized at an undiscounted amount in the Statement of Profit and Loss for the year in which
the related services are rendered.
w Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. Current and deferred
tax are recognised in profit or loss, except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised
in other comprehensive income or directly in equity respectively.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from ‘profit before tax'
as reported in the statement of profit and loss because of items of income or expense that are taxable or
deductible in other years and items that are never taxable or deductible. The Company's current tax is
calculated using tax rates that have been enacted or substantially enacted by end of reporting periods.

Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets
are generally recognised for all deductible temporary differences to the extent that it is probable that taxable
profits will be available against which those deductible temporary differences can be utilised. Such deferred
tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition of
assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the
asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in
which the liability is settled or the asset realised, based on tax rates that have been enacted or substantively
enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the
manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying
amount of its assets and liabilities.

x Earnings Per Share

Basic earnings per share are computed by dividing the profit after tax by the weighted average number of
equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit after
tax as adjusted for the effects of dividend interest and other charges relating to the dilutive potential equity
shares by weighted average number of shares plus dilutive potential equity shares.

2.2 Significant accounting judgments,

estimates and assumptions Significant

accounting judgements

The application of the Company's accounting policies in 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. The estimates and assumptions are based on historical experience and
other factors that are considered to be relevant. The estimates and underlying assumptions are reviewed
on an ongoing basis and any revisions thereto are recognized in the period in which they are revised or in
the period of revision and future periods if the revision affects both the current and future periods. Actual
results may differ from these estimates which could result in outcomes that require a material adjustment to
the carrying amount of assets or liabilities affected in future periods.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting
date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are described below. Existing circumstances and assumptions about
future developments may change due to market changes or circumstances arising that are beyond the
control of the Company. Such changes are reflected in the assumptions when they occur.

(a) Fair value measurement of financial instruments

When the fair value 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 ECL 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.

(b) Defined benefit plans (gratuity benefits)

The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined
using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from
actual developments in the future. These include the determination of the discount rate, future salary
increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a
defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed
at each reporting date.

(c) Provisions and Contingent Liabilities

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. These are
reviewed at each Balance Sheet date and adjusted to reflect the current best estimate. Contingent liabilities
are not recognised in the financial statements. The policy for the same has been explained above in note
2.1 (I).

For and on behalf of For and On Behalf Of The Board Of Directors Of

M/s. Pankaj R. Shah & Associates Aarvee Denims And Exports Limited

Chartered Accountants
Registration No. : 107361W

Vinod P. Arora Ashish Shah

Chairman & Managing Director Managing

Director (DIN:00007065) (DIN:00007201)

CA Nilesh Shah

Partner

Membership No.107414 Kalpesh Shah Abira Mansuri

Place : Ahmedabad Whole Time Director Company

Date : 27/05/2025 secretary (DIN:00007262)

UDIN : 25107414BMGIRZ3467_Date : 27/05/2025