2.17 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 measured at the best estimate of
the expenditure required to settle the present obligation at the
Balance Sheet date.
If the effect of the time value of money is material, provisions
are discounted to reflect its present value using a current pre¬
tax rate that reflects the current market assessments of the
time value of money and the risks specific to the obligation.
When discounting is used, the increase in the provision due to
the passage of time is recognised as a finance cost.
Where the Company expects some or all of a provision to be
reimbursed, the reimbursement is recognised as a separate
asset but only when the reimbursement is virtually certain. The
expense relating to any provision is presented in the income
statement net of any reimbursement.
Contingencies:
Contingent liabilities
A contingent liability 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 but is
not recognised because:
- it is not probable that an outflow of resources
embodying economic benefits will be required to
settle the obligation; or
- the amount of the obligation cannot be measured
with sufficient reliability.
Contingent liabilities are not recognized but disclosed unless
the contingency is remote.
Contingent assets
A contingent asset is a possible asset that arises from past
events and whose existence 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.
Contingent assets are not recognised but are disclosed when
the inflow of economic benefits is probable. When inflow is
virtually certain, an asset is recognized.
2.18 Segment Reporting
Operating segments are defined as components of an
enterprise for which discrete financial information is available
that is evaluated regularly by the chief operating decision
maker, in deciding how to allocate resources and assessing
performance.
The Company is engaged in manufacture and trading of
synthetic yarn and textiles which is considered as the only
reportable business segment. The Company's Chief Operating
Decision Maker (CODM) is the Managing Director. He evaluates
the Company’s performance and allocates resources based
on analysis of various performance indicators by geographical
areas only.
2.19 Cash and cash equivalents
Cash and cash equivalents in the Balance Sheet comprise
cash at banks and cash on hand and short term deposits/
investments with an original maturity of three months or
less from the date of acquisition, which are subject to an
insignificant risk of changes in value. These exclude bank
balances (including deposits) held as margin money or
security against borrowings, guarantees etc. being not readily
available for use by the Company.
For the purpose of the Statement of cash flows, cash and
cash equivalents consist of cash and short term deposits
and exclude items which are not available for general use as
on the date of Balance Sheet, as defined above, net of bank
overdrafts which are repayable on demand where they form
an integral part of an entity's cash management.
2.20 Dividend to equity share holders of the
Company
The company recognises a liability to make dividend
distributions to equity holders of the Company when the
distribution is authorised and the distribution is no longer at
the discretion of the Company. As per the corporate laws in
India, a distribution is authorised when it is approved by the
shareholders. A corresponding amount is recognised directly
in equity.
2.21 Cash Flow Statement
Statement of Cash Flows is prepared segregating the cash
flows into operating, investing and financing activities. Cash
flow from operating activities is reported using indirect method
as set out in Ind AS 7 'Statement of Cash Flows', adjusting the
net profit for the effects of:
i. changes during the period in inventories and operating
receivables and payables transactions of a non-cash
nature;
ii. non-cash items such as depreciation, provisions, deferred
taxes, unrealised foreign currency gains and losses; and
iii. all other items for which the cash effects are investing or
financing cash flows.
2.22 Earnings per share
The Basic Earnings per equity share ('EPS') is computed
by dividing the net profit or loss after tax before other
comprehensive income for the year attributable to the equity
shareholders of the Company by weighted average number of
equity shares outstanding during the year. Ordinary shares that
will be issued upon the conversion of a mandatorily convertible
instrument are included in the calculation of basic earnings per
share from the date the contract is entered into. Contingently
issuable shares are treated as outstanding and are included
in the calculation of basic earnings per share only from the
date when all necessary conditions are satisfied (i.e. the events
have occurred).
Diluted earnings per equity share are computed by dividing
the net profit or loss before OCI attributable to equity holders
of the Company by the weighted average number of equity
shares considered for deriving basic earnings per equity
share and also the weighted average number of equity shares
that could have been issued upon conversion of all dilutive
potential equity shares (including options and warrants). The
dilutive potential equity shares are adjusted for the proceeds
receivable had the equity shares been actually issued at fair
value. Dilutive potential equity shares are deemed converted
as of the beginning of the period unless issued at a later date.
Anti-dilutive effects are ignored.
2.23 Events after Reporting date
Where events occurring after the Balance Sheet date provide
evidence of conditions that existed at the end of the reporting
period, the impact of such events is adjusted within the financial
statements. Where the events are indicative of conditions that
arose after the reporting period, the amounts are not adjusted,
but are disclosed if those non-adjusting events are material.
2.24 Exceptional Items
An item of Income or expense which by its size, type or incidence
requires disclosure in order to improve an understanding of the
performance of the Company is treated as an exceptional item
and the same is disclosed in the financial statements.
2.25 Corporate Social Responsibility (CSR)
expenditure
The Company charges its CSR expenditure during the year to
the statement of profit & loss.
2.26 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.
In May 2025, MCA notified amendments to Ind AS 21 - The
Effects of Changes in Foreign Exchange Rates, applicable w.e.f.
April 1, 2025. The Company has reviewed the amendment
and based on its evaluation has determined that it does not
have any significant impact in its financial statements.
In August 2025, MCA notified the following
amendments to:
1. Ind AS 1, Presentation of Financial Statements, applicable
w.e.f. April 1, 2025 - The amendment relates to
classification of liabilities as current or non-current and
non-current liabilities with covenants. In the context of
classifying a liability as current, it removes the requirement
of existence of a right to defer settlement for at least 12
months after the reporting date and instead requires that
the said right should exist on the reporting date and have
substance. The amendment also introduces guidance on
classification of liabilities with covenants. The Company
has no impact of these amendments in its classification
criteria of current and non-current liabilities.
2. Ind AS 7, Statement of Cash Flows and Ind AS 107,
Financial Instruments: Disclosures, applicable w.e.f.
April 1, 2025 - The amendment in Ind AS 7 requires to
inform users of financial statements of the existence of
supplier finance arrangements and explain the nature of
the arrangements, the carrying amount of liabilities and
the range of payment due dates. Ind AS 107 has been
amended to add supplier finance arrangements as a
factor that may cause concentration of liquidity risk. The
Company has reviewed the amendment and based on
its evaluation has determined that it does not have any
significant impact in its financial statements.
Nature and Purpose of Reserves
a) Capital Reserve
Capital Reserve was created under the previous GAAP out
of profit earned from a specific transaction of capital nature.
Capital reserve is not available for the distribution to the
shareholders.
b) Capital Redemption Reserve
Capital Redemption Reserve was created on redemption of
Preference shares and purchase of its own shares out of free
reserves of the Company in accordance with the requirements
of Companies Act. This can be utilized in accordance with the
provisions of the Companies Act, 2013.
c) Securities Premium
The amount received in excess of face value of the equity
shares is recognised in Securities Premium Reserve. This can
be utilized in accordance with the provisions of the Companies
Act, 2013.
d) General Reserve
This Reserve is created by an appropriation from one
component of equity (generally retained earnings) to another,
not being an item of Other Comprehensive Income. The
same can be utilized by the Company in accordance with the
provisions of the Companies Act, 2013.
e) Employee Stock Option Outstanding
The fair value of the equity-settled share based payment transactions with employees is recognised in Statement of Profit and
Loss with corresponding credit to Employee Stock Options Outstanding Account.
f) Retained Earnings
Retained earnings are the profits that the Company has earned till date, less any transfer to General Reserve, dividends or other
distributions paid to the shareholders.
I. Term loans
External Commercial Borrowings (ECB) From Foreign Consortium Banks
(i) ' 5,057.01 Lakhs (net of transaction cost ' 69.71 Lakhs) [previous Year ' 6,370.45 Lakhs (net of transaction cost ' 149.01
Lakhs)], are secured by first priority exclusive charge over Fully Drawn Yarn spinning machinery and equipment's thereof and
personal guarantee of promoter directors. The loan is repayable in 20 half yearly equal instalments that commenced from
September 2018 and bear Interest at 6M Euribor 1.10% p.a.
(ii) ' 1,784.76 Lakhs (net of transaction cost ' 12.06 Lakhs) [previous Year ' 2,499.97 Lakhs (net of transaction cost '38.17
Lakhs)], are secured by first priority exclusive charge over Partial Oriented Yarn spinning machinery and equipment's thereof
and personal guarantee of promoter directors. The loans are repayable in 14 half yearly equal instalments that commenced
from December 2019 and bear Interest at 6M Euribor 0.80% p.a.
(iii) ' 3,046.10 Lakhs (net of transaction cost ' 27.38 Lakhs) [previous Year ' 3,286.03 Lakhs (net of transaction cost '93.71
Lakhs)], are secured by first priority exclusive charge over Partial Oriented Yarn spinning machinery and equipment's thereof
and personal guarantee of promoter directors. The loans are repayable in 16 half yearly equal instalments that commenced
from February 2023 and bear Interest at 6M Euribor 0.88% p.a.
II. The Company has used the borrowings from banks and financial institution for the specific purpose for which it was taken at
the balance sheet date.
III. As on the balance sheet date, there is no default in repayment of loan and interest.
I. Working capital loans from consortium member banks (Punjab National Bank, Bank of Baroda, Indusind Bank Ltd and Yes Bank
Ltd.) are secured by first charge by way of hypothecation of inventory of raw materials, finished goods, semi finished goods, stores
and spares, book debts and other receivables (both present and future) and first charge on mortgage on immovable properties
(save & except mortgage on vehicles and plant & machinery acquired out of specific loan(s)) on pari passu basis. These loans
are repayable on demand. Rupee working capital loan carry an interest rate linked with 1 Year MCLR and 3 Months Treasury Bill
aggregating not more than 9.05 % p.a.
II. Disclosure of returns/Statements submitted by the Company to the bank on quarterly basis in respect of borrowings: Quarterly
returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the books
of accounts.
III. The Company has not been declared as wilful defaulter by any bank or financial institution or government or any government
authority.
C.
i) The Company has filed writ petition in Gujarat High Court
at Ahmedabad on March 17, 2022 against the demand
raised by Asst. Commissioner, Bharuch for ' 2,340.87
lakhs in respect of ITC on services in the case of inverted
duty refunds granted for the period May 2018 to January
2021. Hon’ble High Court has stayed the demand. The
Company is entitled to Input Tax credit of alleged excess
refund even if the case is decided against the Company.
Thus, there would not be any financial impact of the
same. However, the company may have to pay interest
which is presently not ascertainable.
ii) DGGI Surat Zonal Unit has issued Show Cause Notice
dated January 16, 2023 raising a demand of ' 815.81
Lakhs towards IGST amount on deemed supply of
services by corporate office of the Company to other
distinct persons i.e., manufacturing plants of the Company
in other states on account of alleged violation of Section
74(1) of CGST Act, 2017 read with Section 20 of IGST
Act, 2017 and Rules made thereunder. The Company
has filed reply to the Show Cause Notice on April 03,
2023. Additional Commissioner, Central GST Delhi East
has vide order dated 31.01.2025 confirmed the demand
of ' 815.81 lakhs together with penalty of same amount.
The company had filed an appeals with Commissioner
Appeals, CGST Delhi. The Company may have to pay
interest which is presently not ascertainable.
iii) During FY 2023-24 the company has received a show
cause notice for an aggregate amount of ' 12,092.40
Lakhs on the ground of Inverted Duty Refunds under
rule 89(5) of CGST Rules, 2017 granted erroneously for
the period March 2022 to January 2023. The company
has filed writ petition with Hon’ble High Court of Gujarat
at Ahmedabad against the show cause notice. The
company is quite hopeful of a favourable decision. Even
in case of adverse decision the company will be entitled
to input tax credit of the GST amount. However, in case of
an adverse order the company will be liable for interest.
The aforementioned amounts under disputes as per
the demands from various authorities for the respective
periods and has not been adjusted to include further
interest and penalty leviable, if any, at the time of final
outcome of the appeals.
The Company does not expect any reimbursement in
respect of the above contingent liabilities and it is not
practicable to estimate the timings of the cash flows, if
any. In respect of the matters pending resolution of the
arbitration/appellate proceedings and it is not probable
that an outflow of resources will be required to settle the
above obligations/claims.
Based on the discussion with the solicitors and as
advised, the management and Company's tax advisors
believes that there are fair chances of decisions in its
favour (in respect of the items listed in A(a) to A(d) &
C above). Hence, no provision is considered necessary
against the same.
The information has been given in respect of such vendor to the extent they could be identified as Micro and Small Enterprises
as per MSMED Act, 2006 on the basis of information available with the Company. In cases of confirmation from vendors, interest
for delayed payments amounting to ' 1.16 Lakhs (previous year ' 2.01 Lakhs) has not been provided.
46. SEGMENT INFORMATION
The Company is primarily engaged in manufacture and trading of synthetic yarn and textiles which is considered as the only
reportable business segment. The Company's Chief Operating Decision Maker (CODM) is the Managing Director. He evaluates
The Company’s performance and allocates resources based on analysis of various performance indicators by geographical areas
only.
48. LEASES: COMPANY AS A LESSEE
The weighted average incremental borrowing rate applied to lease liability is 9%.
a) Lease Rent
The Company has various operating leases under cancellable operating lease arrangements for accommodation for employees
and other assets which are renewable by mutual consent on mutually agreeable terms and range between 11 months to 12
years. The Company has given interest free refundable security deposit in accordance with the agreed terms. There are no
restrictions imposed by these arrangements. There are no sub leases. The Company has not entered into any non cancellable
lease.
49. EMPLOYEE BENEFITS
Refer note 2.13 for accounting policy on Employee Benefits
A. Defined contribution plans
i. Provident Fund/Employees’ Pension Fund
ii. Employees’ State Insurance
B. Defined Benefit Plan
Gratuity: The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service
gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service.
(i) Balance Sheet
The assets, liabilities and surplus/(deficit) position of the defined benefit plans at the Balance Sheet date were:
Notes:
(i) The actuarial valuation of plan assets and the present value of the defined benefit obligation were carried out as at March 31,
2026. The present value of the defined benefit obligation and the related current service cost and past service cost, were
measured using the Projected Unit Credit Method.
(ii) Discount rate is based on the prevailing market yields of Indian Government bonds as at the Balance Sheet date for the
estimated term of the obligations.
(iii) The salary escalation rate is arrived after taking into consideration the inflation, seniority, promotion, business plan, HR policy
and other relevant factors on long term basis.
51. SHARE BASED PAYMENTS
(I) Employee Stock Option Scheme (ESOS) -
TRANCHE 3
(Refer Note No 2.14 of accounting policy)
The Nomination and Remuneration Committee of the
Company had at its meeting held on October 30, 2023,
approved grant of 27,20,000 (face value of ' 1/- per share)
stock options (“options”) to the eligible employees of the
Company under the Filatex Employee Stock Option Scheme
2015 (Filatex ESOS -2015), at an exercise price of ' 48.05
per option (being the closing price at NSE on October 27,
2023 i.e. immediately preceding the grant date), each option
being convertible into one Equity Share of the Company upon
vesting subject to the Securities and Exchange Board of India
(Share Based Employee Benefits) Regulations, 2014 and the
terms and conditions of the Filatex ESOS 2015.
The terms and conditions of the grant as per the Filatex
Employee Stock Option Scheme, 2015 (Filatex ESOS 2015)
are as under:
A. Vesting period
On completion of 2 Years from the date of grant of options
for 15%
On completion of 3 Years from the date of grant of options
for 20%
On completion of 4 Years from the date of grant of options
for 25%
On completion of 5 Years from the date of grant of options
for 40%
B. Exercise period
The exercise period will be 30 days from the date of vesting for
1st, 2nd and 3rd vesting and 45 days for 4th vesting of options.
The options, which have been vested and not exercised within
such period, can be carried forward till the last vesting and can
be exercised, either partially or wholly. However, the options
not so exercised with the period available for exercising of last
vesting shall lapse and will not be available for exercise by the
employee.
(II) Employee Stock Option Scheme (ESOS) -
TRANCHE 4
(Refer Note No 2.14 of accounting policy)
The Nomination and Remuneration Committee of the
Company had at its meeting held on January 29, 2025,
approved grant of 1,50,000 (face value of ' 1/- per share)
stock options (“options”) to the eligible employees of wholly
owned subsidiary Company i.e. Ecosis Limited (formerly
known as Texfil Private Limited) of the Company under the
Filatex Employee Stock Option Scheme 2015 (Filatex ESOS
-2015), at an exercise price of ' 46.61 per option (being the
closing price at NSE on January 28, 2025 i.e. immediately
preceding the grant date), each option being convertible
into one Equity Share of the Company upon vesting subject
to the Securities and Exchange Board of India (Share Based
Employee Benefits) Regulations, 2014 and the terms and
conditions of the Filatex ESOS 2015.
The terms and conditions of the grant as per the Filatex
Employee Stock Option Scheme, 2015 (Filatex ESOS 2015)
are as under:
A. Vesting period
35% on October 30, 2026
25% on October 30, 2027
40% on October 30, 2028
B. Exercise period
The exercise period will be 30 days from the date of vesting
for 1st and 2nd vesting and 45 days for 3rd vesting of options.
The options, which have been vested and not exercised within
such period, can be carried forward till the last vesting and can
be exercised, either partially or wholly. However, the options
not so exercised with the period available for exercising of last
vesting shall lapse and will not be available for exercise by the
employee.
(III) Employee Stock Option Scheme (ESOS) -
TRANCHE 5
(Refer Note No 2.14 of accounting policy)
The Nomination and Remuneration Committee of the
Company had at its meeting held on July 23, 2025, approved
grant of 2,50,000 (face value of ' 1/- per share) stock options
(“options”) to the eligible employees of wholly owned subsidiary
Company i.e. Ecosis Limited (formerly known as Texfil Private
Limited) of the Company under the Filatex Employee Stock
Option Scheme 2015 (Filatex ESOS -2015), at an exercise
price of ' 59.00 per option, each option being convertible
into one Equity Share of the Company upon vesting subject
to the Securities and Exchange Board of India (Share Based
Employee Benefits) Regulations, 2014/SEBI (Share Based
Employee Benefits and Sweat Equity) Regulations, 2021 and
the terms and conditions of the Filatex ESOS 2015.
The terms and conditions of the grant as per the Filatex
Employee Stock Option Scheme, 2015 (Filatex ESOS 2015)
are as under:
A. Vesting period
On completion of 2 Years from the date of grant of options
for 15%
On completion of 3 Years from the date of grant of options
for 20%
On completion of 4 Years from the date of grant of options
for 25%
On completion of 5 Years from the date of grant of options
for 40%
B. Exercise period
The exercise period will be 30 days from the date of vesting for 1st, 2nd and 3rd vesting and 45 days for 4th vesting of options. The
options, which have been vested and not exercised within such period, can be carried forward till the last vesting and can be
exercised, either partially or wholly. However, the options not so exercised with the period available for exercising of last vesting
shall lapse and will not be available for exercise by the employee.
The expected life of the Stock option is based on historical data and current expectations and is not necessarily indicative of
exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar
to the life of the options is indicative of future trends, which may not necessarily be the actual outcome.
During the year ended, the Company recorded an employee compensation expense of ' 128.46 Lakhs (Previous year ' 124.74
Lakhs) in the Statement of Profit & Loss.
Methods and assumptions used to estimate the fair values
are consistent with those used for the year ended 31st March,
2025. The following methods/assumptions were used to
estimate the fair values:
1 The carrying value of Cash and cash equivalents, trade
receivables, trade payables, short-term borrowings, other
financial assets and financial liabilities approximate their
fair value mainly due to the short-term maturities of these
instruments.
2 The fair values of investment in Mutual funds, bonds,
invit's and quoted equity shares is based on the quoted
price in the active market of respective investment as at
the Balance Sheet date.
3 Derivative financial instruments: The fair value of
forward foreign exchange contracts is determined using
the forward exchange rates at the balance sheet date
using valuation techniques with inputs that are directly or
indirectly observable in the marketplace. The derivatives
are entered into with the banks/counterparties with
investment grade credit ratings.
4 Description of significant unobservable inputs to
valuation (Level 3):
The following shows the valuation techniques and inputs
used for Non-current financial instruments that are not
carried at fair value:
a. Security deposits given against lease and lease
liabilities: Discounted cash flow method using
appropriate discounting rate.
b. Non-current Financial assets/liabilities other
than above: Expected Cash Flow for the financial
instruments.
5 Unquoted equity instruments: where most recent
information to measure fair value is insufficient and where
the fair value of these investments cannot be reliably
measured, or if there is a wide range of possible fair value
measurements, cost has been considered as the best
estimate of fair value.
6 There has been no change in the valuation methodology
for Level 3 inputs during the year. There were no transfers
between Level 1 and Level 2 during the year and no
transfer into and out of Level 3 fair value measurements.
II. Financial Risk Management Objectives and
Policies
The Company’s activities expose it to a variety of financial risks
namely market risk, credit risk and liquidity risk. The Company’s
primary risk management focus is to minimize potential
adverse effects of market risk on its financial performance.
The Company’s risk management assessment and policies
and processes are established to identify and analyse the
risks faced by the Company, to set appropriate risk limits and
controls, and to monitor such risks and compliance with the
same.
Risk assessment and management policies and processes
are reviewed regularly to reflect changes in market conditions
and the Company’s activities. The Board of Directors and the
Audit Committee is responsible for overseeing the Company’s
risk assessment and management policies and processes.
The Company’s financial risk management policy is set by the
management. Market risk is the risk of loss of future earnings,
fair values or future cash flows that may result from a change
in the price of a financial instrument. The value of a financial
instrument may change as a result of changes in the interest
rates, foreign currency exchange rates, equity prices and other
market changes that affect market risk sensitive instruments.
The Company manages market risk which evaluates and
exercises independent control over the entire process of
market risk management. The management recommends risk
management objectives and policies, which are approved by
Senior Management and the Audit Committee.
a) Credit Risk
Credit risk is the risk of financial loss to the Company if a
customer or counterparty to a financial instrument fails to
meet its contractual obligations, and arises principally from
the Company’s receivables from customers. Credit risk arises
from cash held with banks as well as credit exposure to clients,
including outstanding accounts receivable. The maximum
exposure to credit risk is equal to the carrying value of the
financial assets. The objective of managing counterparty
credit risk is to prevent losses in financial assets. The
Company assesses the credit quality of the counterparties,
taking into account their financial position, past experience
and other factors. The Company establishes an allowance
for impairment that represents its expected credit losses in
respect of trade and other receivables. The management
uses a simplified approach for the purpose of computation of
expected credit loss for trade receivables.
The Company’s exposure to credit risk is influenced mainly
by the individual characteristics of each customer. The
demographics of the customer, including the default risk of the
industry and country, in which the customer operates, also has
an influence on credit risk assessment. Credit risk is managed
through credit approvals, establishing credit limits, continuously
monitoring the credit worthiness of customers to which the
Company grants credit terms in the normal course of business
and through regular monitoring of conduct of accounts. The
Company also holds security deposits for outstanding trade
receivables which mitigate the credit risk to some extent.
An impairment analysis is performed at each reporting date on
an individual basis for major customers and follows simplified
approach for recognition of impairment loss allowance. The
history of trade receivables shows a negligible provision for
bad and doubtful debts. The management believes that no
further provision is necessary in respect of trade receivables
based on historical trends of these customers. Further, the
Company's exposure to customers is diversified and no single
customer has significant contribution to trade receivable
balances.
In respect of financial guarantees provided by the Company
to banks & financial institutions, the maximum exposure which
the Company is exposed to is the maximum amount which
the Company would have to pay if the guarantee is called
upon. Based on the expectation at the end of the reporting
period, the Company considers that it is more likely than not
that such an amount will not be payable under the guarantees
provided.
The credit risk on liquid funds such as banks in current and deposit accounts and derivative financial instruments is limited
because the counterparties are banks with high credit-ratings.
b) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company
manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due.
Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate
liquidity risk management framework for the management of the Company's short-term, medium-term and long-term funding
and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities
and committed borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity
profiles of financial assets and liabilities and by monitoring rolling forecasts of its liquidity requirements to ensure it has sufficient
cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times
so that the Company does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities.
c) Market Risk
Market risk is the risk of loss of future earnings, fair values
or future cash flows that may result from adverse changes
in market rates and prices (such as interest rates, foreign
currency exchange rates and commodity prices) or in the
price of market risk-sensitive instruments as a result of such
adverse changes in market rates and prices. Market risk is
attributable to all market risk-sensitive financial instruments
and all short term and long-term debt. Market risk comprises
three types of risk: interest rate risk, currency risk and other
price risk, such as equity price risk and commodity risk.
Financial instruments affected by market risk include loans
and borrowings, deposits, FVTPL investments, trade payables,
trade receivables, derivative financial instruments and other
financial instruments. The Company is exposed to market
risk primarily related to foreign exchange rate risk, interest
rate risk and the market value of its investments. Thus, the
Company’s exposure to market risk is a function of investing
and borrowing activities.
i) Foreign exchange risk
Foreign currency risk is the risk that the fair value or future
cash flows of an exposure will fluctuate because of changes
in foreign exchange rates. The Company’s foreign exchange
risk arises from its foreign currency borrowings and trade
receivables and trade payables denominated in foreign
currencies. The results of the Company’s operations can be
affected as the rupee appreciates/depreciates against these
currencies. The Company enters into derivative financial
instruments such as foreign exchange forward contracts
to mitigate the risk of changes in exchange rates on foreign
currency exposures The Company has a treasury team which
monitors the foreign exchange fluctuations on a continuous
basis and advises the management of any material adverse
effect on the Company.
a. Foreign currency sensitivity analysis:
The following tables demonstrate the sensitivity to a reasonably possible change in exchange rates of USD, Euro, JPY, CHF and
GBP with INR, with all other variables held constant. The impact on the Company’s profit before tax is due to changes in the fair
value of monetary assets and liabilities including non-designated foreign currency derivatives. The Company’s exposure to foreign
currency changes for all other currencies is not material.
ii) 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 the risk of changes in market interest rates relates primarily to the Company’s
long-term debt obligations with floating interest rates.
The Company’s investments in term deposits (i.e., margin money) with banks are for short durations, and therefore do not expose
The Company to significant interest rates risk.
a. Interest rate risk exposure
The exposure of the Company's borrowing to interest rate changes at the end of the reporting period are as follows:
b. Interest rate sensitivity:
The sensitivity analysis below have been determined based on exposure to interest rates for borrowings at the end of the
reporting period and the stipulated change taking place at the beginning of the financial year and held constant throughout the
reporting period in case of borrowings that have floating rates.
iii.) Price risk
The Company invests its surplus funds in various mutual funds (debt fund, equity fund, liquid schemes and income funds etc.),
short term debt funds, listed or unlisted equity shares, government securities and fixed deposits. The price risk arises due to
uncertainties about the future market values of these investments. In order to manage its price risk arising from investments, the
Company diversifies its portfolio in accordance with the limits set by the risk management policies.
III. Capital Risk Management Policies and Objectives
The Company’s objective while managing capital is to safeguard its ability to continue as a going concern (so that it is enabled to
provide returns and create value for its shareholders, and benefits for other stakeholders), support business stability and growth,
ensure adherence to the covenants and restrictions imposed by lenders and/or relevant laws and regulations, and maintain an
optimal and efficient capital structure so as to reduce the cost of capital and to maximise shareholders value. In order to maintain
or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders,
issue new shares, obtain new borrowings or sell assets to reduce debt, etc.
The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions or its
business requirements and the requirements of the financial covenants.
The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. Net debt is calculated
as interest bearing loans and borrowings less cash and cash equivalents.
In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it meets
financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in
meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches
in the financial covenants of any interest-bearing loans and borrowings in the current period.
IV. Changes in liabilities arising from financing activities as per Ind AS 7 - Statement of cash flows
The major changes in the Company’s liabilities arising from financing activities are due to financing cash flows and accrual of
financial liabilities. The Company did not acquire any liabilities arising from financing activities during business combinations
effected in the current period or comparative period.
The Company disclosed information about its interest-bearing loans and borrowings. There are no obligations under finance
lease and hire purchase contracts.
55. ADDITIONAL REGULATORY INFORMATION
REQUIRED BY SCHEDULE III OF COMPANIES
ACT, 2013
1. Details of Benami property:
No proceedings have been initiated or are pending against the
company for holding any Benami property under the Benami
Transactions (Prohibition) Act, 1988 and the rules made
thereunder.
2. Transaction with Struck Off Companies:
The Company do not have any transaction with companies
struck off.
3. Charges with Registrar of Companies:
The Company do not have any charges or satisfaction which
is yet to be registered with ROC beyond the statutory period.
4. Details of crypto currency or virtual currency:
The Company has not traded or invested in Crypto currency or
Virtual Currency during the current or previous year.
5. Utilisation of borrowed funds and share premium:
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:
(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.
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 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.
6. Compliance with approved scheme(s) of arrangements:
The Company has not entered into any scheme of
arrangement which has an accounting impact on current or
previous financial year.
7. Valuation of PPE, Intangible Assets and Investment
property:
The Company has not revalued its property, plant & equipment
(including Right Of Use Assets) or intangible assets or both
during the current or previous year.
8. Loans/advances to specified persons:
There is no grant of loans/advances in the nature of loans
repayable on demand.
9. The Company has complied with the number of layers of
companies prescribed under the Companies Act, 2013.
10. Undisclosed income:
There is no income surrendered or disclosed as income
during the current or previous year in the tax assessments
under the Income Tax Act, 1961, that has not been recorded
in the books of account.
57. USE OF ESTIMATES AND JUDGEMENTS
The preparation of financial statements in conformity with the
recognition and measurement principles of Ind AS requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure
of contingent liabilities at the date of the financial statements
and the results of operations during the reporting period end.
Although these estimates are based upon management’s
best knowledge of current events and actions, historical
experience and other factors, including expectations of future
events that are believed to be reasonable, actual results could
differ from these estimates. The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which
the estimate is revised if the revision affects only that period,
or in the period of the revision and future periods if the revision
affects both current and future periods.
A. Judgements in applying accounting policies
The judgements, apart from those involving estimations (see
note below), that the Company has made in the process of
applying its accounting policies and that have a significant
effect on the amounts recognised in these financial statements
pertain to:
Leases:
Ind AS 116 requires lessees to determine the lease term as
the non-cancellable period of a lease adjusted with any option
to extend or terminate the lease, if the use of such option is
reasonably certain. The Company makes an assessment
on the expected lease term on a lease-by-lease basis and
thereby assesses whether it is reasonably certain that any
options to extend or terminate the contract will be exercised.
In evaluating the lease term, the Company considers factors
such as any significant leasehold improvements undertaken
over the lease term, costs relating to the termination of
the lease and the importance of the underlying asset to
Company’s operations taking into account the location of the
underlying asset and the availability of suitable alternatives.
The lease term in future periods is reassessed to ensure that
the lease term reflects the current economic circumstances.
After considering current and future economic conditions, the
Company has concluded that no changes are required to
lease period relating to the existing lease contracts.
Investment:
The Company has invested more than 20% equity capital
in the power SPV's namely FPEL Sunrise Private Limited and
FP Crysta Energy Private Limited to qualify as a captive user.
As per the shareholding agreement, the Company shall not
directly or indirectly take part in financial and operation policy
decisions of the Power SPV's.
As per Ind AS 28, If an entity holds, directly or indirectly (e.g.
through subsidiaries), 20 per cent or more of the voting power
of the investee, it is presumed that the entity has significant
influence, unless it can be clearly demonstrated that this is not
the case.
Based on the above facts, the presumption of significant
influence/participating in financial and operating decision
making is not valid even though it holds 20% or more of
the voting rights of another entity as the shareholding by
the Company is only by virtue of compliance with electricity
regulations with no intent of influencing the operations of
the power SPV's. In view of the above investments are not
considered as investment in associates.
B. Key sources of estimation uncertainty
The following are the key assumptions concerning the future,
and other key sources of estimation uncertainty at the end of
the reporting period that may have a significant risk of causing
a material adjustment to the carrying amounts of assets and
liabilities within the next financial year:
(i) Impairment of trade receivables:
The impairment provisions for trade receivables are based
on lifetime expected credit loss based on a provision matrix.
Lifetime expected credit losses are the expected credit losses
that result from all possible default events over the expected
life of a financial instrument. The provision matrix takes into
account historical credit loss experience and is adjusted
for forward looking information. The expected credit loss
allowance is based on the ageing of the receivables that are
due and the rates used in the provision matrix.
The Company uses judgment in making assumptions about
risk of default and expected loss rates and selecting the inputs
to the impairments calculation, based on the Company’s past
history, existing market conditions as well as forward looking
estimates at the end of each reporting period.
(ii) Fair value measurements of financial instruments:
In estimating the fair value of a financial asset or a financial
liability, the Company uses market-observable data to the
extent it is available. Where active market quotes are not
available, the management applies valuation techniques
to determine the fair value of financial instruments. This
involves developing estimates, assumptions and judgements
consistent with how market participants would price the
instrument.
(iii) Actuarial Valuation:
The determination of Company’s liability towards defined
benefit obligation viz. gratuity and other long-term employee
benefit obligation viz. long term compensated absences to
employees is made through independent actuarial valuation
including determination of amounts to be recognised in the
Statement of Profit and Loss and in other comprehensive
income. Such valuation depend upon assumptions determined
after taking into account inflation, seniority, promotion and
other relevant factors such as supply and demand factors in
the employment market. Information about such valuation is
provided in notes to the financial statements.
(iv) Claims, Provisions and Contingent Liabilities:
The Company has ongoing litigations with various regulatory
authorities and third parties. Where an outflow of funds is
believed to be probable and a reliable estimate of the outcome
of the dispute can be made based on management’s
assessment of specific circumstances of each dispute
and relevant external advice, management provides for its
best estimate of the liability. Such accruals are by nature
complex and can take number of years to resolve and can
involve estimation uncertainty. These estimates could change
substantially over time as new facts emerge and each dispute
progresses. Information about such litigations is provided in
notes to the financial statements.
(v) Income Taxes:
Deferred tax assets are recognised for unused tax losses and
unabsorbed depreciation carry forwards to the extent that it is
probable that taxable profit will be available against which the
losses/depreciation can be utilised. Significant management
judgement is required to determine the amount of deferred tax
assets that can be recognised, based upon the likely timing
and the level of future taxable profits together with future tax
planning strategies.
(vi) Share-based payments:
Estimating fair value for share-based payment transactions
requires determination of the most appropriate valuation
model, which is dependent on the terms and conditions of
the grant. This estimate also requires determination of the
most appropriate inputs to the valuation model including
the expected life of the share option, volatility and dividend
yield and making assumptions about them. This requires
a reassessment of the estimates used at the end of each
reporting period. The assumptions and models used for
estimating fair value for share-based payment transactions
are disclosed in notes to the financial statements.
(vii) Useful lives of property, plant and equipment
and intangible assets:
As described in the significant accounting policies, the
Company determines and also reviews the estimated useful
lives of property, plant and equipment and intangible assets
at the end of each reporting period. Such lives are dependent
upon an assessment of both the technical life of the assets
and also their likely economic life, based on various internal
and external factors including relative efficiency and operating
costs. Accordingly, depreciable lives are reviewed annually
using the best information available to the Management.
58. The figures for the previous years have been regrouped
and/or reclassified wherever necessary to conform with the
current year presentation.
59. No Subsequent event occurred post balance sheet
date which requires adjustment in the standalone financial
statement for the year ended March 31, 2026.
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