k. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised when there is a present
obligation (legal or constructive) as a result of past
event and it is probable that an outflow of resources
embodying economic benefits will be required to settle the
obligation and there is a reliable estimate of the amount
of the obligation. The expense relating to any provision is
presented in the statement of profit and loss, net of any
reimbursement.
If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate
that reflects, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the
provision due to the passage of time is recognised as part
of finance costs.
Provisions are measured at the best estimate of the
expenditure required to settle the present obligation at
the reporting date. These estimates are reviewed at each
reporting date and adjusted to reflect the current best
estimates.
Contingent liabilities are disclosed when there is a possible
obligation arising from past events, the existence of which
will be confirmed only by the occurrence or non-occurrence
of one or more uncertain future events not wholly within
the control of the Company or a present obligation that
arises from the past events where it is either not probable
that an outflow of resources will be required to settle or a
reliable estimate of the amount cannot be made.
Contingent assets are disclosed, where an inflow of
economic benefits is probable. Contingent assets are not
recognised in financial statements since this may result
in the recognition of income that will never be realised.
However, when the realisation of income is virtually
certain, then the related asset is not a contingent asset
and is recognised.
l. Revenue from Contracts with Customers
The Company derives revenues primarily from the following
major sources.
• Sale of footwear and related products
• Sale of generated wind power
The Company recognises revenue from sale of footwear
and related products at a point in time when control of the
goods is transferred to the customer in accordance with
the terms of the contract and the revenue can be reliably
measured, regardless of when payment is being made. No
element of financing is present as the sales are generally
made with a credit term of 0-30 days, which is consistent
with market practice. The performance obligation in
contracts are considered fulfilled in accordance with the
terms agreed with the respective customers.
The Company recognises revenue from sale of generated
wind power at a point in time on the basis of net power
delivered as per power purchase agreement signed with
the Discom(s).
The transaction price is the amount of consideration
which the Company expects to be entitled in exchange for
transferring promised goods to a customer.
The consideration promised in a contract with a customer
may include fixed consideration, variable consideration (if
reversal is less likely in future), or both.
Revenue is disclosed net of goods and services tax (GST),
rebates, discounts, returns and claims as applicable.
A contract asset is the right to consideration in exchange
for goods or services transferred to the customer. If the
Company performs by transferring goods or services to
a customer before the customer pays consideration or
before payment is due, a contract asset is recognised for
the earned consideration that is conditional.
A contract liability is recognised if a payment is received
from a customer before the Company transfers the related
goods or services. Contract liabilities are recognised as
revenue when the Company performs as per the terms of
contract.
m. Other Operating Revenue
Other operating revenue include revenue arising from a
Company's operating activities, i.e., either its principal
or ancillary revenue generating activities, but which is
not revenue arising from sale of products or rendering of
services. The other operating revenue of the Company
includes revenue from scrap sales, export incentives,
franchisee fees etc.
Export incentives are recognised as income on accrual
basis to the extent its realisation is certain.
n. Other 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, by
reference to the principal outstanding and at the effective
interest rate applicable.
Difference between the sale price and carrying value of
investment is recognised in other income.
Other income is recognised on accrual basis in the financial
statements, except when there is uncertainty of collection.
o. Employee Benefits
All employee benefits like salaries, wages etc. payable
wholly within twelve months of rendering the service are
classified as short-term employee benefits and they are
recognised in the period in which the employee renders
the related service. A liability is recognised for the amount
expected to be paid when there is a present legal or
constructive obligation to pay this amount as a result of
past service provided by the employee and the obligation
can be estimated reliably.
Contribution towards provident fund and employee state
insurance is made to the regulatory authorities, where the
Company has no further obligations. Such benefits are
classified as defined contribution plans as the Company
does not carry any further obligations, apart from the
contributions made on a monthly basis. Such contributions
are charged to the statement of profit and loss for the
period of service rendered by the employees.
The Company has a defined benefit gratuity plan and pays
annual contribution to Life Insurance Corporation of India
(“LIC”) through a Trust, namely Relaxo Footwears Limited
Employees Group Gratuity Scheme.
Remeasurement of the net defined benefit liability (asset)
comprise:
• Actuarial gains and losses
• The return on plan assets, excluding amounts
included in net interest on the net defined benefit
liability (asset) and
• Any change in the effect of the asset ceiling,
excluding amounts included in net interest on the net
defined benefit liability (asset),
are recognised immediately in the balance sheet with
a corresponding debit or credit to other comprehensive
income (OCI) in the period in which they occur.
Remeasurements are not reclassified to statement of
profit and loss in subsequent periods.
Past service cost is recognised as an expense at the earlier of:
• when the plan amendment or curtailment occurs, and
• when the entity recognises related restructuring
costs or termination benefits.
Compensated absences which are expected to be availed
or encashed within twelve months from the end of the
year are treated as short term employee benefits. The
obligation towards the same is measured at the expected
cost of accumulated absences as the additional amount
expected to be paid as a result of the unused entitlement
as on the reporting date.
Compensated absences which are expected to be availed
or encashed beyond twelve months from the end of the
year are treated as other long term employee benefits.
The Company's liability is actuarially determined by an
independent valuer using the projected unit credit method
at the end of each year.
Actuarial gains/losses on compensated absences are
immediately taken to the statement of profit and loss.
p. Share Based Payment
Employees of the Company receive part remuneration in
the form of share-based payments in consideration of the
services rendered. The Company recognises compensation
expense relating to share based payments in accordance
with Ind AS 102 “Share Based Payment”. Stock options
granted by the Company to its employees are accounted
as equity settled share based payment. Accordingly, the
estimated fair value of options granted that is determined
on the date of grant, is charged to statement of profit
and loss on a proportionate basis over the vesting period
of options which is the requisite service period, with a
corresponding increase in equity.
The fair value of the options at the grant date is calculated
by an independent valuer basis Black Scholes model.
q. Borrowing Costs
Borrowing cost includes interest and ancillary costs
incurred in connection with the arrangement of borrowings
and charged to statement of profit and loss on the basis of
effective interest rate (EIR).
Borrowing cost includes exchange differences arising
from foreign currency borrowings to the extent they are
regarded as an adjustment to the interest cost.
Borrowing cost that are attributable to the acquisition or
construction of a qualifying asset are capitalised as part
of the cost of such asset till such time the asset is ready
for its intended use. A qualifying asset is an asset that
necessarily takes a substantial period of time to get ready
for its intended use.
All other borrowing costs are expensed in the period in
which they occur.
r. Depreciation and Amortisation
Depreciation on property, plant and equipment is provided
pro-rata to the period of use on straight line method
based on the estimated useful lives of the assets,
which have been determined as per Schedule II of Companies
Act, 2013.
Freehold land is not depreciated.
Leasehold improvements are depreciated on straight line
method over shorter of the asset's useful life and their
initial agreement period.
The residual values, useful lives and methods of
depreciation of property, plant and equipment are reviewed
at each financial year end and if any of these estimates
differ from previous estimates such change is accounted
for as a change in an accounting estimate.
Intellectual property rights are amortised on straight line
method over their useful life.
Computer software and licenses are amortised on straight
line method over the period of five years.
The amortisation period and method for intangible assets
with a finite useful life are reviewed at each financial year
end and if any of these estimates differ from previous
estimates, such change is accounted for as a change in an
accounting estimate.
s. Earnings Per Share
Basic earnings per share is computed by dividing the profit
after tax for the year attributable to equity shareholders by
the weighted average number of equity shares outstanding
during the year. The weighted average number of equity
shares outstanding during the year is adjusted for events
i.e. bonus issue, share splits and further issue of share
capital.
Diluted earnings per share is computed by dividing
the profit after tax for the year attributable to equity
shareholders by the weighted-average number of equity
shares outstanding during the year and adjusted for the
effects of all dilutive potential equity shares.
t. Dividend Payments
Final dividend is recognised, when it is approved by the
shareholders and the distribution is no longer at the
discretion of the Company. However, Interim dividend is
recorded as a liability on the date of declaration by the
Company's Board of Directors.
*Cash outflows related to disputed tax matters are determinable only on outcome of the pending cases at various forums/authorities. The potential
undiscounted amount of total payments for taxes that the Company may be required to make if there was an adverse decision related to these
disputed demands of regulators are as stated above.
**The Supreme Court of India vide order passed in November 2016, upheld the constitutional validity of entry tax and directed the Company to file
fresh appeal before the High Court to decide other matters related to levy of entry tax in the state of Haryana. The matter is pending before the Punjab
& Haryana High Court. However, the principal liability amounting to H46.80 crores for entry tax has been disclosed in note no.18.
***The Company along with other plot allottees has received a demand notice from Haryana State Industrial & Infrastructure Development Corporation
(‘HSIIDC’) towards enhanced cost for the industrial plots allotted to the Company.
Based on the Company's own assessment and advice given by its legal counsel, the Company has a good case in the above cases. Pending final disposal
of the matters before the appropriate forum, the same have been disclosed as contingent liability.
The lawsuits in respect of certain intellectual property rights and other laws / matter are pending in courts / forums. The proceedings are going on
before appropriate authorities and the ultimate outcome of the matter cannot presently be determined. In the opinion of management the amount
involved is not material.
(b) Defined Benefit Plan - Gratuity (funded): The Company contributes annually to the Life Insurance Corporation of India (LIC)
through a trust, namely the Relaxo Footwears Limited Employees Group Gratuity Scheme. In accordance with the provisions of the
Code on Social Security, 2020, gratuity is payable to employees upon separation, retirement, death, or disablement. For employees
(other than in case of death or disablement), eligibility arises upon completion of at least five years of continuous service. The gratuity
benefit is calculated as 15 days of qualifying wages (as defined under the Code) for each completed year of service or part thereof
in excess of six months, based on the last drawn wages. The present value of gratuity obligation is determined based on actuarial
valuation using the projected unit credit method.
Risk exposure
Valuations are performed on certain basic set of pre-determined assumptions and other regulatory framework which may vary over
time. Thus, the Company is exposed to various risks in providing the above gratuity benefit which are as follows:
Interest Rate Risk: The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase
in the ultimate cost of providing the above benefit and will thus result in an increase in the value of liability.
Liquidity risk: This is the risk that the Company is not able to meet the short-term gratuity payouts. This may arise due to non
availability of enough cash / cash equivalents to meet the liabilities or holding of illiquid assets not being sold in time.
Salary escalation risk: The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan
participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used
to determine the present value of obligation will have a bearing on the plan's liability.
Demographic risk: The Company has used certain mortality and attrition assumptions in valuation of the liability. The Company is
exposed to the risk of actual experience turning out to be worse compared to the assumption.
Regulatory risk: Gratuity benefit is paid in accordance with the requirements of chapter V (Gratuity) of the Code on Social Security,
2020 (as amended from time to time). There is a risk of change in regulation requiring higher gratuity payouts.
Asset liability mismatch or market risk: The duration of the liability is longer compared to duration of assets, exposing the Company
to market risk for volatilities / fall in interest rate.
Investment risk: The probability or likelihood of occurrence of losses relative to the expected return on investment. .
Note No. 34: Disclosure on Employee Share Based Payment
Disclosure is hereby given in pursuant to Ind AS 102 “Share Based Payment”.
RFL Employee Stock Option Plan 2014 (hereinafter referred to as the “ESOP 2014” / “The Plan”), was approved by the shareholders
through postal ballot on August 5, 2014. The plan entitles the permanent employees, existing and future, including the Whole Time
Director (but excluding the Independent Directors and Promoter Directors) of the Company to exercise the option granted for purchase
of equity shares in the Company at the exercise price i.e. the latest available closing price, prior to the date of meeting of the Board /
Nomination & Remuneration Committee, in which options are granted subject to compliance with vesting conditions.
Note No. 38: Financial Risk Management
Financial risk management is an ongoing process within the Company. The Company has a robust risk management framework to
identify, monitor, mitigate and minimise risks arising from financial instruments.
The Company's financial liabilities other than derivative instruments comprise of borrowings, trade payables, lease liabilities and
other financial liabilities. The main purpose of these financial liabilities is to finance the Company's operations.
The Company's financial assets include investments, balances with banks, cash and cash equivalents, trade receivables, security
deposits and other financial assets that are derived directly from its operations.
Credit risk
Credit risk is the risk that the counterparty will not meet its obligation under a financial instrument or customer contract, leading to
a financial loss. The Company is exposed to credit risk from its operating activities, primarily from trade receivables, balances with
banks including cash and cash equivalents and from its investing activities including derivative instruments.
Management of credit risk
Concentration of credit risk with respect to trade receivables is limited, due to the customer base being large across all regions.
All trade receivables are reviewed and assessed at every reporting period. The Company has adopted a policy of only dealing with
creditworthy counterparties, therefore the Company does not expect any material risk on this account.
Historical experience of collecting receivables of the Company is supported by low level of past defaults and hence the credit risk is
perceived to be low.
Credit risk arising from balances with banks, including cash and cash equivalents, investments in mutual funds, perpetual bonds,
non-convertible debentures, commercial papers and derivative instruments is limited because the counterparties are banks / mutual
funds / corporates with high credit ratings.
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's main source of liquidity is
cash and cash equivalents and the cash flows that are generated from operations. The Company's approach to managing liquidity is to ensure that it
will always have sufficient funds to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses
or risking damage to the Company's reputation. The Company manages liquidity risk by maintaining adequate reserves, continuously monitoring
forecast with actual cash flows and matching the maturity profiles of the financial assets and liabilities.
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of change in market
prices. Market risk comprises of currency risk, interest rate risk and price risk, such as equity price risk and commodity price risk.
Financial instruments affected by market risk includes borrowings, trade payables and Investments etc.
Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign
exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's operating
activities i.e. import of materials, capital items and export of finished goods, where revenue or expenses are denominated in foreign
currencies.
Exposure to currency risk
The Company uses foreign exchange forward contracts to mitigate foreign exchange related risk exposures. The Company's exposure
to unhedged foreign currency risk as at March 31, 2026 and March 31, 2025 has been disclosed in note no. 36.
Currency risk sensitivity
The following table demonstrate the sensitivity analysis on profit before tax due to change in USD exchange rate, with all other
variables held constant. The impact on the Company's profit before tax due to changes in the fair value of unhedged monetary assets
and liabilities is given below: (H in Crore)
The Company's unhedged foreign currency exposure denominated in EUR, CAD, QAR and AED are insignificant, hence sensitivity
analysis has not been disclosed.
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 is mainly exposed to interest rate risk due to its variable interest rate borrowings. The interest
rate risk arises due to uncertainties about the future market interest rate of these borrowings.
Exposure to interest rate risk
As at March 31, 2026, the exposure to interest rate risk due to variable interest rate borrowings amounted to nil (previous year nil).
The Company's exposure to price risk arises from investment in mutual funds, bonds & non-convertible debentures and equity
instruments held and classified as FVTPL or FVTOCI. To manage the price risk arising from investments, the Company diversifies its
portfolio of assets with banks / mutual funds / corporates with high credit ratings.
The Company's unquoted equity instruments are susceptible to market price risk arising from uncertainties about future value of
the investment. The investment in unquoted equity instruments is not significant, hence sensitivity analysis has not been disclosed.
The following table demonstrate the sensitivity to a reasonably possible change in prices of investment in mutual funds, bonds &
non-convertible debentures with all other variables held constant. The impact on the Company's profit before tax due to changes in
the prices of investments is given below: (H in Crore)
Commodity price risk
The primary raw materials used in our manufacturing include natural rubber and various polymers such as EVA and PU. Prices are
highly sensitive to global supply-and-demand dynamics, as well as fluctuations in crude oil and its derivatives. Since many of these
polymers are not produced domestically, the Company relies significantly on imports.
To mitigate these risks, the Company proactively monitors global political trends and price movements. Strategic initiatives include
diversifying our sourcing network-specifically across markets like South Korea and China-developing new vendor partnerships and
exploring alternative materials to ensure price competitiveness, quality and long-term sustainability.
Capital includes equity share capital and other equity attributable to the equity holders of the Company. The primary objective of the
Company's capital management is to ensure that it maintains an optimal capital structure and maximise the shareholder's value. The
Company has complied with those covenants throughout the reporting period.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions to meet requirements
of the financial covenants. To maintain or adjust the capital structure, the Company may review the dividend payment to shareholders,
return capital to shareholders or issue new shares.
Fair value of financial assets and liabilities is generally determined by reference to the transaction price or market price. If the fair
value is not reliably determinable, the Company determines the fair value using valuation techniques that are appropriate in the
circumstances and for which sufficient data are available, maximising the use of relevant observable inputs and minimising the use
of unobservable inputs.
The following section describes the valuation techniques used and key inputs for fair valuation:
a. Foreign exchange forward contracts are valued using market observable inputs, such as spot rates and forward rates at the end of
reporting period.
b. Fair value of mutual funds are at published net asset value (NAV).
c. The fair value of perpetual bonds / non-convertible debentures are determined based on prevailing yield to discount future
cash flows.
d. Commercial Paper is valued using the effective interest rate method.
e. Unquoted equity instruments where most recent information to measure fair value is insufficient, cost has been considered as best
estimate of fair value.
f. The carrying amount of other financial assets and financial liabilities measured at amortised cost in the financial statements
are a reasonable approximation of their fair values, since the Company does not anticipate that the carrying amounts would be
significantly different from the values that would eventually be received or settled.
Fair Value Hierarchy
To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial
instruments into the three levels prescribed as per Ind AS 113 “Fair Value Measurement”.
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
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: Unobservable inputs for the asset or liability.
Company implements its CSR activities through partner organisations registered with Ministry of Corporate Affairs (MCA). Company
has a vision of ensuring sustained human development of the most deprived communities primarily under thematic areas viz.
Education, Health & Hygiene, Skill Development and Environment Conservation.
Nature of CSR activities
Short Term Project: Remedial education project in Delhi focusses on government school students, by providing them with remedial
classes.
Long Term Projects: The company is executing some long term projects, the details of which are as follows:
Education- In collaboration with Samagra Shiksha Uttarakhand, the Company continues to implement its flagship ‘Parivartan Model
School Project', aimed at providing equitable learning opportunities to students in rural government schools. Owing to the project's
impact and continued demand from Samagra Shiksha, the initiative has now been expanded to Dehradun district. Currently, 128
Government Primary, Upper Primary, Higher Secondary Schools, and Inter Colleges across Haridwar and Dehradun are being covered,
with a focus on school infrastructure improvement and capacity building of teachers, students, SMC members, parents, and
community as well.
Skill Development- Company also focuses over the skilling youth under the ‘Skill Development Project' in Delhi with traits like customer
service, front desk jobs, with placement assistance.
Health- Under the thematic area of health, company is implementing projects like ‘Mobile Health Unit' (MHU) and project ‘Nayan.
MHU is providing basic primary health care facilities to the residents of eleven villages near Bhiwadi and project Nayan is focusing on
the preventive and corrective procedures related to the avoidable blindness covering population of 189 villages including screening at
281 government schools of Tijara Block in Khairthal district of Rajasthan.
Environment Conservation- The company understands the need of the hour and environment conservation projects are focused to
mitigate the impacts of global warming, climate change and loss of biodiversity. In coordination with the ‘Forest Department' and
‘Watershed Development & Soil Conservation Department' of Alwar District Rajasthan, construction/renovation of 11 anicut/check
dams with an approximate 3.4 lac cubic meter of water in single filling were done. On the plantation front the maintenance of 55,000
saplings at Bachedi village, Thanagazhi block of Alwar district, as well as on the road dividers at Bhiwadi, Khairthal district Rajasthan
and green belt area at Lowakhurd Jhajjar district of Haryana is being undertaken.
Reasons for shortfall: Company is on track in spending the allocated funds towards the long term projects envisaged for the year. The
amount of H4.55 crores has been transferred to unspent CSR account on April 29, 2026.
b. Details of benami property held
Company does not hold any benami property. No proceedings have been initiated or pending against the Company for holding any
benami property under Prohibition of Benami Property Transactions Act,1988 and the rules made thereunder.
c. Borrowings secured against current assets
Quarterly returns or statements of current assets filed by the Company with banks are in agreement with the books of accounts.
d. Wilful defaulter
The Company is not declared wilful defaulter by any bank in accordance with the guidelines on wilful defaulters issued by the RBI.
e. Relationship with struck off Companies
The Company has not entered into any transactions with companies struck off under section 248 of the Companies Act, 2013. This is
determined to the extent such parties have been identified on the basis of information available with the Company.
g. Compliance with number of layers of Company
The number of layers prescribed under clause (87) section 2 of the Companies Act, 2013 read with Companies (Restriction on number
of Layers) Rules, 2017 is not applicable to the Company.
i. Compliance with approved scheme(s) of arrangements
During the year, no scheme of arrangements has been approved by the competent authority in terms of sections 230 to 237 of the
Companies Act, 2013.
j. Utilisation of borrowed funds and share premium
The Company has not advanced or loaned or invested funds to any other persons (intermediaries) with the understanding that the
intermediary shall directly or indirectly lend or invest in other persons or provide any guarantee in any manner whatsoever on behalf
of the Company (ultimate beneficiary).
The Company has also not received any fund from any persons with the understanding that the Company shall directly lend or invest
or provide any guarantee to any other persons on behalf of the funding party.
Note No. 52: Undisclosed Income
Company does not have any transaction which are not recorded in the books of accounts that has been surrendered or disclosed as
income during the year in the tax assessments under the Income Tax Act, 1961.
Note No. 53: Details of Crypto Currency or Virtual Currency
Company has not traded or invested in crypto currency or virtual currency during the year.
Note No. 54: Audit Trail
As proviso to rule 3(1) of Companies (Accounts) Rules, 2014 (as amended), the Company is using accounting software for maintaining
its books of account which has a feature of recording audit trail (edit log) facility in terms of laid down requirements along with
change log management and the same has operated throughout the financial year including previous year for all relevant transactions
recorded in the software.
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