(y) Provisions, Contingent Liabilities and Contingent
Assets:
Provisions are recognized when the Company has a
present obligation (legal or constructive) as a result of a
past event and it is probable that an outflow of resources,
that can be reliably estimated, will be required to settle such
an obligation.
If the effect of the time value of money is material, provisions
are determined by discounting the expected future cash
flows to net present value using an appropriate pre-tax
discount rate that reflects current market assessments
of the time value of money and, where appropriate, the
risks specific to the liability. Unwinding of the discount is
recognized in the Statement of Profit and Loss as a finance
cost. Provisions are reviewed at each reporting date and are
adjusted to reflect the current best estimate.
A present obligation that arises from 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, is disclosed as a contingent liability.
Contingent liabilities are also 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.
Claims against the Company where the possibility of
any outflow of resources in settlement is remote, are not
disclosed as contingent liabilities.
Contingent assets are not recognized in financial statements
since this may result in the recognition of income that may
never be realized. However, when the realization of income
is virtually certain, then the related asset is not a contingent
asset and is recognized.
(z) Investment in Associates
The Company's investment in its associates are carried at
cost net of accumulated impairment loss, if any.
On disposal of the Investment, the difference between the
net disposal proceeds and the carrying amount is charged
or credited to the statement of Profit and Loss.
Note 2(A) Critical accounting judgments and key sources
of estimation uncertainty:
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. Uncertainty about these
assumptions and estimates could result in outcomes that
require a material adjustment to the carrying amount of assets
or liabilities affected in future periods.
Key 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. The Company
based its assumptions and estimates on parameters
available when the financial statements were prepared.
Existing circumstances and assumptions about future
developments, however, 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.
(i) Useful Lives of Property, Plant & Equipment and
Intangible Assets:
The Company uses its technical expertise along with
historical and industry trends for determining the
economic life of an asset/component of an asset. The
useful lives are reviewed by management periodically
and revised, if appropriate. In case of a revision, the
unamortized depreciable amount is charged over the
remaining useful life of the assets.
(ii) Fair value measurement of financial instruments:
When the fair values of financial assets and financial
liabilities recorded in the balance sheet cannot be
measured based on quoted prices in active markets,
their fair value is measured using valuation techniques
including the Discounted Cash Flow model. The
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.
(iii) Defined benefit plans:
The cost of the defined benefit plans gratuity and
provident fund, and the present value of the gratuity
and provident fund 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.
(iv) Recognition and measurement of deferred tax
assets and liabilities:
Deferred tax assets and liabilities are recognized for
deductible temporary differences for which there
is probability of utilization against the future taxable
profit. The Company uses judgement to determine
the amount of deferred tax liability / asset that can be
recognized, based upon the likely timing and the level
of future taxable profits and business developments.
(v) Income Taxes:
The Company calculates income tax expense based on
reported income and estimated exemptions / deduction
likely available to the Company. The Company has
applied the lower income tax rates on income tax
expenses and the deferred tax assets / liabilities.
(vi) Asset held for sale:
The company has used certain judgements and
estimates to determine fair value of asset held for sale. Fair
value has determined on basis of independent external
valuation and quotes from dealer of similar assets.
(vii) Inventory:
Valuation of Inventory involves a level of subjectivity
due to inherent uncertainties such as volatility in
raw material prices and fluctuations in the prices
of finished goods driven by changes in consumer
demand. Given the size of the inventory balance, the
complexities involved, and the need for judgment
in applying assumptions related to cost and net
realizable value, we recognise that inventory
valuation requires careful consideration and is a
significant area of accounting focus for the company.
| 36. FINANCIAL RISK MANAGEMENT OBJECTIVES (IND AS 107):
The Company's principal financial liabilities, other than derivatives, comprises of borrowings, lease, trade and other payables. The main purpose
of these financial liabilities is to finance the company's operations. The company's principal financial assets, other than derivatives include trade
and other receivables, deposit with banks, investments and cash and cash equivalents that derive directly from its operations.
The Company's activities expose it to market risk, liquidity risk and credit risk. Company's overall risk management focuses on the unpredictability
of financial markets and seeks to minimise potential adverse effects on the financial performance of the company. The company uses derivative
financial instruments, such as foreign exchange forward contracts, to hedge foreign currency risk exposure. Derivatives are used exclusively for
hedging purposes and not as trading or speculative instruments.
The Company has standard operating procedures and investment policy for deployment of surplus liquidity, which allows investment in inter
corporate deposits, fixed deposits, debt securities and mutual fund schemes of debt and debt like categories and restricts the exposure in equity
markets.
Compliances of these policies and principles are reviewed by internal auditors on periodical basis.
The Corporate Treasury team updates the Audit Committee on a quarterly basis to about the implementation of the above policies. It also updates
to the Internal Risk Management Committee of the Company on periodical basis about the various risk to the business and status of various
activities planned to mitigate the risk.
A. Market Risk 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,
commodity prices, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all
market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and borrowings.
1) Foreign Currency Risk:
Foreign currency risk is the risk of impact related to fair value or future cash flows of an exposure in foreign currency, which fluctuate due to
changes in foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to import of
raw materials and spare parts, capital expenditure and exports.
When a derivative is entered for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms
of the hedged exposure.
Note: If the rate is decreased by 100 bps profit will increase by an equal amount.
I nterest rate sensitivity has been calculated assuming the borrowings outstanding at the reporting date have been outstanding for the
entire reporting period.
3) Commodity price risk
Commodity price risk for the Company is mainly related to fluctuations of raw materials prices linked to various external factors, which can
affect the production cost of the Company. Company actively manages inventory and in many cases sale prices are linked to major raw
material prices. Energy costs is also one of the primary costs' drivers, any fluctuation in fuel prices can lead to drop in operating margin.
To manage this risk, the Company enters into long-term supply agreement for power, identifying new sources of supply etc. Additionally,
processes and policies related to such risks are reviewed and managed by senior management on continuous basis.
B. Credit Risk Management:
Credit risk arises when a customer or counterparty does not meet its obligations under a financial instrument or customer contract, leading
to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing/
investing activities, including deposits with banks, mutual fund investments, and investments in debt securities, foreign exchange
transactions and financial guarantees. The Company has two major customers which represents 80% receivables as on 31stMarch, 2025
(77% receivables as on 31stMarch, 2024) and company is receiving payments from these parties within due dates. Hence, the company
has no significant credit risk related to these parties.
Credit Risk on cash and cash equivalent, deposits with the banks/financial institutions, debt securities is generally low as the said deposits
have been made with the banks/financial institutions who have been assigned high credit rating by international and domestic rating
agencies.
Credit Risk on Derivative Instruments are generally low as Company enters into the Derivative Contracts with the reputed Banks and
Financial Institutions.
Investments of surplus funds are made only with approved Financial Institutions/ Counterparty. Investments primarily include investment in
units of mutual funds and high investment grade corporates. These Mutual Funds and Counterparties have low credit risk.
Total Non-current and current investments as on 31stMarch, 2025 is ' 41,289 Lacs (31st March,2024 - ' 34,480 Lacs).
C. Liquidity Risk Management:
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. Prudent
liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate
amount of credit facilities to meet obligations when due. The Company's treasury team is responsible for liquidity, funding as well as
settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management
monitors the Company's liquidity position through rolling forecasts based on expected cash flows.
The table below provides details regarding the remaining contractual maturities of financial liabilities and investments at the reporting date
based on contractual undiscounted payments.
| 36(B) FAIR VALUE MEASUREMENTS (IND AS 113):
The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction
between willing parties, other than in a forced or liquidation sale.
The Company has established the following fair value hierarchy that categorizes the values into 3 levels. The inputs to valuation techniques used to
measure fair value of financial instruments are:
Level 1: This hierarchy uses quoted (unadjusted) prices in active markets for identical assets or liabilities. The fair value of all bonds which are traded in
the stock exchanges is valued using the closing price or dealer quotations as at the reporting date.
Level 2: The fair value of financial instruments that are not traded in an active market (For example traded bonds, over the counter derivatives) is
determined using valuation techniques which maximize the use of observable market data and rely as little as possible on company specific estimates.
The mutual fund units are valued using the closing Net Asset Value. If all significant inputs required to fair value an instrument are observable, the
instrument is included in Level 2.
The management assessed that fair value of cash and bank balances, trade receivables, trade payables, cash credits and other financial assets and
liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The following methods and assumptions were used to estimate the fair values:
(a) The fair values of the quoted investments/units of mutual fund schemes are based on market price/net asset value at the reporting date.
(b) The fair values of unquoted investments are based on net asset value at the reporting date.
(c) The fair value of forward foreign exchange contracts is calculated as the present value determined using forward exchange rates and interest rate
curve of the respective currencies.
(d) The fair value of the remaining financial instruments is determined using discounted cash flow analysis or based on the contractual terms. The
discount rates used is based on management estimates.
137. SEGMENT REPORTING (IND AS 108):
The Company is exclusively engaged in the business of synthetic yarn related products primarily in India. As per Ind AS 108 “Operating Segments",
specified under Section 133 of the Companies Act, 2013, there are no reportable operating or geographical segments applicable to the Company.
b) Defined Benefit Plans - Gratuity and Provident Fund
Gratuity:
Inherent Risk - The plan is defined benefit in nature which is sponsored by the Company and hence it underwrites all the risks pertaining to the
plan. In particular, this exposes the Company to actuarial risk such as adverse salary growth, change in demographic experience, inadequate
return on underlying plan assets. This may result in an increase in cost of providing these benefits to employees in future. Since the benefits are
lump sum in nature, the plan is not subject to any longevity risks.
xiii) The estimates of future salary increases considered in actuarial valuation takes into account inflation, seniority, promotion and
other relevant factors.
xiv) Asset liability matching strategy:
The money contributed by the Company to Gratuity Fund has to be invested. The trustee have outsourced management of investment to an
Insurance Company. The Insurance Company in turn manage these funds as per mandate provided by the trustees and the asset allocation
which is with in permissible limits prescribed in insurance regulations. Due to restrictions in type of investments that can be held by the fund it is
not possible to explicitly follow asset liability matching strategy. There is no compulsion on the part of company to fully prefund liability of the plan.
The Company fund these benefit based on known liability and Level of underfunding of the plan.
Provident Fund:
The Company makes contribution towards Provident fund for certain eligible employees to the trust, set up and administered by the Company,
in line with the Provident Fund and Miscellaneous Provisions Act, 1952. The plan guarantees interest at the rate notified by the Provident Fund
Authorities. The contribution by the employer and employee together with the interest accumulated thereon are payable to employees at the
time of their separation from the company or retirement, whichever is earlier. The benefits vest immediately on rendering of the services by the
employee. The rules of the trust provides that if the board of trustees are unable to pay interest at the rate declared by the government under Para
60 of the Employees provident fund scheme, 1972 for the reason that the return on investment is less or for any other reason, then the deficiency
shall be made good by the Company making interest shortfall a defined benefit plan. Accordingly, the Company has obtained actuarial valuation
and based on the below provided assumptions there is no deficiency as at the balance sheet date. Hence, the liability is restricted towards
monthly contributions only.
redetermine quantum of duty short paid, imposition of equal amount of penalty on redetermined amount of duty demand and applicable interest.
The Commissioner, CGST & Central Excise, Raigad has re-determined assessable value pursuant to order of CESTAT and confirmed the demand
amounting to '730 lacs (as against above demand of '22,927 lacs), interest at appropriate rate on the duty and equal amount of penalty vide its
order dated 8th September, 2020. Against the said order of the Commissioner, CGST & Central Excise, Raigad, Department has filed an appeal
before the Appellate Tribunal.
The Company's appeal in the matter is pending before the hon'ble Supreme Court of India. The Company has deposited the amount of duty of
'730 Lacs under protest. The Company has been advised by legal experts that it has a fair chance of ultimately succeeding in the matter and
accordingly no provision is required to be made in the accounts.
(c) Foreseeable Losses: The Company has a process whereby periodically all long term contracts are assessed for material foreseeable losses. At
the year end, the Company has reviewed and ensured that adequate provision as required under any law/ applicable accounting standards for
material foreseeable losses on such long term contracts has been made in the books of account.
(d) Pending litigations: The Company has reviewed its pending litigations and proceedings and has adequately provided for where provisions are
required and disclosed the contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these
proceedings to have a materially adverse effect on its financial statements.
| 46 CAPITAL AND OTHER COMMITMENTS:
(a) Estimated amount of contracts remaining to be executed on capital account, not provided for (net of advances) as on 31st March, 2025 is ' 1,044
Lacs. (31st March, 2024 - ' 830 Lacs).
(b) Other Commitments: The Company has non-cancellable agreements with Gas Utilities Company for purchase of LNG. Under this agreement,
the Company is committed to purchase certain annual minimum quantity of LNG failing which it will pay the seller for any shortfall in offtake of
LNG based on an agreed formula. The cost of the minimum committed quantity as at 31st March, 2025 for the remaining period of the contract at
current market prices approximates ' 5,051 Lacs (Previous Year ' 7,193 Lacs). Based on the current projection Company does not expect shortfall
in offtake of minimum committed quantity and therefore no material foreseeable losses are expected.
On February 26, 2025, a fire incident occurred at the NFY Spinning Plant No.1 located at the Bharuch Unit. The damage to plant, equipment, and
inventory is adequately covered under an existing insurance policy, and the claim process has been initiated.
This is the Balance Sheet referred to in our report of even date. For and on behalf of the Board of Directors
For KKC & Associates LLP
(formerly Khimji Kunverji & Co LLP) Krupa R. Gandhi Suresh Sodani
Chartered Accountants Director Managing Director
(FRN 105146W/W100621) DIN: 00294629 DIN: 08789604
Kamlesh R Jagetia Yogesh R Shah Rahul Dubey
Partner Chief Financial Officer Vice President - Legal &
Membership No. 139585 Company Secretary
Place : Chittorgarh, Rajasthan Place : Mumbai
Date : 6th May 2025 Date : 6th May 2025
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