Accounting Policies of Active Clothing Co Ltd. Company

Mar 31, 2025

1. GENERAL INFORMATION

Active Clothing Co. Limited ( the Company ) is a Public Company, which
was incorporated under the provisions of the Companies Act, 1956 on
27.02.2002 and has its registered office at E-225, PHASE-VIII-B, MOHALI. The
Company is engaged in manufacturing and trade of apparels. The
Company is listed on Bombay Stock Exchange.

The financial statements were approved for issue in accordance with a
resolution of the directors on May 30, 2025.

2. SIGNIFICANT ACCOUNTING POLICES, SIGNIFICANT ACCOUNTING

JUDGEMENTS, ESTIMATES AND ASSUMPTIONS AND APPLICABILITY OF NEW AND
REVISED IND AS

2.1 Statement of Compliance

These financial statements have been prepared on a going concern basis
following the accrual basis of accounting in accordance with the Generally
accepted Accounting Principles (GAAP) in India (Indian Accounting
Standards referred to as “IndAS”) as specified under the section 133 of the
Companies Act, 2013 read with Rule 3 of Companies (Indian Accounting
Standard) Rules, 2015 and relevant amendments rules issued thereafter.

These financial statements are the Company’s first Ind AS financial
statements and are covered by Ind AS 101, First time adoption of Indian
Accounting Standards (Ind AS 101). The transition to Ind AS has been
carried out from the accounting principles generally accepted in India
(“Indian GAAP”) which is considered as the “Previous GAAP” for the purpose
of Ind AS 101. Under previous GAAP financial statements were prepared in

accordance with the Accounting Standards notified under section 133 of
the Act read together with paragraph 7 of the Companies (Accounts) Rules
2014 (“Indian GAAP”) and other relevant provisions of the Act as applicable.

2.2. Basis of preparation and presentation

The financial statements have been prepared on the historical cost basis
except for certain financial instruments that are measured at fair value at
the end of each reporting period, as explained in the accounting policies
below. Historical cost is generally based on the fair value of the
consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date, regardless of whether that price is directly
observable or estimated using another valuation technique. Preparation of
the standalone financial statements requires the use of certain critical
accounting judgments, estimates and assumptions. It also requires the
management to exercise judgment in the process of applying the
Company’s accounting policies. The areas involving a higher degree of
judgment of complexity, or areas where assumptions and estimates are
significant to the standalone financial statements.

The financial statements are presented in Indian Rupees in Lacs, the national
currency of India which the Company has selected as its functional
currency.

CASH FLOW STATEMENT

Cash flow statement is prepared segregating the cash flows from operating,
investing and financing activities. Cash Flow from operating activities is
reported using indirect method as set out in Indian Accounting Standard
(INDAS)-7 “Statement of Cash Flows”.

a) Transactions of a non -cash nature

b) Any deferrals or accruals of past or future operating cash receipts or
payment and

Items of income or expense associated with investing or financing cash
flows

Cash and cash equivalents comprise cash at bank and in hand and
demand deposits with banks and are reflected as such in the cash flow
statement. Cash equivalents are short term balances ( with an original
maturity of three months or less from the date of acquisition ), highly liquid
investments that are readily convertible into known amounts of cash and
which are subject to insignificant risk of changes in value.

2.3 Property, Plant and equipments (PPE)

Land and buildings held for use in the production or supply of goods or
services, or for administrative purposes, are stated in the balance sheet at
cost less accumulated depreciation and accumulated impairment losses.
Land is not depreciated.

The Cost of an item of Property, plant and equipment comprises:

a. Its purchase price including import duties and non-refundable
purchase taxes after deducting trade discount and rebates.

b. Any attributable expenditure directly attributable for bringing an asset
to the location and the working condition for its intended use and

c. the initial estimate of the costs of dismantling and removing the item
and restoring the site on which it is located, the obligation for which an
entity incurs either when the item is acquired or as a consequence of
having used the item during a particular period for purpose other than
to produce inventories during that period.

The Company has elected to continue with the carrying value of all its PPE
recognized as on April 1, 2015 measured as per the previous GAAP and
use that carrying value as its deemed cost as on transition date.

Depreciation is provided on Written down value Method on the basis of
useful lives of such assets specified in Schedule-ll to the Companies Act,
2013.

The estimated useful life of the assets have been assessed based on
technical advice, taking into account the nature of the asset, the
estimated usage of the asset, the operating conditions of the asset, past
history of replacement, anticipated technological changes,
manufactures warranties and maintenance support etc and are as under:
Building 30-60 Years

Plant & equipment 15 Years

Furniture and Fixtures & Office Equipment 10 Years

Vehicles 8Years

Computer and Others 3-5 Years

Advances paid towards the acquisition of property, plant and equipment
outstanding at each balance sheet date is classified as capital advances
under other non-current assets and the cost of assets not put to use
before such date are disclosed under ‘Capital work-in-progress’.
Subsequent expenditures relating to property, plant and equipment is
capitalized only when it is probable that future economic benefits
associated with these will flow to the Company and the cost of the item
can be measured reliably. Repairs and maintenance costs are
recognized in net profit in the statement of profit and loss when incurred.
The cost and related accumulated depreciation are eliminated from the
financial statements upon sale or retirement of the asset and the resultant
gains or losses are recognized in the statement of profit & loss. Assets to be
disposed off are reported at the lower of the carrying value or the fair
value less cost to sell.

Depreciation is recognized so as to write off the cost of assets (other than
freehold land and properties under construction ) less their residual values
over their useful lives, using the Written down value method. The
estimated useful lives, residual value and depreciation method are
reviewed at the end of each reporting period, with the effect of any
changes in estimate for on a prospective basis.

For items produced during testing/ trail phase, clarification added that
revenue generated out of the same shall not be recognized in Statement
of Profit and Loss and considered as part of cost of PPE in line with
amended Ind AS 16.

2.4. Intangible assets

There are no intangible assets.

Current and non-current Classification

Ind AS requires that an entity shall present current and non-current assets,
and current and non-current liabilities, as separate classification in its balance
sheet.

Any asset or liability is classified as current of it satisfies any of the following
conditions:

a) it is expected to be realized or settled or is intended for sale or
consumption in the Company’s normal operating cycle which is
ascertained by the Company as 12 month;

b) It is expected to be realized or settled within twelve months from the
reporting date.

c) In the case of an asset.

• it is held primarily for the purpose of providing services; or

• it is cash equivalent unless it is restricted from being exchange or used;
to settle a liability for at least twelve months after the reporting date;

d) in the case of a liability, the company does not have an unconditional
right to defer settlement of liability for at least twelve month from the
reporting date.

All other assets and liabilities are classified as non-current.

2.5 Financial Instruments

Financial assets include cash and cash equivalents, trade receivables,
employees and other advances and eligible current and non current
assets.

Subsequent to initial recognition, financial assets are measured as
described below:

Trade Receivables

Trade receivables that do not contain a significant financing component
are initially recognized at transaction price. They are subsequently
measured at amortised cost less any Impairment losses. Due to their short
term maturity, the carrying amount approximate fair value.

2.6 Other Financial Assets

Other financial assets, cash and cash equivalents and other assets. They
are presented and current assets, expect for those maturing later that 12
months after the reporting date which are presented as non current
assets.

2.7 Inventories

Inventories are valued at cost or net realizable value, whichever is lower.
The cost in respect of the various items of inventory is computed as under:

In case of raw material at cost plus direct expenses. The cost includes cost
of purchase and other costs incurred in bringing the inventories to their
present location and condition.

In case of stores and spares at cost plus direct expenses. The cost
includes cost of purchase and other costs incurred in bringing the
inventories to their present location and condition.

In case of work in progress at raw material cost plus conversion costs
depending upon the stage of completion.

In case of finished goods at raw material cost plus conversion costs,
packing cost, non recoverable indirect taxes ( if applicable) and other
overheads incurred to bring the goods to their present location and
condition.

In case of by-products at estimated realizable value.

Net realizable value is the estimated selling price in ordinary course of
business, less estimated costs of completion and the estimated costs
necessary to make the sale.

Financial Liabilities

Financial liabilities include long and short term borrowings, bank
overdrafts, trade payables, eligible current and non current liabilities.

Trade Payable

Trade Payable, which consist of Trade Creditors, other current liabilities
and borrowings are recognized initially at fair value.

Cash & Cash Equivalents

Cash & Cash equivalents comprise of cash on hand , cash at banks, short
term deposits and short term, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.

2.7. Borrowing Costs

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

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

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Mar 31, 2024

2. SIGNIFICANT ACCOUNTING POLICES, SIGNIFICANT ACCOUNTING

JUDGEMENTS, ESTIMATES AND ASSUMPTIONS AND APPLICABILITY OF NEW AND REVISED IND AS

2.1 Statement of Compliance

These financial statements have been prepared on a going concern basis following the accrual basis of accounting in accordance with the Generally accepted Accounting Principles (GAAP) in India (Indian Accounting Standards referred to as “IndAS”) as specified under the section 133 of the Companies Act, 2013 read with Rule 3 of Companies (Indian Accounting Standard) Rules, 2015 and relevant amendments rules issued thereafter.

These financial statements are the Company''s first Ind AS financial statements and are covered by Ind AS 101, First time adoption of Indian Accounting Standards (Ind AS 101). The transition 1o Ind AS has been carried out from the accounting principles generally accepted in India ("Indian GAAP") which is considered as the "Previous GAAP” for the purpose of Ind AS 101. Under previous GAAP financial statements were prepared in accordance with the Accounting Standards notified under section 133 of the Act read together with paragraph 7 of the Companies (Accounts) Rules 2014 (“Indian GAAP”) and other relevant provisions of the Act as applicable.

2.2. Basis of preparation and presentation

The financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair value at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. Preparation of the standalone financial statements requires the use of certain critical accounting judgments, estimates and assumptions. It also requires the management to exercise judgment in the process of applying the Company''s accounting policies. The areas involving a higher degree of judgment of complexity, or areas where assumptions and estimates are significant to the standalone financial statements.

The financial statements are presented in Indian Rupees in Lacs, the national currency of India which the Company has selected as its functional currency.

CASH FLOW STATEMENT

Cash flow statement is prepared segregating the cash flows from operating, investing and financing activities. Cash Row from operating activities is reported using indirect method as set out in Indian Accounting Standard (INDAS)-7 "Statement of Cash Flows”.

a) Transactions of a non -cash nature

b) Any deferrals or accruals of past or future operating cash receipts or payment and

Items of income or expense associated with investing or financing cash flows

Cash and cash equivalents comprise cash at bank and in hand and demand deposits with banks and are reflected as such in the cash flow statement. Cash equivalents are short term balances ( with an original maturity of three months or less from the date of acquisition ), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

2.3 Property, Plant and equipments (PPE)

Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses. Land is not depreciated.

The Cost of an item of Property, plant and equipment comprises:

a. Its purchase price including import duties and non-refundable purchase taxes after deducting trade discount and rebates.

b. Any attributable expenditure directly attributable for bringing an asset to the location and the working condition for its intended use and

c. the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period for purpose other than to produce inventories during that period.

The Company has elected to continue with the carrying value of all its PPE recognized as on April 1, 2015 measured as per the previous GAAP and use that carrying value as its deemed cost as on transition date.

Depreciation is provided on Written down value Method on the basis of useful lives of such assets specified in Schedule-ll fo the Companies Act, 2013.

The estimated useful life of the assets have been assessed based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufactures warranties and maintenance support etc and are as under: Building 30-60 Y ears

Plant & eguipment 15 Years

Furniture and Fixtures & Office Equipment 10 Years

Vehicles 8Years

Computer and Others 3-5 Years

Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other non-current assets and the cost of assets not put to use before such date are disclosed under Capital work-in-progress''. Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. Repairs and maintenance costs are recognized in net profit in the statement of profit and loss when incurred. The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset and the resultant gains or losses are recognized in the statement of profit & loss. Assets to be disposed off are reported at the lower of the carrying value or the fair value less cost to sell.

Depreciation is recognized so as to write off the cost of assets (other than freehold land and properties under construction ) less their residual values over their useful lives, using the Written down value method. The estimated useful lives, residual value and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate for on a prospective basis.

For items produced during testing/ trail phase, clarification added that revenue generated out of the same shall not be recognized in Statement of Profit and Loss and considered as part of cost of PPE in line with amended Ind AS16.

2.4. Intangible assets

There are no intangible assets.

Current and non-current Classification

Ind AS requires that an entity shall present current and non-current assets, and current and non-curTent liabilities, as separate classification in its balance sheet.

Any asset or liability is classified as current of it satisfies any of the following conditions:

a) it is expected to be realized or settled or is intended for sale or consumption in the Company''s normal operating cycle which is ascertained by the Company as 12 month;

b) It is expected to be realized or settled within twelve months from the reporting date.

c) In the case of an asset.

• it is held primarily for the purpose of providing services; or

• it is cash equivalent unless it is restricted from being exchange or used; to settle a liability for at least twelve months after the reporting date;

d) in the case of a liability, the company does not have an unconditional right to defer settlement of liability for at least twelve month from the reporting date.

All other assets and liabilities are classified as non-current.

2.5 Financial Instruments

Financial assets include cash and cash equivalents, trade receivables, employees and other advances and eligible current and non current assets.

Subsequent to initial recognition, financial assets are measured as described below:

Trade Receivables

Trade receivables that do not contain a significant financing component are initially recognized at transaction price. They are subsequently measured at amortised cost less any Impairment losses. Due to their short term maturity, the carrying amount approximate fair value.

2.6 Other Financial Assets

Other financial assets, cash and cash equivalents and other assets. They are presented and current assets, expect for those maturing later that 12 months after the reporting date which are presented as non current assets.

2.7 Inventories

Inventories are valued at cost or net realizable value, whichever is lower. The cost in respect of the various items of inventory is computed as under:

In case of raw material at cost plus direct expenses. The cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.

In case of stores and spares at cost plus direct expenses. The cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.

In case of work in progress at raw material cost plus conversion costs depending upon the stage of completion.

In case of finished goods at raw material cost plus conversion costs, packing cost, non recoverable indirect taxes ( if applicable) and other overheads incurred to bring the goods to their present location and condition.

In case of by-products at estimated realizable value.

Net realizable value is the estimated selling price in ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Financial Liabilities

Financial liabilities include long and short term borrowings, bank overdrafts, trade payables, eligible current and non current liabilities.

Trade Payable

Trade Payable, which consist of trade Creditors, other current liabilities and borrowings are recognized initially at fair value.

Cash & Cash Equivalents

Cash & Cash equivalents comprise of cash on hand , cash at banks, short term deposits and short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

2.7. Borrowing Costs

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

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

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Mar 31, 2018

1. SIGNIFICANT ACCOUNTING POLICIES

A) BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The Financial Statements are prepared in accordance with Indian Accounting Standards(IND AS) notified under section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, 2015; and other relevant provisions of the Act and Rules thereunder. The financial statements are prepared under historical cost convention basis, except for the certain assets and liabilities measured at fair Value.

All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in the Revised Schedule III to the Companies Act, 2013. Based on the nature of services and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current/ non-current classification of its assets and liabilities.

B) USE OF JUDGEMENT AND ESTIMATES

Financial statements are in conformity with the generally accepted accounting principles, which require estimates and assumptions to be made that affect the reported amount of assets and liabilities as on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results materialize.

C) REVENUE RECOGNITION

i) Sales are accounted for at the time of issuance of bill/invoices to the customers.

Ii Revenue in respect of the export incentives is recognized on post export basis.

D) EMPLOYEES’ BENEFIT

Short term employee benefits

All employee benefits payable/available within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages, bonus, etc. are recognized in the statement of profit and loss in the period in which the employee renders the related service.

Post-employment benefits

Defined contribution plan Provident fund

The company makes specified contribution towards employee provident fund to Employees Provident Fund administered by the Regional Provident Commissioner. The Company’s contribution to provident fund, being a defined contribution plan, is recognized in the statement of profit and loss in the financial year to which it relates Defined benefit Gratuity Plan

The company has not provided for in the books of accounts as required by IAS-19 issued by the Institute of Chartered Accountants of India.

E) PROPERTY, PLANTS AND EQUIPMENTS

Fixed Assets are carried at cost of acquisition less accumulated depreciation. Costs include all expenses incurred to bring the asset to its present location and condition.

F) DEPRECIATION AND AMORTISATION

Pursuant to the notification of Schedule II of the Companies Act, 2013, by the Ministry of Corporate Affairs effective 01 April 2014, the management has reassessed and changed, wherever necessary the useful lives to compute depreciation, to conform to the requirements of the Companies Act, 2013. Depreciation on fixed assets for year ended 31 March 2018 is provided on written down value method as per the rates prescribed under Schedule II of the Companies Act, 2013.

G) BORROWING COST

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalized till the date on which each assets is put to use as part of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which they are incurred.

H) FOREIGN EXCHANGE TRANSACTIONS

Foreign currency transactions are recorded at the exchange rates prevailing at the date of transaction. Exchange differences arising on settlement of transactions are recognized as income or expense in the year in which they arise.

I) Provision and Contingent Liabilities :

i) Provision is recognized (for liabilities that can be measured by using a substantial degree of estimation) when :

a) the Company has a present obligation as a result of a past event ;

b) a probable outflow of resources embodying economic benefits is expected to settle the obligation ; and

c) the amount of the obligation can be reliably estimated

ii) Contingent liability is disclosed in case there is :

a) (i) possible obligation that arises from past events and 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 enterprise ; or

(ii) a reliable estimate of the amount of the obligation cannot be made.

b) a present obligation arising from past events but is not recognized

i) when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation ; or

(ii) a reliable estimate of the amount of the obligation cannot be made.

J) INVENTORIES

Raw Material , Work in Progress, Store & Spares, Finished Goods are valued at lower of cost or market value ( net releasable value ). Costs includes direct material and labor costs and proportion of manufacturing over heads.

K) GOVERNMENT GRANTS AND SUBSIDIES:

a) Government grants and subsidies are recognized as and when the same are received.

b) Capital Government Grants or Subsidies relating to specific fixed assets are deducted from the gross value of the respective fixed assets and other capital grants are credited to Capital Reserve.

c) Other Government Grants or Subsidies relating to an expense item are deducted from related expenses.

L) ACCOUNTING FOR TAXES ON INCOME

Provision for taxation has been duly made under the Income Tax Act, 1961.

Deferred tax is recognized for all timing differences. Deferred tax assets are carried forward to the extent it is reasonably / virtually certain that future taxable profit will be available against which such deferred tax assets can be realized. Deferred tax assets are reviewed at each balance sheet date and written down/written up to reflect the amount that is reasonably/virtually certain (as the case may be) to be realized.

Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted at the balance sheet date.