Notes to Accounts of Astron Paper & Board Mill Ltd.

Mar 31, 2025

* Nature of Security

A Primary Security & Collateral

- Secured by Exclusive Charge on Plant & Machinery situated at Plot No. 64/1, Village: Chubadak, Taluka: Bhuj, Dist: Kutchh.

B Collateral Security

a Secured by Equitable Mortgage of Factory Land & Building situated at R.S. No. 52/1-2, 53/1-2, Village Sukhpar, Tal.: Halvad, Dist.:Surendranagar.

b Secured by Equitable Mortgage of Office Premises at D-702, Ganesh Meridian, S.G. Road, Ahmedabad.

c Secured by Equitable Mortgage of Plot of Land at Survey No. 55, Village Sukhpar, Taluka Halvad, District: Surendranagar.

d Secured by Equitable Mortgage of Plot of Land at Survey No. 54, Village Sukhpar, Taluka Halvad, District: Surendranagar.

e Factory Land Situated at Survey No. 49/1 & 50 Village Sukhpar, Tah.: Halvad, Dist.: Morbi.

f Plant & Machineries (Unit II), Village Sukhpar, Tal: Halvad, Dist: Surendranagar.

g Secured by Equitable Mortgage of Office Premises at D-704, Ganesh Meridian, S.G. Road, Ahmedabad.

h Secured by Factory Land situated at Survey No. 51-1, 51-2 & 51-3, 49-2 Village Sukhpar, Tal.: Halvad, Dist.:Surendranagar.

i Secured by Land & Building situtated at Survey No. 64/1, Village: Chubdak, Bhuj.

Common Collateral Security for all of the Credit Facilities Including Working Capital Facilities ** Entire Term Loans secured by personal guarantees of the following persons/parties.

- Directors

Mr. Kiritbhai G. Patel Mr. Ramakant K. Patel Mr. Karshanbhai H. Patel

* * *

Term Loan from UBI of Rs. 9.00 Crores (For Bhuj Plant) to be repaid by 20 Quarterly Instalment of Rs. 45 Lacs and Instalment to Commence from 31/10/2018.

* Nature of Security A Primary Security

Working Capital secured by way of First Pari Passu charge on all the current assets of the company including raw material, stock-inprocess, finished goods, stores & spares, receivables, packing materials, Book Debts, Stock Procured under LC & Book Debts raised thereto and other current assets both present and future (For Halvad Unit I, Unit II and Bhuj Unit).

B Collateral Security

Common Collateral Security for all of the Credit Facilities Including Term Loans:

a Secured by Equitable Mortgage of Factory Land & Building situated at R.S. No. 52/1-2, 53/1-2, Village Sukhpar, Tal.: Halvad, Dist.:Surendranagar.

b Secured by Equitable Mortgage of Office Premises at D-702, Ganesh Meridian, S.G. Road, Ahmedabad.

c Secured by Equitable Mortgage of Plot of Land at Survey No. 55, Village Sukhpar, Taluka Halvad, District: Surendranagar.

d Secured by Equitable Mortgage of Plot of Land at Survey No. 54, Village Sukhpar, Taluka Halvad, District: Surendranagar.

e Factory Land Situated at Survey No. 49/1 & 50 Village Sukhpar, Tah.: Halvad, Dist.: Morbi.

f Plant & Machineries (Unit II), Village Sukhpar, Tal: Halvad, Dist: Surendranagar.

g Secured by Equitable Mortgage of Office Premises at D-704, Ganesh Meridian, S.G. Road, Ahmedabad.

h Secured by Factory Land situated at Survey No. 51-1, 51-2 & 51-3, 49-2 Village Sukhpar, Tal.: Halvad, Dist.:Surendranagar.

i Secured by Land & Building situtated at Survey No. 64/1, Village: Chubdak, Bhuj.

** Outstanding balances of working capital secured by personal guarantees of the following:

- Directors

Mr. Kiritbhai G. Patel Mr. Ramakant K. Patel Mr. Karshanbhai H. Patel

*** For Default in payment/repayment of loans refer to Note No. 17 **** Working capital loans repayable on demand.

$ The Company had been sanctioned working capital limits from banks in earlier years on the basis of security of current assets. As the loan accounts have been declared NPA by banks, the company has not filed monthly and quarterly statements and returns with bank since August-2024.

Note: Changes in Liabilities have been disclosed in the statement of cash flow as financing activities.

NOTE NO. 31 : CONTINGENET LIABILITIES
				[Amount '' In Lakhs]
SR. NO.	P A R T I C U L A R S	AS AT 31st MARCH, 2024		AS AT 31st MARCH, 2019
I.	Bank Guarantee to PGVCL As Security Deposit for Electricity Supply		332.17		332.17
II.	Corporate Guarantee to Canara Bank, Mehsana for Working Capital Loan and Term Loan Availed by Subsidiary Company Balaram Papers Private Limited		1,495.00		1,495.00
III.	Excise/Service Tax Liability-Audit Objection-RCM Liability on Ocean Freight -Office of the Commissioner of Central Goods and Service Tax, Audit Commissionerate, Rajkot dated 30.01.2019		30.59		30.59
IV.	Income Tax Liabilities on account of Income Tax Assessement Order dated 30/12/2022 under section 143(3) for A.Y. 2021-22 passed by Deputy Commissioner of Income, Central Circle 1(1), Ahmedabad in respect of which the Company has preferred an appeal before CIT-(A) [Demand Amount Included in Order Passed Under Section 147 dated 24/03/20245]				36.15
V.	Income Tax Liabilities on account of Income Tax Assessement Order dated 30/03/2024 under section 143(3) for A.Y. 2022-23 passed by Deputy Commissioner of Income, Central Circle 1(1), Ahmedabad in respect of which the Company has preferred an appeal before CIT-(A) [As per Notice Under Section 156 Without Any Interest as the Income Tax Department may have levied]		5,177.21		5,177.21
	[Rs. 38,81,09,281/- Added to Total Income on Protective Basis]
VI.	Income Tax Liabilities on account of Income Tax Assessement Order dated 24/03/2025 under section 147 for A.Y. 2020-21 passed by Deputy Commissioner of Income, Central Circle 1(1), Ahmedabad in [As per Notice Under Section 156 Without Any Interest as the Income Tax Department may have levied]		772.86
VII.	Income Tax Liabilities on account of Income Tax Assessement Order dated 24/03/2025 under section 147 for A.Y. 2021-22 passed by Deputy Commissioner of Income, Central Circle 1(1), Ahmedabad in respect of which the Company has preferred an appeal before CIT-(A) [As per Notice Under Section 156 Without Any Interest as the Income Tax Department may have levied]		6,528.77
	TOTAL...............		14,336.60		7,071.12

c) Debtors of Sale of Goods

The company has initiated legal proceedings/taken actions for recovery against the doubtful debtors amounting to Rs. 58.26/-(Previous Year Rs. 58.26/-). In respect of debts of Rs. 58.26/-, though the company has initiated legal proceedings/taken actions for the recovery, the company had made provision for doubtful debts against that in the books of account pending outcome of the litigation in respect of each of the debtor.

d) Disputed Government Liabilities:

1. Disputed Income2 Tax Liabilities for A.Y. 2021-22: (Refer Note No. 31(IV)

In pursuance of various notices, the assessment proceedings for A.Y. 2021-22 relevant to financial year 2020-21 were completed by the office of Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad on 30/12/2022 by passing an assessment order under section 143(3) of the Income Tax Act, 1961. Vide assessment order dated 30/12/2022 under section 143(3), the Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad made an addition of Rs. 84.40/- to taxable income for A.Y. 2021-22 on account of demurrage, detention and other related charges incurred by the company in respect of import of raw materials treating the same as being penal in nature as per section 37(1) of the Income Tax Act, 1961 and raised demand of Rs. 36.15/-.

The charges were in the nature of storage/container facilities availed by the company beyond the time allowed to lift the materials from the port pending clearance of documents/compliance of procedure on account of various factors like late receipt of documents from the suppliers, late release of shipment etc. and were paid to various shipping line companies/agencies for availing their facilities. The charges incurred not being in the nature of penalty within the meaning of section 37(1) and hence the additions of Rs. 84.40/- have been considered by the company as inappropriate based on legal advice and has preferred an appeal before Commissioner of Income Tax-(Appeal). The matter was pending for adjudication before Commissioner of Income Tax-(Appeal) as on the date of approval of financial statements by the Board of Directors.

Considering the nature of expenses incurred, provisions of section 37(1) of the Income Tax Act, 1961 and the legal advice, it is more likely that the addition so made by the Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad will be reversed and hence no provision has been made for such liability in the books of account for the financial year 2024-25. However, such the same has been disclosed as contingent liabilities in notes to the accounts (Refer Note No. 31(IV).

Since, the assessment proceedings for A.Y. 2021-22 were subject to re-assessment under section 147, the demand amounts as above raised vide order under section 143(3) have been included in demand raised under section 156 vide order under section 147 dated 24th March, 2025. [Refer to Para 4 below]

2. Disputed Income Tax Liabilities for A.Y. 2022-23: (Refer Note No. 31(V)

The Income Tax Authorities had carried out search operations from 26th May, 2022 to 29th May, 2022 at the registered office of the company and had seized certain documents relating to the company during the course of search. The post-search proceedings were carried out during the preceding as well as current financial years and the company has complied with notices and instructions from the Income Tax Department as issued from time to time. In pursuance of various notices, the assessment proceedings for A.Y. 2022-23 relevant to financial year 2021-22 were completed by the office of Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad on 31/03/2024 by passing an assessment order under section 143(3) of the Income Tax Act, 1961. Vide assessment order dated 31/03/2024 under section 143(3), the Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad made an addition of Rs. 5,321.92/- to taxable income for AY. 2022-23 on account of various grounds and raised demand of Rs. 5,177.21/- vide notice issued under section 156 of the Income Tax Act, 1961.

The additions to income have been made without consideration of facts and submissions made and hence the additions of Rs. 5,321.92/- have been considered by the company as inappropriate based on legal advice and has preferred an appeal before Commissioner of Income Tax-(Appeal). The matter was pending for adjudication before Commissioner of Income Tax-(Appeal) as on the date of approval of financial statements by the Board of Directors.

Considering the nature of additions made and the legal advice, it is more likely that the addition so made by the Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad will be reversed and hence no provision has been made for such liability in the books of account for the financial year 2024-25. However, such the same has been disclosed as contingent liabilities in notes to the accounts (Refer Note No. 31(V).

3. Income Tax Liabilities for A.Y. 2020-21: (Refer Note No. 31(VI)

The Income Tax Authorities had carried out search operations from 26th May, 2022 to 29th May, 2022 at the registered office of the company and had seized certain documents relating to the company during the course of search. The post-search proceedings were carried out during the current financial year and the company has complied with notices and instructions from the Income Tax Department as issued from time to time. In pursuance of various notices, the assessment proceedings for A.Y. 2020-21 relevant to financial year 2019-20 were completed by the office of Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad on 24/03/2025 by passing an assessment order under section 147 of the Income Tax Act, 1961. Vide assessment order dated 24/03/2025

under section 147, the Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad made an addition of Rs. 1,179.90/- to taxable income for A.Y. 2020-21 on account of various grounds and raised demand of Rs. 772.86/- vide notice issued under section 156 of the Income Tax Act, 1961.

The additions to income have been made without consideration of facts and submissions made and hence the additions of Rs. 1,179.90/- have been considered by the company as inappropriate based on legal advice and has taken actions to prefer an appeal before Commissioner of Income Tax-(Appeal).

Considering the nature of additions made and the legal advice, it is more likely that the addition so made by the Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad will be reversed and hence no provision has been made for such liability in the books of account for the financial year 2024-25. However, such the same has been disclosed as contingent liabilities in notes to the accounts (Refer Note No. 31(VI).

4. Disputed Income Tax Liabilities for A.Y. 2021-22: (Refer Note No. 31(VII)

The Income Tax Authorities had carried out search operations from 26th May, 2022 to 29th May, 2022 at the registered office of the company and had seized certain documents relating to the company during the course of search. The post-search proceedings were carried out during the current financial year and the company has complied with notices and instructions from the Income Tax Department as issued from time to time. In pursuance of various notices, the assessment proceedings for A.Y. 2021-22 relevant to financial year 2020-21 were completed by the office of Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad on 24/03/2025 by passing an assessment order under section 147 of the Income Tax Act, 1961. Vide assessment order dated 24/03/2025 under section 147, the Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad made an addition of Rs. 5,595.71/- to taxable income for A.Y. 2020-21 on account of various grounds in addition of disallowance of Rs. 84.40/- already made vide order passed under section 143(3) and raised demand of Rs. 6,528.77/- vide notice issued under section 156 of the Income Tax Act, 1961.

The additions to income have been made without consideration of facts and submissions made and hence the additions of Rs. 5,595.71/- have been considered by the company as inappropriate based on legal advice and has preferred an appeal before Commissioner of Income Tax-(Appeal).

Considering the nature of additions made and the legal advice, it is more likely that the addition so made by the Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad will be reversed and hence no provision has been made for such liability in the books of account for the financial year 2024-25. However, such the same has been disclosed as contingent liabilities in notes to the accounts (Refer Note No. 31(VI) & 31(IV).

5. RCM Liability on Ocean Freight: (Refer Note No. 31(III)

In the course of audit by the Office of the Commissioner of Central Goods and Service Tax, Audit Commissionerate, Rajkot dated 30th January, 2019, it had raised audit objections regarding non-payment of RCM on Ocean Freight amounting to Rs. 30.59/- and requested the company to provide suitable explanations/clarifications in case of disagreement by the company. The company did not concur with the audit objections raised by the office of Commissioner of Central Goods and Service Tax, Audit Commissionerate, Rajkot since the similar matter in cases of other parties were going on for adjudication at the jurisdictional Hon’ble High Court of Gujarat. However, upto the date of authorization of Standalone Financial Statements for issue by the Board of Directors i.e. 29th May, 2025, the company has paid Rs. 30.59/- under protest. There has been no further proceeding in the matter subsequent to the date of initial report upto the date of authorization of Financial Statements for issue by the Board of Directors i.e. 29th May, 2025.

e) Defined Contribution Benefit Plans-Gratuity:

Due to suspension of operations at plants and closure of business operations during the year, most of the employees have either been relieved or discontinued their services to the company and hence no provision has been made towards gratuity liabilities for the year.

f) Financial Instruments and Related Disclosures: (Refer to Note No. 32,33 & 34)

Financial Risk Management:

The company activities are exposed various financial risks: credit risk, liquidity risk and foreign exchange fluctuation risk. The Company’s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance.

I. Credit Risk:

Trade Receivables:

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss to the Company. The maximum exposure to the credit risk as at the reporting date is primarily from trade receivables. Trade receivables are unsecured and are derived from revenue earned from customers from sale of goods. Trade receivables generally are impaired after three years when recoverability is considered doubtful based on general trend. The Company considers that trade receivables stated in the financial statements are not impaired and past due for each reporting dates under review are of good credit quality subject to outcome of the litigations where the company has initiated legal proceedings for recovery.

Other Financial Assets:

Credit risk relating to cash and cash equivalents is considered negligible since the counterparties are banks which are majorly owned by Government of India and have oversight of Reserve Bank of India. The Company considers the credit quality of term deposits with banks to be good and the company reviews these banking relationships on an ongoing basis.

The Company considers all other financial assets as at the financial statement dates to be of good credit quality.

II. Liquidity Risk:

The company’s principal sources of liquidity are from Short Term Bank Borrowings, Cash and Cash Equivalents and Cash generated from operations.

The Short- term liquidity requirements consist mainly of Trade Payables, Expense Payables, Employee Dues, Servicing of Interest on Short -Term and Long -Term Borrowings and payment of instalments of term loans and vehicle loans and other payments arising during the normal course of business.

III. Foreign Exchange Rate Risk:

The Company undertakes transactions denominated in foreign currency mainly for purchase of raw materials and sale of goods which are subject to the risk of exchange rate fluctuations. Financial assets and liabilities denominated in foreign currency are also subject to reinstatement risks. Hedging is regularly carried out to mitigate the risks of exchange rate fluctuations.

i) In the opinion of the Board of Directors, Current Assets & Loans and Advances have a value on realisation in the ordinary course of business equal to the amount at which they are stated in the balance sheet. In the opinion of the Board of Directors, claims receivable against property/goods are realizable as per the terms of the agreement and/or other applicable relevant factors and have been stated in the financial statements at the value which is most probably expected to be realized.

j) The company has obtained balance confirmation from some of the parties for Trade Payables, Trade Receivables and parties to whom loans/advance have been granted. All other balances of debtors and creditors and loans and advances are subject to confirmation and subsequent reconciliation, if any.

k) Expenses in foreign currency:

Expenses in foreign currency:

CIF Value of Imports:

Raw Materials '' 5,499.96/- (Previous Year '' 15,225.16/-)

Foreign Travelling:

'' NIL/- (Previous Year '' NIL /-)

Income in Foreign Currency:

FOB Value of Exports:

'' 213.45/- (Previous Year '' 219.67/-)

m) Income Tax Search Proceedings:

The Income Tax Authorities had carried out search operations from 26th May, 2022 to 29th May, 2022 at the registered office of the company and had seized certain documents relating to the company during the course of search. The post-search proceedings were carried out during the current financial year as well as in the preceding financial year and the company has complied with notices and instructions from the Income Tax Department as issued from time to time. Subsequent to search operations, the Income Tax Department issued notices for assessment for the Assessment Years 2023-24, 2020-21 and 2021-22 under section 147. The assessment in case of AY. 2022-23 was completed by the Income Tax Department by the end of preceding financial year raising demand of Rs. 51,77,20,750 vide notice issued under section 156 [of Rs. addition of Rs. 3,881.09 made on protective basis] by making various adjustments and additions to the income for A.Y. 2022-23. Further to above, the re-assessment proceedings for AY. 2023-24, 2020-21 and 2021-22 have also been completed vide order passed under section 147 dated 24th March, 2025 by making various additions and raising demand as per note number 31(VI) & 31(VII). Further to above, the Income Tax Department has also issued notices under section 148 for A.Y. 2016-17 & 201819 upto the end of the current financial years. The proceedings in these matters were pending for re-assessment before the Income Tax Department upto the approval of financial statements for the financial year 2024-25 by the Board of Directors.

The income tax department has also issued notices for penalty proceedings in respect of assessment/re-assessment years for which orders have been passed. The proceedings in these matters were also pending before the Income Tax Department upto the approval of Standalone financial statements for the financial year 2024-25 by the Board of Directors as the company has preferred appeals against the orders.

The company had legal consultation in this regard and based on the legal advices from various experts in the matter, the management of the company has decided to challenge the assessments being unreasonable and without any basis and therefore preferred appeals before the Commissioner of Income Tax, [Appeals] being the appropriate appellate authority upto the date of approval Standalone financial statement by the Board of Directors i.e. 29th May, 2025.

Considering the legal opinions with regard to the demand for A.Y. 2022-23, 2020-21 and 2021-22 no provisions have been made for such liabilities in the books of account but disclosed as contingent liabilities in the standalone financial statements. As no liabilities have been determined by the Income Tax Department for A.Y. 2020-21 and 2021-22 since the assessment proceedings were in process, the liability of any nature has not been envisaged by the management of the company. Based on the legal consultations and the documents seized and proceedings carried out during the course of search as well as post search proceedings, in the opinion of the management of the company it is more likely that the company may not be required to incur any liability towards income tax on completion of the applicable income tax proceedings for A.Y. 2020-21 and A.Y. 2021-22 and hence no provision of income tax liability could either be determined or made or disclosed.

The previous financial year ratios have been restated considering the effects of prior period errors and omission applied as per Ind-AS-8. @ Substantial operational losses incurred during the year, reduction in value of inventories due to revaluation, delay in payment to suppliers and statutory liabilities due to liquidity and plant shutdown during the year resulted into lower current ratio compared to the preceding financial year.

# Substantial operational losses resulted into erosion of net-worth of the company. Further due to closure of plants, the company could not honour its liabilities towards banks. These factors had negative impact on debt equity ratio of the company for the year.

$ Substantial operational losses coupled with inability of the company to discharge its liabilities towards banks resulted into debt service ratio of the company being substantially lower than the previous financial year and being negative.

a Substantial operational losses and consequent substantial reduction in average capital employed in the business resulted into substantial negative return on equity of the company.

& Closure of plants and subsequent non-resumption of manufacturing upto the closure of financial year resulted into lower inventory turnover ratio compared to the preceding financial year.

* Substantial Reduction in turnover on account of closure of plants, non-resumption of business and substantial outstanding balance of trade receivables vis-a-vis operating turnover had negative impact on trade receivable turnover ratio.

! Substantial operational losses, closure of plants, non-availability of liquid sources of funds and subsequent inability of the company to discharge its liabilities towards trade payables resulted into trade payable ratio being lower than preceding financial year.

!! Substantial operational losses, closure of plants and erosion of capital employed in the business adversely affected net capital turnover ratio.

@@ Continuous losses in the business over the last three financial years impacted the liquidity of the company adversely which resulted into closure of business during the year. Further due to non-utilisation of inventories of raw materials, coal and chemicals for the substantial period of time the quality of the same deteriorated and hence they had to be revalued at their respective realizable values. In addition to this though the plants remained non-operational for the substantial period of time during the year, the company had incurred some costs being fixed in nature and also finance cost increased due to additional levies by banks for accounts becoming NPA. These factors had impacted the profitability substantially and resulted into substantial losses for the year.

## Substantial losses over the past three years and resultant reduction in net-worth coupled with inability of the company to discharge liabilities towards bank borrowings resulted into substantial negative return on capital employed for the year.

* Investments includes Investment in Securities, Balance in Fixed Deposit Accounts with Bank, Investment Properties only.

Income On Investment includes Interest on Bank Fixed Deposits, Rental Income on Investment Property and Gain/(Loss) on Investment Held or Sold.

o) Subsidy Income:

The company had made an application for grant of subsidy to Industrial Commissionerate, Gandhinagar for grant of subsidy under the Scheme for Incentive to Industries in the form of reimbursement of Net VAT-Gujarat/Net GST-Gujarat based on gross investments in property, plant & equipment (referred to as Fixed Assets) and subject of compliance of the conditions as specified for eligibility of the grant of subsidy in the financial year 2021-22. The company had been issued Provisional Eligibility Certificates under Scheme for Incentive to Industries by the Industrial Commissionerate, Gandhinagar during the financial year 2021-22. Based on the consideration of such Provisional Eligibility Certificates and on the basis of consideration of compliance of terms and conditions of grant of subsidy and possibility of further compliance as may be required, the company had accounted an amount of Rs. 825.25/- as subsidy income for the financial year 2021-22 as an operational income and had classified the same as income from operations in the standalone financial statements.

The company has realized subsidy amount of Rs. 263.56 during the current financial year and the balance amount of Rs. 561.69/- was pending to be recovered as at the end of the current financial year on account of ongoing procedural compliances. Based on the legal consultation it is expected that the company may realize stage-wise or in instalments or period-wise subsidy amount in the coming year(s) of the balance amount and hence the balance of subsidy of Rs. 561.69/- has been carried as Current Financial Assets as Claims Receivable in the Financial Statements.

p) Impairment Losses:

On periodical basis and as and when required, the Company reviews the carrying amount of its assets vis-a-vis net realisable value of respective asset or group of assets. In the Financial Year 2023-24, the Company has reviewed the carrying amount of its assets and observed that there is no indication that those assets or group of assets have expected net realisable value below the carrying amount resulting into any impairment loss. On account of expected realisable value of asset or group of assets not being lower than their respective carrying values as at the end of the financial year no such impairment loss has been provided.

Though the wholly owned subsidiary of the company i.e. Balaram Papers Private Limited has incurred losses over the years and has not carried out any operational activities during the financial year 2023-24, the management of the company has assessed the carrying value of its investment in subsidiary and estimated that in all likely possibilities it is expected that realizable value of its investment either through operations by subsidiary and in case if required to be disposed off will not be lower than the carrying value and hence the investment in subsidiary has been carried at cost of acquisition without any provision for impairment if any. The management will continue to assess the realizable value of its investment in the subsidiary if any event occurs which indicates that the realizable value of investment in the subsidiary will not higher than the carrying value then the company will provide for impairment losses.

Though the company had to suspend business operations and discontinue to operate plants, the management expects the assets other than investment in subsidiary and loans to subsidiary to be used on availability of liquidity of funds and does not intend either to discontinue the business use of such assets or intends to sell the assets within one year from the end of the current financial year and hence no assets have been recognised as held for sale as at the end of the current financial year. The management expects to use such assets in the business operations and it is estimated that in all likely possibilities it is expected that realizable value of all other assets either through resumption of business operations and in case if required to be disposed off will not be lower than the carrying value and all other assets have been carried at cost of acquisition without any provision for impairment if any.

q) Relationship with Struck off Companies:

The company did not have any transaction with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956, during the current year and in the previous year.

r) Borrowings From Banks:

The company has availed working capital and other loans from various banks for an amount as outstanding as reported in the standalone financial statements (Refer to Note No. 17 & 19) against the security of its assets including current assets. As a part of terms of sanction with various banks, the company is required to submit various monthly, quarterly and periodical statements including stock statements and statement of various assets charged for availing loans including working capital loans. Due to substantial business losses and nonavailability of liquidity, the company could not discharge its liabilities towards bank borrowings and hence subsequently the bank loan accounts from all banks have been declared as NPA and no drawing power was available against the outstanding bank loan accounts as at March 31, 2025.

The management of the company has been making all efforts to resume the production and business operations so as to regularize bank accounts and discharge its liabilities as are due or become due.

s) Shut-Down of Plants and Preparation and Presentation of Standalone Financial Statements on Going Concern Basis:

The company has shut down its plants at Halved since 8th of September, 2024 and has not resumed the production since the closure upto the date of approval the standalone financial statements for the current financial year i.e. 29th May, 2025. The other plant of the company at Bhuj has also been non-operational.

Though the company has been facing financial stress and has defaulted in payment to creditors including bank creditors in the financial year 2024-25, the management of the company has been taking all appropriate measures to maintain plant & machineries, operating PPE and operating production facilities so as to commence the normal course of production and business on availability of sufficient sources of funds. Considering the past market presence of the company, operational activities carried out by the company over the years, profits generated in the past, profitable nature of the business, operational capacities available, management efforts to revive the plant operations & business and management experience in the line of business, the management of the company expects to resume normal course of production and business and for that actively making all efforts including efforts to arrange for sources of funds. On resumption of the plant operations & business, the management of the company expects to discharge all of its liabilities towards bank, suppliers and other creditors and continue to operate for foreseeable future.

As the management of the company expects to resume plant operations & business in the coming financial year that is financial year 2025-26, the company has operated plants and continued normal business operations upto 8th September, 2024, expects to discharge all of its liabilities towards bank, suppliers and other creditors, expects to continue to operate the normal course of business and management assessment to derive revenue from continued use of operational capacities and not liquidate them in the foreseeable future, the standalone financial statements for the financial year 2024-25 have been prepared assuming company’s status as going concern.

t) Import of Raw Materials:

The company has been using more than 80.00% of its raw materials i.e. waste paper from imports over the years since the commencement of production. The plants of the company at Halvad were operating upto 8th September, 2024. Before the operations at plants at Halvad were shut down, the company had placed orders for import of raw materials i.e. waste papers from various suppliers. To secure import purchases and negotiate better terms for import and as per prevailing standards on import of goods, the company has been following the system of making advance payment through the bank facilities in the form of Letter of Credit (LC)/Buyer’s Credit (BC) to import suppliers. Accordingly, as the operations of the company were going on the company had made advance payments to suppliers of imported raw materials pending receipt of goods. However, in the meantime, the company had to close down its operational activities due to non-availability of liquid sources of funds on account of continuous business losses. As result of this the company could not make further payment to import suppliers if any pending as well to the all service providers as involved in the entire cycle of import of goods including shipping lines and hence the company could not lift materials from the port. The management of the company made all possible efforts to revive the operational activities and to make payment to suppliers so that imported raw materials could be lifted from the port. However, the position of the company deteriorated further over the period of time and all bank accounts of the company then were declared as NPA by banks effective from December-2024. Because of the factors stated above, the company could not lift raw materials from the ports for extended period of time and hence the company had been issued notices for auction of raw materials. However, for reasons of non-availability of sufficient manpower and sources of funds the company could not respond to such notices. The management of the company made possible efforts to get the details of materials sold through auction from various sources including shipping lines. However, due to non-payment of outstanding dues and other factors affecting the business of the company, the company could not get appropriate documentary evidence with regard to materials lying at port at 31st March, 2025 as well as goods disposed of through auction and in absence of documentary evidence, the company could not account for purchase of imported goods

and liabilities thereagainst, inventory held at port, sale of goods through auction and give appropriate accounting treatment to amounts paid as custom duty against such import and amounts paid to import suppliers. Accordingly, the company continued to carry amounts paid to import suppliers and custom duties paid as amount recoverable in the books of account as at 31st March, 2025. On availability of appropriate documentary evidences, appropriate treatment of above matters will be given in the books of account.

u) Inventory Write-Down:

Due to shut down of the plants and non-utilisation of raw materials and other items and also holding of inventory including finished goods as such over the period from 8th September, 2024 upto 31st December, 2024, the management of the company considered it appropriate to physically verify the materials as lying at factories with a view to determine realizable values or values in use of various items of inventories including raw materials, packing materials, coal, finished goods, stock-in-process and also stores items. Accordingly, physical verification of inventories was carried out at Halvad Plant by technical persons and it was reported to the management that:

i. The quality of raw materials of various grades i.e. waste paper has been degraded such that it will give low yields and low strength due to water mixing in paper fiber, moisture, fungal growth, environmental effects and other factors relating to storage and natural effects.

ii. The quality of various items of chemical deteriorated due to self-life and other factors affecting the chemical composition of respective items.

iii. The packing material quality deteriorated due to damage to material on account of non-use and time factor.

iv. The quality of coal deteriorated due to moisture, non-use and natural effects.

However, considering the effects of assessment as already given to the valuation of inventories in December-2024 and on further assessment of quality as at 31st March, 2025 for the financial year ended 31st March, 2025 no further write down was deemed appropriate by the management in respect of various items of inventories.

The standalone financial statements for the year ended includes the above effect of inventories write-down off Rs. 973.64 under the respective heads of expenses

v) The Standalone Financial Statements were authorised for issue by the Board of Directors on 29th May, 2025.

x) The previous year’s figures have been reworked, regrouped and reclassified wherever necessary so as to make them comparable with those of the current year.

The Standalone Financial Statements have been presented in Indian Rupee (?) in Lakhs rounded off to two decimal points as per amendment to Schedule III to the Companies Act, 2013.

The figures wherever shown in bracket represent deductions.

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Mar 31, 2024

m) Provisions, Contingent Liabilities and Contingent Assets

The Company recognises a provision when it has a present obligation as a result of a past event that probably requires an outflow of the Company''s resources embodying economic benefits at the time of settlement and a reliable estimate can be made of the amount of the obligation. The provisions are measured at the best estimate of the amounts required to settle the present obligation as at the financial statement date and are not discounted to its present value.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only on the occurrence or nonoccurrence of one or more future uncertain events not wholly or substantially 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 the obligation or a reliable estimate of the amount cannot be made.

When demand notices are issued by the Government Authorities and demand is disputed by the company and it is probable that the company will not be required to settle/pay such demands then these are classified as disputed obligations under contingent liabilities.

Contingent Assets, if any, are not recognised in the financial statements. If it becomes certain that inflow of economic benefit will arise then such asset and the relative income are recognised in financial statements.

n) Current/Non-Current Classifications:

The Company presents assets and liabilities in the balance sheet on the basis of their classifications into current and non-current. "

Assets:

An asset is treated as current when it is:

• Expected to be realised or intended to be sold or consumed in normal operating cycle

• Held primarily for the purpose of trading

• Expected to be realised within twelve months after the reporting period

• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

Liabilities:

A liability is treated as current when it is:

• Expected to be settled in normal operating cycle

• Held primarily for the purpose of trading

• Due to be settled within twelve months after the reporting period

• No unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

All other liabilities are classified as non-current.

o) Financial Instruments, Financial Assets, Financial Liabilities and Equity Instruments The financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the relevant instrument and are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities measured at fair value through profit or loss) are added to or deducted from the fair value on initial recognition of financial assets or financial liabilities.

A. Financial Assets:

Initial Recognition:

Financial Assets include Investments, Trade Receivables, Security Deposits, Cash and Cash Equivalents and eligible current and non-current assets. The financial assets are initially recognized at the transaction price when the Company becomes party to contractual obligations. The transaction price includes transaction costs unless the asset is being value at fair value through the Statement of Profit and Loss. Subsequent Measurement:

The subsequent measurement of financial assets depends upon the initial classification of financial assets. For the purpose of subsequent measurement, financial assets are classified as under:

I. Financial Assets At Amortized Cost where the financial assets are held solely for collection of cash flows and contractual terms of the assets give rise on specified dates to cash flows that are solely payments of principal and interest on principal amount outstanding.

ii. Fair value through other comprehensive income (FVTOCI), where the financial assets are held not only for realization of principal and interest but also from the sale of such assets. Such assets are subsequently measured at fair value, with unrealised gains and losses arising from changes in the fair value being recognised in other comprehensive income.

III. Fair value through profit or loss (FVTPL), where the assets are managed in accordance with an approved investment strategy that triggers purchase and sale decisions based on the fair value of such assets. Such assets are subsequently measured at fair value, with unrealised gains and losses arising from changes in the fair value being recognised in the Statement of Profit and Loss in the period in which they arise.

Trade Receivables, Security Deposits, Cash and Cash Equivalents, Investments in Equity where reliable data for fair value is not available and eligible current and noncurrent assets are classified for measurement at amortized cost.

Investments in equity instruments are classified for measurement at FVTPL. Impairment:

If the recoverable amount of an asset (or cash-generating unit/Fixed Assets) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount if any, in which case the impairment loss is treated as a revaluation decrease.

Financial assets, other than those at Fair Value through Profit and Loss (FVTPL), are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

The company recognises impairment loss on trade receivables using expected credit loss model.

B. Financial Liabilities:

Financial liabilities, which include long and short-term loans and borrowings, trade payables, eligible current and non-current liabilities. The borrowings, trade payables and other financial liabilities are initially recognised at the value of the respective

contractual obligations. They are subsequently measured at amortised cost. Financial liabilities are derecognised when the liability is extinguished, that is, when the contractual obligation is discharged, cancelled and on expiry of the terms.

p) Fair Value Measurement:

The Company measures financial instruments, such as, derivatives at fair value at each financial statement date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• In the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability

• The principal or the most advantageous market must be accessible by the

Company. _

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a nonfinancial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

q) Cash and Cash Equivalents-For the Purpose of Cash Flow Statements:

Cash and cash equivalent in the balance sheet comprise cash at banks and in hand and short-term deposits with an original maturity of three months or less or deposits with bank held as margin money against the import of goods or as security against the supply of goods, which are subject to an insignificant risk of changes in value.

r) Operating Cycle:

Based on the activities of the company and normal time between incurring of liabilities and their settlement in cash or cash equivalents and acquisition/right to assets and their realization in cash or cash equivalents, the company has considered its operating cycle as 12 months for the purpose of classification of its liabilities and assets as current and non-current.

s) Prior Period Errors:

Prior period errors are in the form of omission of certain items in the financial statements of prior periods which were not available when the financial statements were approved for issue and which could reasonably be expected to have been obtained and taken into account in the preparation and presentation of financial statement of prior period.

The Prior period errors have been corrected retrospectively by restating the respective amounts of the prior period presented in which the error occurred. If the errors have occurred before the earliest prior period presented, the errors have been corrected by restating the opening balances of assets, liabilities and equity of the earliest prior period presented.

t) Events Subsequent to Financial Statements Period:

Events after the reporting period are those events, both favourable and unfavourable that have occurred between the end of the reported financial statements year and the date when financial statements are approved for issue by the Board of Directors of the company.

Events after the reporting period can be identified as those that provide evidence of conditions that existed as at the end of the financial year i.e. adjusting events after the financial year end and those are indicative of conditions that arose after the financial year end i.e. non-adjusting events after the financial year end.

The company adjusts the amounts of assets, liabilities, incomes and expenses recognised in the financial statements of the reporting period to reflect the effects of adjusting events to the respective assets, liabilities, incomes and expenses of the reporting period.

The non-adjusting events are not recognised in the financial statement of the reporting period but the nature of event and an estimate of its financial effect are disclosed in the notes of accounts.

u) Government Grants:

Government grants are recognised in the period where it is determined that there is reasonable assurance that the grant will be received and all attached conditions relating to grant will be complied with.

The revenue grant relating to or arising from business operations is recognised as operating income in the Statement of Profit and Loss of the period in which is determined that it is reasonably certain that grant will be received and all attached conditions relating to grant will be complied with.

v) Earnings Per Share:

The Company presents basic and diluted earnings per share details for its ordinary shares. Basic earning per share is calculated by dividing the net profit after tax for the year attributable to the ordinary shareholders of the company by weighted number of ordinary shares outstanding for applicable period during the year.

Diluted earning per share is calculated considering the effect of dilution if any to ordinary share during the year.

w) Expected Credit Loss:

The measurement of expected credit loss on financial assets is based on the evaluation of collectability and the management’s judgement regarding recoverability.

A considerable amount of judgement is required in assessing the ultimate realization of the trade receivables having regard to the past collection history of each party, ongoing dealings with the parties, and assessment of their ability to pay the debts.

x) Materiality

The Management of the company uses judgement in deciding whether individual items or groups of items are material in the financial statements. Materiality is judged by reference to the nature or magnitude or both of the items. The deciding factor is whether omitting or misstating or obscuring an information could individually or in combination with other related information influence decisions that primary users make on the basis of the financial statements. Management also uses judgement of materiality for determining the compliance requirement of the Ind AS. Further, the company may also be required to present separately immaterial items when required by law.

• Nature of Security

A Primary Security & Collateral

• Secured by Exclusive Charge on Plant & Machinery situated at Plot No. 64/1, Village: Chubadak, Taluka: Bhuj, Dist: Kutchh.

B Collateral Security

a Secured by Equitable Mortgage of Factory Land & Building situated at R.S. No. 52/1-2, 53/1-2, Village Sukhpar, Tal: Halvad, Dist.:Su b Secured by Equitable Mortgage of Office Premises at D-702, Ganesh Meridian, S.G. Road, Ahmedabad. c Secured by Equitable Mortgage of Plot of Land at Survey No. 55, Village Sukhpar, Taluka Halvad, District: Su rend ran agar, d! Secured by Equitable Mortgage of Plot of Land at Survey No. 54, Village Sukhpar, Taluka Halvad, District: Surendranagar. e Factory Land Situated at Survey No. 49/1 & 50 Village Sukhpar, Tah.: Halvad, Dist.: Morbi. f Plant & Machineries (Unit III, Village Sukhpar, TaL Halvad, Dist: Surendranagar. g Secured by Equitable Mortgage of Office Premises at D-704, Ganesh Meridian, S.G. Road, Ahmedabad. h Secured by Factory Land situated at Survey No. 51-1,51-2 & 51-3,49-2 Village Sukhpar, Tal.: Halvad, Dist.:Surendranagar. i Secured by Land & Building situtated at Survey No. 64/1, Village: Chubdak, Bhuj.

Common Collateral Security for all of the Credit Facilities Including Working Capital Facilities ** Entire Term Loans secured by personal guarantees of the following persons/parties.

- Directors

Mr. Kintbhai G. Patel Mr. Ramakant K. Patel Mr. Karshanbhai H. Patel

• ••

Term Loan from UBl of Rs. 9.00 Crores (For Bhuj Plant) to be repaid by 20 Quarterly Instalment of Rs. 45 Lacs and Instalment to Commence from 31/10/2018.

Note: Changes in Liabilities have been disclosed in the statement of cash flow as financing activities.

d) Disputed Government Liabilities:

1. Disputed Income Tax Liabilities for A.Y. 2021-22: (Refer Note No. 32(IV)

In pursuance of various notices, the assessment proceedings for A.Y. 2021-22 relevant to financial year 2020-21 were completed by the office of Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad on 30/12/2022 by passing an assessment order under section 143(3) of the Income Tax Act, 1961. Vide assessment order dated 30/12/2022 under section 143(3), the Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad made an addition of Rs. 84.40/- Lakh to taxable income for A.Y. 2021-22 on account of demurrage, detention and other related charges incurred by the company in respect of import of raw materials treating the same as being penal in nature as per section 37(1) of the Income Tax Act, 1961 and raised demand of Rs. 36.15/- Lakh.

The charges were in the nature of storage/container facilities availed by the company beyond the time allowed to lift the materials from the port pending clearance of documents/compliance of procedure on account of various factors like late receipt of documents from the suppliers, late release of shipment etc. and were paid to various shipping line companies/agencies for availing their facilities. The charges incurred not being in the nature of penalty within the meaning of section 37(1) and hence the additions of Rs. 84.40/- Lakh have been considered by the company as inappropriate based on legal advice and has preferred an appeal before Commissioner of Income Tax-(Appeal), National Faceless Appellate Centre. The matter was pending for adjudication before Commissioner

of Income Tax-(Appeal) as on the date of approval of financial statements by the Board of Directors.

Considering the nature of expenses incurred, provisions of section 37(1) of the Income Tax Act, 1961 and the legal advice, it is more likely that the addition so made by the Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad will be reversed and hence no provision has been made for such liability in the books of account for the financial year 2022-23. However, such the same has been disclosed as contingent liabilities in notes to the accounts (Refer Note No. 32(IV).

2. Disputed Income Tax Liabilities for A.Y. 2022-23: (Refer Note No. 32(V)

The Income Tax Authorities had carried out search operations from 26^th May, 2022 to 29^th May, 2022 at the registered office of the company and had seized certain documents relating to the company during the course of search. The post-search proceedings were carried out during the current financial year and the company has complied with notices and instructions from the Income Tax Department as issued from time to time. In pursuance of various notices, the assessment proceedings for A.Y. 2022-23 relevant to financial year 2021-22 were completed by the office of Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad on 31/03/2024 by passing an assessment order under section 143(3) of the Income Tax Act, 1961. Vide assessment order dated 31/03/2024 under section 143(3), the Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad made an addition of Rs. 5,321.92/- Lakh to taxable income for A.Y. 2022-23 on account of various grounds and raised demand of Rs. 5,177.21/- Lakh vide notice issued under section 156 of the Income Tax Act, 1961.

The additions to income have been made without consideration of facts and submissions made and hence the additions of Rs. 5,321.92/- Lakh have been considered by the company as inappropriate based on legal advice and has preferred an appeal before Commissioner of Income Tax-(Appeal), National Faceless Appellate Centre. The matter was pending for adjudication before Commissioner of Income Tax-(Appeal) as on the date of approval of financial statements by the Board of Directors.

Considering the nature of additions made and the legal advice, it is more likely that the addition so made by the Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad will be reversed and hence no provision has been made for such liability in the books of account for the financial year 2023-24. However, such the same has been disclosed as contingent liabilities in notes to the accounts (Refer Note No. 32(V).

3. RCM Liability on Ocean Freight: (Refer Note No. 32(MI)

In the course of audit by the Office of the Commissioner of Central Goods and Service Tax, Audit Commissionerate, Rajkot dated 30^th January, 2019, it had raised audit objections regarding non-payment of RCM on Ocean Freight amounting to Rs. 30.59/- Lakh and requested the company to provide suitable explanations/clarifications in case of disagreement by the company. The company did not concur with the audit objections raised by the office of Commissioner of Central Goods and Service Tax, Audit Commissionerate, Rajkot since the similar matter in cases of other parties were going on for adjudication at the jurisdictional Hon’ble High Court of Gujarat. However, upto the date of authorization of Financial Statements for issue by the Board of Directors i.e. 29^th May, 2024, the company has paid Rs. 30.59/- Lakh under protest. There has been no further proceeding in the matter subsequent to the date of initial report upto the date of

authorization of Financial Statements for issue by the Board of Directors i e 29^th May 2024

f) Financial Instruments and Related Disclosures: (Refer to Note No. 33,34 & 35) Financial Risk Management:

The company activities are exposed various financial risks: credit risk, liquidity risk and foreign exchange fluctuation risk. The Company’s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance.

I. Credit Risk:

Trade Receivables:

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss to the Company. The maximum exposure to the credit risk as at the reporting date is primarily from trade receivables. Trade receivables are unsecured and are derived from revenue earned from customers from sale of goods. Trade receivables generally are impaired after three years when recoverability is considered doubtful based on general trend. The Company considers that trade receivables stated in the financial statements are not impaired and past due for each reporting dates under review are of good credit quality subject to outcome of the litigations where the company has initiated legal proceedings for recovery.

Other Financial Assets:

Credit risk relating to cash and cash equivalents is considered negligible since the counterparties are banks which are majorly owned by Government of India and have

oversight of Reserve Bank of India. The Company considers the credit quality of term deposits with banks to be good and the company reviews these banking relationships on an ongoing basis.

The Company considers all other financial assets as at the financial statement dates to be of good credit quality.

II. Liquidity Risk:

The company’s principal sources of liquidity are from Short Term Bank Borrowings, Cash and Cash Equivalents and Cash generated from operations.

The Short- term liquidity requirements consist mainly of Trade Payables, Expense Payables, Employee Dues, Servicing of Interest on Short -Term and Long -Term Borrowings and payment of instalments of term loans and vehicle loans and other payments arising during the normal course of business.

III. Foreign Exchange Rate Risk:

The Company undertakes transactions denominated in foreign currency mainly for purchase of raw materials and sale of goods which are subject to the risk of exchange rate fluctuations. Financial assets and liabilities denominated in foreign currency are also subject to reinstatement risks. Hedging is regularly carried out to mitigate the risks of exchange rate fluctuations to the extent considered feasible.

! Better net working capital management in the form of inventory holding, realization from trade receivables and proper utilization of short-term borrowings, trade payables and other current liabilities have positive impact on net capital turnover ratio compared to the last year.

$ Though the company continued to incur losses in the current year but due to continuous efforts to better manage resources and reduction in cost of raw materials and some of the cost of production resulted into losses being substantially lower than previous year having positive impact on Net Profit Ratio and Return on Capital

Employed Ratio.

*

Investments includes Investment in Securities, Balance in Fixed Deposit Accounts with Bank, Investment Properties only.

Income On Investment includes Interest on Bank Fixed Deposits, Rental Income on Investment Property and Gain/(Loss) on Investment Held or Sold.

o) Subsidy Income:

The company had made an application for grant of subsidy to Industrial Commissionerate, Gandhinagar for grant of subsidy under the Scheme for Incentive to Industries in the form of reimbursement of Net VAT-Gujarat/Net GST-Gujarat based on gross investments in property, plant & equipment (referred to as Fixed Assets) and subject of compliance of the conditions as specified for eligibility of the grant of subsidy in the financial year 2021-22. The company had been issued Provisional Eligibility Certificates under Scheme for Incentive to Industries by the Industrial Commissionerate, Gandhinagar during the financial year 2021-22. Based on the consideration of such Provisional Eligibility Certificates and on the basis of consideration of compliance of terms and conditions of grant of subsidy and possibility of further compliance as may be required, the company had accounted an amount of Rs. 825.25/- Lakh as subsidy income for the financial year 2021-22 as an operational income and had classified the same as income from operations in the financial statements.

The company has not realized any amount out of the subsidy income of Rs. 825.25/-Lakh during the current financial year on account of ongoing procedural compliances. Based on the legal consultation it is expected that the company may realize stage-wise or in instalments or period-wise subsidy amount in the coming year(s) and hence the

balance of subsidy of Rs. 825.25/-Lakh has been carried as Current Financial Assets as Claims Receivable in the Financial Statements.

p) Impairment Losses:

On periodical basis and as and when required, the Company reviews the carrying amount of its assets vis-a-vis net realisable value of respective asset or group of assets. In the Financial Year 2023-24, the Company has reviewed the carrying amount of its assets and observed that there is no indication that those assets or group of assets have expected net realisable value below the carrying amount resulting into any impairment loss. On account of expected realisable value of asset or group of assets not being lower than their respective carrying values as at the end of the financial year no such impairment loss has been provided.

Though the wholly owned subsidiary of the company i.e. Balaram Papers Private Limited has incurred losses over the years and has not carried out any operational activities during the financial year 2023-24, the management of the company has assessed the carrying value of its investment in subsidiary and estimated that in all likely possibilities it is expected that realizable value of its investment either through operations by subsidiary and in case if required to be disposed off will not be lower than the realizable value and hence the investment in subsidiary has been carried at cost of acquisition without any provision for impairment if any. The management will continue to assess the realizable value of its investment in the subsidiary if any event occurs which indicates that the realizable value of investment in the subsidiary will not higher than the carrying value then the company will provide for impairment losses.

q) Relationship with Struck off Companies:

The company did not have any transaction with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956, during the current year and in the previous year. "

r) The Financial Statements were authorised for issue by the Board of Directors on 29^th May, 2024.

s) The previous year’s figures have been reworked, regrouped and reclassified wherever necessary so as to make them comparable with those of the current year.

The Financial Statements have been presented in Indian Rupee ('') in Lakhs rounded off to two decimal points as per amendment to Schedule III to the Companies Act, 2013. The figures wherever shown in bracket represent deductions.

SIGNATURES TO NOTES T TO ''36''

FOR, M/S. ASTRON PAPER & BOARD MILL LIMITED FOR, SNDK & ASSOCIATES,

CHARTERED ACCOUNTANTS, FIRM REG. NO.: W100060

KIRIT PATEL RAMAKANT PATEL

(CHAIRMAN & MANAGING (DIRECTOR)

DIRECTOR)

KISHAN R. KANANI PARTNER M. NO. 192347

ROHIT PATEL H I N A R. PATEL PLACE: AHMEDABAD

(C F O ) ( CO M PANY SECRETARY) DATE: 29^th MAY, 2024

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Mar 31, 2023

m) Provisions, Contingent Liabilities and Contingent Assets

The Company recognises a provision when it has a present obligation as a result of a past event that probably requires an outflow of the Company’s resources embodying economic benefits at the time of settlement and a reliable estimate can be made of the amount of the obligation. The provisions are measured at the best estimate of the amounts required to settle the present obligation as at the financial statement date and are not discounted to

its present value.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only on the occurrence or nonoccurrence of one or more future uncertain events not wholly or substantially 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 the obligation or a reliable estimate of the amount cannot be made.

When demand notices are issued by the Government Authorities and demand is disputed by the company and it is probable that the company will not be required to settle/pay such demands then these are classified as disputed obligations under contingent liabilities.

Contingent Assets, if any, are not recognised in the financial statements. If it becomes certain that inflow of economic benefit will arise then such asset and the relative income are recognised in financial statements.

n) Current/Non-Current Classifications:

The Company presents assets and liabilities in the balance sheet on the basis of their classifications into current and non-current.

Assets:

An asset is treated as current when it is:

• Expected to be realised or intended to be sold or consumed in normal operating cycle

• Held primarily for the purpose of trading

• Expected to be realised within twelve months after the reporting period

• Cash or cash equivalent unless restricted from being exchanged or used to settle

a liability for at least twelve months after the reporting period.

All other assets are classified as noncurrent.

Liabilities:

A liability is treated as current when it is:

• Expected to be settled in normal operating cycle

• Held primarily for the purpose of trading

• Due to be settled within twelve months after the reporting period

• No unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

All other liabilities are classified as noncurrent.

o) Financial Instruments, Financial Assets, Financial Liabilities and Equity Instruments

The financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the relevant instrument and are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities measured at fair value through profit or loss) are added to or deducted from the fair value on initial recognition of financial assets or financial liabilities.

A. Financial Assets:

Initial Recognition:

Financial Assets include Investments, Trade Receivables, Security Deposits, Cash and Cash Equivalents and

eligible current and non-current assets. The financial assets are initially recognized at the transaction price when the Company becomes party to contractual obligations. The transaction price includes transaction costs unless the asset is being value at fair value through the Statement of Profit and Loss.

Subsequent Measurement:

The subsequent measurement of financial assets depends upon the initial classification of financial assets. For the purpose of subsequent measurement, financial assets are classified as under:

i. Financial Assets At Amortized Cost where the financial assets are held solely for collection of cash flows and contractual terms of the assets give rise on specified dates to cash flows that are solely payments of principal and interest on principal amount outstanding.

ii. Fair value through other comprehensive income (FVTOCI), where the financial assets are held not only for realization of principal and interest but also from the sale of such assets. Such assets are subsequently measured at fair value, with unrealised gains and losses arising from changes in the fair value being recognised in other comprehensive income.

iii. Fair value through profit or loss (FVTPL), where the assets are managed in accordance with an approved investment strategy that triggers purchase and sale decisions based on the fair value of such assets. Such assets are subsequently measured at fair value, with unrealised gains and

losses arising from changes in the fair value being recognised in the Statement of Profit and Loss in the period in which they arise.

Trade Receivables, Security Deposits, Cash and Cash Equivalents, Investments in Equity where reliable data for fair value is not available and eligible current and non-current assets are classified for measurement at amortized cost.

Investments in equity instruments are classified for measurement at FVTPL.

Impairment:

If the recoverable amount of an asset (or cash-generating unit/Fixed Assets) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount if any, in which case the impairment loss is treated as a revaluation decrease.

Financial assets, other than those at Fair Value through Profit and Loss (FVTPL), are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

The company recognises impairment loss on trade receivables using expected credit loss model.

B. Financial Liabilities:

Financial liabilities, which include long and short-term loans and borrowings, trade payables, eligible current and non-current liabilities. The borrowings, trade payables and other financial liabilities are initially recognised at the value of the respective contractual obligations. They are subsequently measured at amortised cost. Financial liabilities are derecognised when the liability is extinguished, that is, when the contractual obligation is discharged, cancelled and on expiry of the terms.

p) Fair Value Measurement:

The Company measures financial instruments, such as, derivatives at fair value at each financial statement date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• In the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability

• The principal or the most advantageous market must be accessible by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate

economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the

nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

q) Cash and Cash Equivalents-For the Purpose of Cash Flow Statements:

Cash and cash equivalent in the balance sheet comprise cash at banks and in hand and short-term deposits with an original maturity of three months or less or deposits with bank held as margin money against the import of goods or as security against the supply of goods, which are subject to an insignificant risk of changes in value.

r) Operating Cycle:

Based on the activities of the company and normal time between incurring of liabilities and their settlement in cash or cash equivalents and acquisition/ right to assets and their realization in cash or cash equivalents, the company has considered its operating cycle as 12 months for the purpose of classification of its liabilities and assets as current and non-current.

s) Prior Period Errors:

Prior period errors are in the form of omission of certain items in the financial statements of prior periods which were not available when the financial statements were approved for issue and which could reasonably be expected to have been obtained and taken into account in the preparation and presentation of financial statement of prior period.

The Prior period errors have been corrected retrospectively by restating the respective amounts of the prior period presented in which the error occurred. If the errors have occurred before the earliest prior period presented, the errors have been corrected by restating the opening

balances of assets, liabilities and equity of the earliest prior period presented.

t) Events Subsequent to Financial Statements Period:

Events after the reporting period are those events, both favourable and unfavourable that have occurred between the end of the reported financial statements year and the date when financial statements are approved for issue by the Board of Directors of the company.

Events after the reporting period can be identified as those that provide evidence of conditions that existed as at the end of the financial year i.e. adjusting events after the financial year end and those are indicative of conditions that arose after the financial year end i.e. non-adjusting events after the financial year end.

The company adjusts the amounts of assets, liabilities, incomes and expenses recognised in the financial statements of the reporting period to reflect the effects of adjusting events to the respective assets, liabilities, incomes and expenses of the reporting period.

The non-adjusting events are not recognised in the financial statement of the reporting period but the nature of event and an estimate of its financial effect are disclosed in the notes of accounts.

u) Government Grants:

Government grants are recognised in the period where it is determined that there

is reasonable assurance that the grant will be received and all attached conditions relating to grant will be complied with.

The revenue grant relating to or arising from business operations is recognised as operating income in the Statement of Profit and Loss of the period in which is determined that it is reasonably certain that grant will be received and all attached conditions relating to grant will be complied with.

v) Earnings Per Share:

The Company presents basic and diluted earnings per share details for its ordinary shares. Basic earning per share is calculated by dividing the net profit after tax for the year attributable to the ordinary shareholders of the company by weighted number of ordinary shares outstanding for applicable period during the year.

Diluted earning per share is calculated considering the effect of dilution if any to ordinary share during the year.

w) Expected Credit Loss:

The measurement of expected credit loss on financial assets is based on the evaluation of collectability and the management’s judgement regarding recoverability. A considerable amount of judgement is required in assessing the ultimate realization of the trade receivables having regard to the past collection history of each party, ongoing dealings with the parties, and assessment of their ability to pay the debts.

d. Disputed Government Liabilities:

1. Disputed Income Tax Liabilities for A.Y. 2021-22: (Refer Note No. 32(VI)

In pursuance of various notices, the assessment proceedings for A.Y. 2021-22 relevant to financial year 2020-21 were completed by the office of Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad on 30/12/2022 by passing an assessment order under section 143(3) of the Income Tax Act, 1961. Vide assessment order dated 30/12/2022 under section 143(3), the Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad made an addition of Rs. 84.40/-Lakhs to taxable income for A.Y. 2021-22 on account of demurrage, detention and other related charges incurred by the company in respect of import of raw materials treating the same as being penal in nature as per section 37(1) of the Income Tax Act, 1961 and raised demand of Rs.36.15/- Lakhs.

The charges were in the nature of storage/container facilities availed by the company beyond the time allowed to lift the materials from the port pending clearance of documents/compliance of procedure on account of various factors like late receipt of documents from the suppliers, late release of shipment etc. and were paid to various shipping line companies/ agencies for availing their facilities. The charges incurred not being in the nature of penalty within the meaning of section 37(1) and hence the additions of Rs. 84.40/- Lakhs have been considered by the company as inappropriate based on legal advice and has preferred an appeal before Commissioner of Income Tax-(Appeal), National Faceless Appellate Centre. The matter was pending for adjudication before Commissioner of Income Tax-(Appeal) as on the date of approval of financial statements by the Board of Directors.

Considering the nature of expenses incurred, provisions of section 37(1) of the Income Tax Act, 1961 and the legal advice, it is more likely that the addition so made by the Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad will be reversed and hence no provision has been made for such liability in the books of account for the financial year 2022-23. However, such the same has been disclosed as contingent liabilities in notes to the accounts (Refer Note No. 32(VI).

2. RCM Liability on Ocean Freight: (Refer Note No. 32(V)

In the course of audit by the Office of the Commissioner of Central Goods and Service Tax, Audit Commissionerate, Rajkot dated 30^th January, 2019, it had raised audit objections regarding non-payment of RCM on Ocean Freight amounting to Rs. 30.59/- Lakhs and requested the company to provide suitable explanations/clarifications in case of disagreement by the company. The company did not concur with the audit objections raised by the office of Commissioner of Central Goods and Service Tax, Audit Commissionerate, Rajkot since the similar matter in cases of other parties were going on for adjudication at the jurisdictional Hon''ble High Court of Gujarat. However, upto the date of authorization of Financial Statements for issue by the Board of Directors i.e. 27^th May, 2023, the company has paid Rs. 30.59/- Lakhs under protest. There has been no further proceeding in the matter subsequent to the date of initial report upto the date of authorization of Financial Statements for issue by the Board of Directors i.e. 27^th May, 2023.

f. Financial Instruments and Related Disclosures: (Refer to Note No. 33,34 & 35)

Financial Risk Management:

The company activities are exposed various financial risks: credit risk, liquidity risk and foreign exchange fluctuation risk. The Company''s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance.

I. Credit Risk:

Trade Receivables:

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss to the Company. The maximum exposure to the credit risk as at the reporting date is primarily from trade receivables. Trade receivables are unsecured and are derived from revenue earned from customers from sale of goods. Trade receivables generally are impaired after three years when recoverability is considered doubtful based on general trend. The Company considers that trade receivables stated in the financial statements are not impaired and past due for each reporting dates under review are of good credit quality subject to outcome of the litigations where the company has initiated legal proceedings for recovery.

Other Financial Assets:

Credit risk relating to cash and cash equivalents is considered negligible since the counterparties are banks which are majorly owned by Government of India and have oversight of Reserve Bank of India. The Company considers the credit quality of term deposits with banks to be good and the company reviews these banking relationships on an ongoing basis.

The Company considers all other financial assets as at the financial statement dates to be of good credit quality.

II. Liquidity Risk:

The company''s principal sources of liquidity are from Short Term Bank Borrowings, Cash and Cash Equivalents and Cash generated from operations.

The Short- term liquidity requirements consist mainly of Trade Payables, Expense Payables, Employee Dues, Servicing of Interest on Short -Term and Long -Term Borrowings and payment of instalments of term loans and vehicle loans and other payments arising during the normal course of business.

III. Foreign Exchange Rate Risk:

The Company undertakes transactions denominated in foreign currency mainly for purchase of raw materials and sale of goods which are subject to the risk of exchange rate fluctuations. Financial assets and liabilities denominated in foreign currency are also subject to reinstatement risks. Hedging is regularly carried out to mitigate the risks of exchange rate fluctuations to the extent considered feasible.

j. In the opinion of the Board of Directors, Current Assets & Loans and Advances have a value on realisation in the ordinary course of business equal to the amount at which they are stated in the balance sheet. In the opinion of the Board of Directors, claims receivable against property/goods are realizable as per the terms of the agreement and/or other applicable relevant factors and have been stated in the financial statements at the value which is most probably expected to be realized.

k. The company has obtained balance confirmation from some of the parties for Trade Payables, Trade Receivables and parties to whom loans/advance have been granted. All other balances of debtors and creditors and loans and advances are subject to confirmation and subsequent reconciliation, if any.

l. Expenses in foreign currency: (Amount D In Lakhs)

CIF Value of Imports:

Raw Materials D 21,666.05 (Previous Year D 26,144.51)

Foreign Travelling:

D NIL (Previous Year D 7.57/-)

Income in Foreign Currency:

FOB Value of Exports:

D 381.38/- (Previous Year D 3,977.57/-)

m. Income Tax Search Proceedings:

The Income Tax Authorities had carried out search operations from 26th May, 2022 to 29th May, 2022 at the registered office of the company and had seized certain documents relating to the company during the course of search. The post-search proceedings were carried out during the current financial year and the company has complied with notices and instructions from the Income Tax Department as issued from time to time. No notices for assessment of income as per the provisions of Income Tax Act, 1961 were issued upto the date of approval of financial statements i.e. 27th May, 2023 and hence liability of any nature has neither been envisaged by the management of the company nor determined by the Income Tax Authorities. Based on the legal consultations and the documents seized and proceedings carried out during the course of search as well as post search proceedings, in the opinion of the management of the company it is more likely that the company may not be required to incur any liability towards income tax on completion of the applicable income tax proceedings and hence no provision of income tax liability could either be determined or made or disclosed.

The previous financial year ratios have been restated considering the effects of prior period errors and omission applied as per Ind-AS-8. & On Account of Increase in Short Term Borrowings and Operational Losses Incurred during the year.

@ On Account of Increase Finance Cost resulting from increase in Short Term Borrowings and Decline in Operating Profit during the year.

# Resulting from operational losses on account of increase in raw materials cost and other cost, lower capacity utilization constrained by lower market demand of finished goods and other market related factors compared to previous financial year.

$ On Account of decline in operational activities and operational profits during the year.

* Investments includes Investment in Securities, Balance in Fixed Deposit Accounts with Bank, Investment Properties only.

Income On Investment includes Interest on Bank Fixed Deposits, Rental Income on Investment Property and Gain/(Loss) on Investment Held or Sold.

o. Subsidy Income:

The company had made an application for grant of subsidy to Industrial Commissionerate, Gandhinagar for grant of subsidy under the Scheme for Incentive to Industries in the form of reimbursement of Net VAT-Gujarat/Net GST-Gujarat based on gross investments in fixed assets and subject of compliance of the conditions as specified for eligibility of the grant of subsidy in the financial year 2021-22. The company had been issued Provisional Eligibility Certificates under Scheme for Incentive to Industries by the Industrial Commissionerate, Gandhinagar during the financial year 2021-22. Based on the consideration of such Provisional Eligibility Certificates and on the basis of consideration of compliance of terms and conditions of grant of subsidy and possibility of further compliance as may be required, the company had accounted an amount of Rs. 825.25/- Lakhs as subsidy income for the financial year 2021-22 as an operational income and had classified the same as income from operations in the financial statements.

The company has not realized any amount out of the subsidy income of Rs. 825.25/- Lakhs during the current financial year on account of ongoing procedural compliances. Based on the legal consultation it is expected that the company may realize stage-wise or in instalments or period-wise subsidy amount in the coming year(s).

p. Relationship with Struck off Companies:

The company did not have any transaction with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956, during the current year and in the previous year.

q) The Financial Statements were authorised for issue by the Board of Directors on 27th May, 2023.

r) The previous year''s figures have been reworked, regrouped and reclassified wherever necessary so as to make them comparable with those of the current year.

The Financial Statements have been presented in Indian Rupee ('') in Lakhs rounded off to two decimal points as per amendment to Schedule III to the Companies Act, 2013.

The figures wherever shown in bracket represent deductions.

The accompanying notes 1 to 32 are an integral part of the Financial Statements.

AS PER OUR REPORT OF EVEN DATE ATTACHED FOR AND ON BEHALF OF THE BOARD

ASTRON PAPER & BOARD MILL LIMITED

FOR, SNDK & ASSOCIATES, KIRIT G. PATEL CHAIRMAN & MANAGING DIRECTOR

CHARTERED ACCOUNTANTS, DIN: 03353684

FIRM REG. NO.: W100060 RAMAKANT K. PATEL DIRECTOR

DIN: 00233423

KISHAN R. KANANI AMIT MUNDRA CHIEF FINANCIAL OFFICER

PARTNER HINA R. PATEL COMPANY SECRETARY

M. NO. : 192347

PLACE: AHMEDABAD PLACE: AHMEDABAD

DATE: 27^th MAY, 2023 DATE: 27^th MAY, 2023

---

Mar 31, 2018

1. CORPORATE INFORMATION:

Astron Paper & Board Mill Limited is a public company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. The shares of the company are listed in two recognized stock exchanges in India i.e. the Bombay Stock Exchange Limited (''BSE'') and the National Stock Exchange of India Limited (''NSE).The company is engaged in the manufacturing of Kraft Paper from waste paper.

* Nature of Security

A Primary Security & Collateral-First Pari Passu Charge

- Secured by Paripassu Charge Over Entire Fixed Assets (Present and Future) of the Company.

a Secured by Paripassu Equitable Mortgage of Factory Land & Building situated at R.S. No. 52/1, 52/2, 53/1, 53/ paiki 2, 54, & 55 Village Sukhpar, Tal.: Halvad, Dist.:Morbi

b Factory Land Situated at Survey No. 49/1 & 50 Village Sukhpar, Tah.: Halvad, Dist.: Morbi

c Secured by Paripassu Equitable Mortgage of Residential Flat at 602, Swagat Apartment, Manav Mandir, Memnagar, Ahmedabad

d Secured by Paripassu Equitable Mortgage of Office Premises at D-702, Ganesh Meridian, S.G. Road, Ahmedabad

e Secured by Paripassu Equitable Mortgage of Residential Complexes at plot no. 72 to 75, 82 to 84, Umiya Township, Village Sukhpar, Viramgam Halvad Highway, Ta.: Halvad, Dist. Morbi

f Secured By Exclusive Charge on Land, Building and Plant & Machinery situtated at Survey No. 64/1, Village: Chubdak, Bhuj in Favour Uninon Bank of India for new term loan availed for Building & Plant &Manchiery for plant at above address.

B Collateral Security

Pari Passu Second Charge over the entire current assets of the company.

Common Collateral Security for all of the Credit Facilities Including Working Capital Facilities except for Term Loan Taken As Per point No. A(f) above:

** Entire Term loans secured by personal/corporate guarantees of the following persons/parties.

- Directors

Shri Kiritbhai G. Patel

Shri Ramakant K. Patel

Shri Karshanbhai H. Patel

- Corporate Guarantee [Not for The Enhanced Exposure of Rs. 16.60 Crores during the Financial Year 2015-16]

M/s. Krupal Trading Company M/s. Shivam Industries

***Term Loan from UBI of Rs.20.00 Crores to be repaid in 84 Monthly Instalment of Rs.23.80 Lacs and Instalment Payment to commence from Sep.-201 2.

Additional Term Loan from UBI of Rs.5.00 Crores to be repaid in 24 Quarterly Instalment of Rs.20.90 Lacs and Instalment Payment to commence from January-201 4. (i.e. in line with SBI Sanction)

Term Loan from Corporation Bank to be repaid by 84 Monthly Instalment of Rs.11.90 Lacs and Instalment to Commence from Nov.-2012

Term Loan from SBI to be repaid by 24 Quarterly Instalment of Rs.43.10 Lacs and Instalment to Commence from January-201 4 i.e. after one year from the date of First Disbursement.

Term Loan from UBI of Rs. 4.00 Crores to be repaid by 60 Monthly Instalment of Rs. 4.78 Lacs, 12 Monthly Instalment and Instalment of Rs.6.52 lacs and 5 Monthly Instalment of Rs. 6.99 Lacs Commencing from April-201 6.

Term Loan from Corporation Bank of Rs. 1.60 Crores to be repaid by 60 Monthly Instalment of Rs. 1.91 Lacs, 12 Monthly Instalment of Rs. 2.69 Lacs, 4 Monthly Instalment of Rs. 2.60 Lacs and 1 Instalment of Rs. 2.72 Lacs, Instalment to Commence from April-2016.

Term Loan from SBI of Rs. 2.00 Crores to be repaid by 28 Quarterly Instalment of Rs. 7.14 Lacs and Instalment to Commence from April-201 6.

Term Loan from UBI of Rs. 9.00 Crores (For Bhuj Plant) to be repaid by 20 Quarterly Instalment of Rs. 45 Lacs and Instalment to Commence from 31/10/2018.

* Nature of Security A Primary Security

Working Capital secured by way of First Pari Passu charge on all the current assets of the company including all kind of stocks, stores, spares, packing materials, movable properties and all book debts, bills, monies and claims receivable.

B Collateral Security

Common Collateral Security for all of the Credit Facilities Including Term Loans:

a Secured by Paripassu Equitable Mortgage of Factory Land & Building situated at R.S. No. 52/1, 52/2, 53/1, 53/ paiki 2, 54, & 55 Village Sukhpar, Tal.: Halvad, Dist.:Morbi b Factory Land Situated at Survey No. 49/1 & 50 Village Sukhpar, Tah.: Halvad, Dist.: Morbi c Secured by Paripassu Equitable Mortgage of Residential Flat at 602, Swagat Apartment, Manav Mandir, Memnagar, Ahmedabad

d Secured by Paripassu Equitable Mortgage of Office Premises at D-702, Ganesh Meridian, S.G. Road, Ahmedabad

e Secured by Paripassu Equitable Mortgage of Residential Complexes at plot no. 72 to 75, 82 to 84, Umiya Township, Village Sukhpar, Viramgam Halvad Highway, Ta.: Halvad, Dist. Morbi

C Pari Passu Second Charge over the entire fixed assets (present & future) of the company.

** Outstanding balances of working capital secured by personal/corporate guarantees of the following:

- Directors

Shri Kiritbhai G. Patel Shri Ramakant K. Patel Shri Karshanbhai H. Patel

- Corporate Guarantee [Not for The Enhanced Exposure of Rs. 16.60 Crores during the Financial Year 2015-16]

M/s. Krupal Trading Company

M/s. Shivam Industries

*** Working capital loans repayable on demand.

c) Debtors of Sale of Goods

The company has initiated legal proceedings for recovery against the doubtful debtors amounting to Rs. 59.11 lacs (Previous Year Rs. 96.17 lacs). In respect of debts of Rs. 59.11 lacs though the company has initiated legal proceedings for the recovery, in view of the management of the company since the matters are pending before respective statutory authorities, it is most likely that the company will be able to recover the amount from the doubtful debtors on adjudication of matters and hence the company has not made any provision against the doubtful debts of Rs. 59.11 lacs (Previous Year Rs. 59.11 lacs).

d) Disputed Government Liabilities:

2 .Disputed Central Excise Liabilities:

The Central Excise Department had disallowed CENVAT credit of Rs. 26.43 lacs on capital goods in respect of which the company had preferred an appeal before the Assistant Commissioner of Central Excise, Surendranagar. The Assistant Commissioner vide his order dated 25th January, 2017 has confirmed the disallowance of CENVAT Credit of Rs. 26.43 lacs. The company has reversed the CENVAT Credit of Rs. 26.43 lacs in the books on 01 /06/ 2016. The company has reversed the CENVAT Credit in the books which has been shown as Pre-deposit of Excise as "Short Term Loans & Advances" in the financial statements. Further, Assistant Commissioner had ordered charging of interest as per the Central Excise Law and imposed penalty of Rs. 26.43 lacs Being dissatisfied with the order, the company had preferred an appeal before Commissioner of Appeals, Central Excise, Rajkot on 27th March, 2017 The matter was pending before the Commissioner of Appeals, Central Excise, Rajkot for its final disposal as at the end of the financial year.

3.Disputed Income Tax Liabilities A.Y. 2013-14:

The Income Tax Officer Ward 1(1)(4), Ahmedabad had disallowed preliminary expenses of Rs. 3.89 lacs claimed by the company during the financial year 2012-13 relevant to A.Y. 2013-14. In respect of the said disallowance, the company had preferred an appeal before the CIT-A-1, Ahmedabad, who had also confirmed the amount disallowed by the Income Tax Officer. Against the order of CIT-A-1, the company had further preferred an appeal before Ho''nable ITAT, Ahmedabad. The appeal before the Ho''nable ITAT is pending for adjudication. In view of the management of the company, the company is eligible to claim expenditure disallowed U/s. 35D of the Income Tax Act, 1 961 and hence has not made any provision for amount disallowed amounting to Rs. 3.89 lacs.

4.Disputed Income Tax Liabilities A.Y. 2014-15:

The DCIT Circle 1(1)(2), Ahmedabad had disallowed preliminary expenses of Rs. 4.36 lacs claimed by the company during the financial year 2013-14 relevant to A.Y. 2014-1 5. In respect of the said disallowance, the company had preferred an appeal before the CIT-A-1, Ahmedabad, who had also confirmed the amount disallowed by the Income Tax Officer. Against the order of CIT-A-1, the company had further preferred an appeal before Ho''nable ITAT, Ahmedabad. The appeal before the Ho''nable ITAT is pending for adjudication. In view of the management of the company, the company is eligible to claim expenditure disallowed U/s. 35D of the Income Tax Act, 1 961 and hence has not made any provision for amount disallowed amounting to Rs. 4.36 lacs.

5.Disputed Income Tax Liabilities A.Y. 2015-16:

The Income Tax Officer Ward 1(1)(4), Ahmedabad had disallowed preliminary expenses of Rs. 4.59 lacs claimed by the company during the financial year 2014-15 relevant to A.Y. 2015-16. In respect of the said disallowance, the company had preferred an appeal before the CIT-A-1, Ahmedabad, who had also confirmed the amount disallowed by the Income Tax Officer. The appeal before the Ho''nable CIT-A-1, Ahmedabad is pending for adjudication. In view of the management of the company, the company is eligible to claim expenditure disallowed U/s. 35D of the Income Tax Act, 1 961 and hence has not made any provision for amount disallowed amounting to Rs. 4.59 lacs.

f) Financial Instruments and Related Disclosures:

Financial Risk Management:

The company activities are exposed various financial risks: credit risk, liquidity risk and foreign exchange fluctuation risk. The Company''s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance.

I. Credit Risk:

Trade Receivables:

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss to the Company. The maximum exposure to the credit risk as at the reporting date is primarily from trade receivables. Trade receivables are unsecured and are derived from revenue earned from customers from sale of goods. Trade receivables generally are impaired after three years when recoverability is considered doubtful based on general trend. The Company considers that trade receivables stated in the financial statements are not impaired and past due for each reporting dates under review are of good credit quality subject to outcome of the litigations where the company has initiated legal proceedings for recovery.

Other Financial Assets:

Credit risk relating to cash and cash equivalents is considered negligible since the counterparties are banks which are majorly owned by Government of India and are have oversight of Reserve Bank of India. The Company considers the credit quality of term deposits with banks to be good and the company reviews these banking relationships on an ongoing basis.

The Company considers all other financial assets as at the balance sheet dates to be of good credit quality.

II. Liquidity Risk:

The company''s principal sources of liquidity are from Short Term Bank Borrowings, Cash and Cash Equivalents and Cash generated from operations.

The Short term liquidity requirements consist mainly of Trade Payables, Expense Payables, Employee Dues, Servicing of Interest on Short Term and Long Term Borrowings and payment of instalments of term loans and vehicle loans and other payments arising during the normal course of business.

III. Foreign Exchange Rate Risk:

The Company undertakes transactions denominated in foreign currency mainly for purchase of raw materials which are subject to the risk of exchange rate fluctuations. Financial assets and liabilities denominated in foreign currency are also subject to reinstatement risks. Hedging is regularly carried out to mitigate the risks of exchange rate fluctuations.

g) Corporate Social Responsibility Expenditure:

The company had incurred following expenditures in terms of section 135 of the Companies Act, 201 3 on Corporate Social Responsibility.

h) Government Grants:

The company received subsidy of Rs. 21.90 lacs from Industrial Commissioner Office, Gandhinagar during the year on account of activities undertaken by it for emission of pollution under Environment Management Policy, 2015. The subsidy so received has been treated as income and has been presented as "Other Income" in the financial statements.

i) IPO Proceeds:

During the year ended 31st March, 2018 the company completed Initial Public Offer (IPO) of 1,40,00,000 Equity Shares of Rs. 10 each at a price of Rs. 50 each in case of entities other than eligible employees and at a price of Rs. 47.50 each in case of eligible employees. The equity shares of the company are listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) on 29th December, 201 7.

l) The company has initiated the process of obtaining confirmations from suppliers as to their status as Micro, Small or Medium Enterprise registered under the applicable category as per the provisions of the Micro, Small and Medium Enterprises (Development) Act, 2006 (MSMED Act, 2006). In absence of the relevant information as to the status of the suppliers, the balance due to Micro, Small and Medium Enterprises and interest due to them if any as per the provision of the Micro, Small and Medium Enterprises (Development) Act, 2006 (MSMED Act, 2006) could not be disclosed or provided. m) In the opinion of the Board of Directors, Current Assets & Loans and Advances have a value on realisation in the ordinary course of business equal to the amount at which they are stated in the balance sheet. In the opinion of the Board of Directors, claims receivable against property/goods are realizable as per the terms of the agreement and/or other applicable relevant factors and have been stated in the financial statements at the value which is most probably expected to be realized. n) The company has obtained balance confirmation from some of the parties for Sundry Creditors, Sundry Debtors and parties to whom loans/advance have been granted. All other balances of debtors and creditors and loans and advances are subject to confirmation and subsequent reconciliation, if any. o) Expenses in foreign currency :

CIF Value of I mports:

Raw Materials Rs. 1 3094.54 lacs (Previous Year Rs. 8972.58 lacs)

Foreign Travelling :

Rs. NIL/- (Previous Year Rs. 0.82 lacs)

FOB Value of Exports:

Rs. 952.03 lacs (Previous Year Rs. 55.57lacs)

p) The previous year''s figures have been reworked, regrouped and reclassified wherever necessary so as to make them comparable with those of the current year.

The Paises are rounded up to the nearest of rupee. The figures wherever shown in bracket represent deductions.