Notes to Accounts of Flexituff Ventures International Ltd.

Mar 31, 2025

2.12 Provisions and contingent liabilities

"Provisions are recognized when there is a
present obligation as a result of a past event, it is
probable that an outflow of resources
embodying economic benefits will be required to
settle the obligation and there is a reliable
estimate of the amount of the obligation.
Provisions are measured at the best estimate of
the expenditure required to settle the present
obligation at the Balance sheet date."

If the effect of the time value of money is
material, provisions are discounted using a
current pre-tax rate that reflects, when
appropriate, the risks specific to the liability.
When discounting is used, the increase in the
provision due to the passage of time is
recognized as a finance cost.

The Company records a provision for
decommissioning costs. Decommissioning
costs are provided at the present value of
expected costs to settle the obligation using
estimated cash flows and are recognized as part
of the cost of the particular asset. The cash flows

are discounted at a current pre-tax rate that
reflect s t h e ri sks speci fi c to th e
decommissioning liability. The unwinding of the
discount is expensed as incurred and recognized
in the statement of profit and loss as a finance
cost. The estimated future costs of
decommissioning are reviewed annually and
adjusted as appropriate. Changes in the
estimated future costs or in the discount rate
applied are added to or deducted from the cost of
the asset.

Contingent liabilities are disclosed when there is
a possible obligation arising from past events,
the existence of which will be confirmed only by
the occurrence or non occurrence of one or
more uncertain future events not wholly within
the control of the Company or a present
obligation that arises from past events where it
is either not probable that an outflow of
resources will be required to settle or a reliable
estimate of the amount cannot be made.

2.13 Cash and cash equivalents

"Cash and cash equivalent in the balance sheet
comprise cash at banks, cash on hand and
short-term deposits net of bank overdraft with
an original maturity of three months or less,
which are subject to an insignificant risk of
changes in value. For the purposes of the cash
flow statement, cash and cash equivalents
include cash on hand, cash in banks and short¬
term deposits net of bank overdraft."

2.14 Corporate social responsibility (CSR)

Provisions are recognised for all CSR activities
undertaken by the Company for which an
obligation has arisen during the year and are
recognized in Statement of profit on loss on
accrual basis. No provision is made against
unspent amount, if any.

2.15 Government grants and subsidies

Grants from the government are recognised at
their fair value where there is a reasonable
assurance that the grant will be received and the
group will comply with all attached conditions.
Government grants relating to income are
deferred and recognised in the profit or loss over
the period necessary to match them with the
costs that they are intended to compensate and
presented within other income.

2.16 Borrowing Costs

Interest and other borrowing costs attributable
to qualifying assets are capitalised. Other
interest and borrowing costs are charged to
Statement of Profit and Loss.

A financial instrument is any contract that gives
rise to a financial asset of one entity and a
financial liability or equity instrument of another
entity.

(a). Financial assets

[i] . Initial recognition and measurement

At initial recognition, financial asset is measured
at its fair value plus, in the case of a financial
asset not at fair value through profit or loss,
transaction costs that are directly attributable to
the acquisition of the financial asset.
Transaction costs of financial assets carried at
fair value through profit or loss are expensed in
profit or loss.

(ii) . Subsequent measurement

For purposes of subsequent measurement,
financial assets are classified in following
categories:

a) at amortized cost; or

b) at fair value through other comprehensive
income; or

c) at fair value through profit or loss.

The classification depends on the entity''s
business model for managing the financial
assets and the contractual terms of the cash
flows."

Amortized cost: Assets that are held for
collection of contractual cash flows where those
cash flows represent solely payments of
principal and interest are measured at
amortized cost. Interest income from these
financial assets is included in finance income
using the effective interest rate method (EIR).

Fair value through other comprehensive income
(FVOCI): Assets that are held for collection of
contractual cash flows and for selling the
financial assets, where the assets'' cash flows
represent solely payments of principal and
interest, are measured at fair value through
other comprehensive income (FVOCI).
Movements in the carrying amount are taken
through OCI, except for the recognition of
impairment gains or losses, interest revenue
and foreign exchange gains and losses which are
recognized in Statement of Profit and Loss.
When the financial asset is derecognized, the
cumulative gain or loss previously recognized in
OCI is reclassified from equity to Statement of
Profit and Loss and recognized in other gains/
(losses). Interest income from these financial
assets is included in other income using the
effective interest rate method.

Fair value through profit or loss: Assets that do
not meet the criteria for amortized cost or FVOCI
are measured at fair value through profit or loss.
Interest income from these financial assets is
included in other income.

Equity instruments:

Investments in subsidiaries are recognised at
cost as per Ind AS 27 less impairment, if any,
except where investments accounted for at cost
shall be accounted for in accordance with Ind AS
105, Non-current Assets Held for Sale and
Discontinued Operations, when they are
classified as held for sale.

All other equity investments are measured at
fair value. Equity instruments which are held for
trading and contingent consideration
recognised by an acquirer in a business
combination are classified as at FVTPL. For all
other equity instruments, the Company may
make an irrevocable election to present in other
comprehensive income subsequent changes in
the fair value (currently no such choice is made).
The Company makes such election on an
instrument-by-instrument basis. The
classification is made on initial recognition and
is irrevocable.

If the Company decides to classify an equity
instrument as at FVTOCI, then all fair value
changes on the instrument, excluding dividends,
are recognized in the OCI. There is no recycling
of the amounts from OCI to P&L, even on sale of
investment. However, the Company may
transfer the cumulative gain or loss within
equity.

Investment in Limited Liability Partnership
(LLP):

Investments in capital of Limited liability
partnership (LLP), where the Company has
control over these LLP''s, are recognised at cost
as per Ind AS 27 less impairment, if any.

(iii). Impairment of financial assets

"The Company assesses on a forward looking
basis the expected credit losses(ECL)
associated with its assets carried at amortised
cost and FVOCI debt instruments. The
impairment methodology applied depends on
whether there has been a significant increase in
credit risk. "

The impairment methodology for each class of
financial assets stated above is as follows:

Trade receivables from customers: The
Company applies the simplified approach to
providing for expected credit losses prescribed

by Ind AS 109, which requires the use of the
lifetime expected loss provision for all trade
receivables.

"Debt investments measured at amortised cost
and FVOCI: Debt investments at amortised cost
and those at FVOCI where there has been a
significant increase in credit risk, lifetime
expected credit loss provision method is used
and in all other cases, the impairment provision
is determined as 12 months expected credit
losses.

For recognition of impairment loss on financial
assets and risk exposure, the Company
determines that whether there has been a
significant increase in the credit risk since initial
recognition. If credit risk has not increased
significantly, 12-month ECL is used to provide
for impairment loss. However, if credit risk has
increased significantly, lifetime ECL is used. If in
subsequent years, credit quality of the
instrument improves such that there is no
longer a significant increase in credit risk since
initial recognition, then the entity reverts to
recognizing impairment loss allowance based
on 12 month ECL. "

Life time ECLs are the expected credit losses
resulting from all possible default events over
the expected life of a financial instrument. The
12 month ECL is a portion of the lifetime ECL
which results from default events that are
possible within 12 months after the year end.

ECL is the difference between all contractual
cash flows that are due to the Company in
accordance with the contract and all the cash
flows that the entity expects to receive (i.e. all
shortfalls), discounted at the original EIR. When
estimating the cash flows, an entity is required to
consider all contractual terms of the financial
instrument (including prepayment, extension
etc.) over the expected life of the financial
instrument. However, in rare cases when the
expected life of the financial instrument cannot
be estimated reliably, then the entity is required
to use the remaining contractual term of the
financial instrument.

ECL impairment loss allowance (or reversal)
recognized during the year is recognized as
income/expense in the statement of profit and
loss. In balance sheet ECL for financial assets
measured at amortized cost is presented as an
allowance, i.e. as an integral part of the
measurement of those assets in the balance
sheet. The allowance reduces the net carrying
amount. Until the asset meets write off criteria,
the Company does not reduce impairment
allowance from the gross carrying amount.

"A financial asset is derecognized only when

a) the rights to receive cash flows from the
financial asset is transferred or

b) retains the contractual rights to receive the
cash flows of the financial asset, but assumes a
contractual obligation to pay the cash flows to
one or more recipients."

Where the entity has neither transferred a
financial asset nor retains substantially all risks
and rewards of ownership of the financial asset,
the financial asset is derecognised if the
Company has not retained control of the
financial asset. Where the Company retains
control of the financial asset, the asset is
continued to be recognised to the extent of
continuing involvement in the financial asset.

Where the financial asset is transferred then in
that case financial asset is derecognized only if
substantially all risks and rewards of ownership
of the financial asset is transferred. Where the
entity has not transferred substantially all risks
and rewards of ownership of the financial asset,
the financial asset is not derecognized.

(b). Financial liabilities

(i) . Initial recognition and measurement

Financial liabilities are classified, at initial
recognition, as financial liabilities at fair value
through profit or loss and at amortized cost, as
appropriate.

All financial liabilities are recognized initially at
fair value and, in the case of borrowings and
payables, net of directly attributable transaction
costs.

(ii) . Subsequent measurement

The measurement of financial liabilities
depends on their classification, as described
below:

Financial liabilities at fair value through profit or
loss

Financial liabilities at fair value through profit or
loss include financial liabilities held for trading
and financial liabilities designated upon initial
recognition as at fair value through profit or loss.
Separated embedded derivatives are also
classified as held for trading unless they are
designated as effective hedging instruments.
Gains or losses on liabilities held for trading are
recognized in the Statement of Profit and Loss.

Loans and borrowings

After initial recognition, interest-bearing loans

and borrowings are subsequently measured at
amortized cost using the EIR method. Gains and
losses are recognized in Statement of Profit and
Loss when the liabilities are derecognized as
well as through the EIR amortization process.
Amortized cost is calculated by taking into
account any discount or premium on acquisition
and fees or costs that are an integral part of the
EIR. The EIR amortization is included as finance
costs in the Statement of Profit and Loss.

(iii) . Compound financial instruments

Compound financial instruments issued by the
Company which can be converted into fixed
number of equity shares for fixed price at the
option of the holders irrespective of changes in
the fair value of the instrument are accounted by
separately recognising the liability and the
equity components. The liability component is
initially recognised at the fair value of a
comparable liability that does not have an equity
conversion option. The equity component is
initially recognised at the difference between the
fair value of the compound financial instrument
as a whole and the fair value of the liability
component. The directly attributable
transaction costs are allocated to the liability
and the equity components in proportion to their
initial carrying amounts.

Subsequent to initial recognition, the liability
component of the compound financial
instrument is measured at amortised cost using
the effective interest method. The equity
component of a compound financial instrument
is not remeasured subsequently."

(iv) . Derecognition

A financial liability is derecognized when the
obligation under the liability is discharged or
cancelled or expires. When an existing financial
liability is replaced by another from the same
lender on substantially different terms, or the
terms of an existing liability are substantially
modified, such an exchange or modification is
treated as the derecognition of the original
liability and the recognition of a new liability. The
difference in the respective carrying amounts is
recognized in the Statement of Profit and Loss as
finance costs.

(c). Offsetting financial instruments

Financial assets and liabilities are offset and the
net amount is reported in the balance sheet
where there is a legally enforceable right to
offset the recognized amounts and there is an
intention to settle on a net basis or realize the
asset and settle the liability simultaneously. The

legally enforceable right must not be contingent
on future events and must be enforceable in the
normal course of business and in the event of
default, insolvency or bankruptcy of the
Company or the counterparty.

2.18 Employee benefits

(a) . Short-term obligations

Liabilities for wages and salaries, including non¬
monetary benefits that are expected to be
settled wholly within 12 months after the end of
the year in which the employees render the
related service are recognized in respect of
employees'' services up to the end of the year and
are measured at the amounts expected to be
paid when the liabilities are settled. The
liabilities are presented as current employee
benefit obligations in the balance sheet.

(b) . Other long-term employee benefit obligations

"Compensated Absences: Accumulated
compensated absences, which are expected to
be availed or encashed within 12 months from
the end of the year are treated as short term
employee benefits. The obligation towards the
same is measured at the expected cost of
accumulating compensated absences as the
additional amount expected to be paid as a result
of the unused entitlement as at the year end.

Accumulated compensated absences, which are
expected to be availed or encashed beyond 12
months from the end of the year end are treated
as other long term employee benefits. The
Company''s liability is actuarially determined
(using the Projected Unit Credit method) at the
end of each year. Actuarial losses/gains are
recognized in the statement of profit and loss in
the year in which they arise.

Compensated absences can be encashed only
on discontinuation of service by employee."

[c]. Post employment obligations

(i). Defined contribution plan

Provident Fund: Contribution towards provident
fund is made to the regulatory authorities,
where the Company has no further obligations.
Such benefits are classified as Defined
Contribution Schemes as the Company does not
carry any further obligations, apart from the
contributions made on a monthly basis which
are charged to the Statement of Profit and Loss.

Employee''s State Insurance Scheme:
Contribution towards employees'' state
insurance scheme is made to the regulatory
authorities, where the Company has no further

obligations. Such benefits are classified as
Defined Contribution Schemes as the Company
does not carry any further obligations, apart
from the contributions made on a monthly basis
which are charged to the Statement of Profit and
Loss.

(ii). Defined benefit plans

Gratuity: The Company provides for gratuity, a
defined benefit plan (the ''Gratuity Plan")
covering eligible employees in accordance with
the Payment of Gratuity Act, 1972. The Gratuity
Plan provides a lump sum payment to vested
employees at retirement, death, incapacitation
or termination of employment, of an amount
based on the respective employee''s salary. The
Company''s liability is actuarially determined
(using the Projected Unit Credit method) at the
end of each year. Actuarial losses/gains are
recognized in the other comprehensive income
in the year in which they arise.

2.19 Earnings per share

"Basic earnings per share is calculated by
dividing the net profit or loss for the year
attributable to equity shareholders by the
weighted average number of equity shares
outstanding during the year. Earnings
considered in ascertaining the Company''s
earnings per share is the net profit or loss for the
year after deducting preference dividends and
any attributable tax thereto for the year. The
weighted average number of equity shares
outstanding during the year and for all the years
presented is adjusted for events, such as bonus
shares, other than the conversion of potential
equity shares, that have changed the number of
equity shares outstanding, without a
corresponding change in resources.

For the purpose of calculating diluted earnings
per share, the net profit or loss for the year
attributable to equity shareholders and the
weighted average number of shares outstanding
during the year is adjusted for the effects of all
dilutive potential equity shares."

2.20 Segment reporting

Operating segments are reported in a manner
consistent with the internal reporting provided
to the chief operating decision maker. The chief
operating decision maker regularly monitors
and reviews the operating result of the whole
Company as one segment of manufacturing of
technical textile. Thus, as defined in Ind AS 108
"Operating Segments", the Company''s entire
business falls under this one operational
segment and hence the necessary information

has already been disclosed in the Balance Sheet
and the Statement of Profit and Loss.

2.21 Contributed equity

"Equity Shares are classified as equity.

Incremental costs directly attributable to the
issue of new shares or options are shown in
equity as a deduction, net of tax, from the
proceeds."

2.22 Dividends

Provision is made for the amount of any dividend
declared, being appropriately authorized and no
longer at the discretion of the entity, on or before
the end of the reporting period but not
distributed at the end of the reporting period.

2.23 Rounding off amounts

All amounts disclosed in financial statements
and notes have been rounded off to the nearest
millions as per requirement of Schedule III of the
Act, unless otherwise stated.

3. SIGNIFICANT ACCOUNTING
JUDGMENTS, ESTIMATES AND
ASSUMPTIONS

The preparation of financial statements requires
management to make judgments, estimates and
assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities, and the
accompanying disclosures, and the disclosure of
contingent liabilities. Uncertainty about these
assumptions and estimates could result in outcomes
that require a material adjustment to the carrying
amount of assets or liabilities affected in future
years.

3.1 Estimates and assumptions

The key assumptions concerning the future and
other key sources of estimation uncertainty at
the year end date, that have a significant risk of
causing a material adjustment to the carrying
amounts of assets and liabilities within the next
financial year, are described below. The
Company based its assumptions and estimates
on parameters available when the financial
statements were prepared. Existing
circumstances and assumptions about future
developments, however, may change due to
market changes or circumstances arising that
are beyond the control of the Company. Such
changes are reflected in the assumptions when
they occur.

(a). Taxes

Deferred tax assets are recognized for unused

tax losses to the extent that it is probable that
taxable profit will be available against which the
losses can be utilized. Significant management
judgment is required to determine the amount of
deferred tax assets that can be recognized,
based upon the likely timing and the level of
future taxable profits together with future tax
planning strategies.

(b) . Defined benefit plans and other long term

benefits (gratuity benefits and compensated
absences)

The cost of the defined benefit plans and other
long term benefits such as gratuity and
compensated absences are determined using
actuarial valuations. An actuarial valuation
involves making various assumptions that may
differ from actual developments in the future.
These include the determination of the discount
rate, future salary increases and mortality rates.
Due to the complexities involved in the valuation
and its long-term nature, a defined benefit
obligation is highly sensitive to changes in these
assumptions. All assumptions are reviewed at
each year end.

The principal assumptions are the discount and
salary growth rate. The discount rate is based
upon the market yields available on government
bonds at the accounting date with a term that
matches that of liabilities. Salary increase rate
takes into account of inflation, seniority,
promotion and other relevant factors on long
term basis.

(c) . Useful lives of property, plant and equipment

"The Company reviews the useful life of
property, plant and equipment at the end of each
reporting period. This reassessment may result
in change in depreciation expense in future
periods."

4. RECENT PRONOUNCEMENTS

(a). Ministry of Corporate Affairs ("MCA") notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards)
Rules as issued from time to time. During the year
ended March 31,2025, MCA has notified Ind AS 117 -
Insurance Contracts and amendments to Ind As 116 -
Leases, relating to sale and lease back transactions,
applicable from April 1, 2024. The Company has
assessed that there is no significant impact on its
standalone financial statements.

---

Mar 31, 2024

2.12 Provisions and contingent liabilities

"Provisions are recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date."

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

The Company records a provision for decommissioning costs. Decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash flows and are recognized as part of the cost of the particular asset. The cash flows are discounted at a current pre-tax rate that reflects t h e ri sks sp eci fi c to th e decommissioning liability. The unwinding of the discount is expensed as incurred and recognized in the statement of profit and loss as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.

2.13 Cash and cash equivalents

"Cash and cash equivalent in the balance sheet comprise cash at banks, cash on hand and short-term deposits net of bank overdraft with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purposes of the cash flow statement, cash and cash equivalents include cash on hand, cash in banks and shortterm deposits net of bank overdraft."

2.14 Corporate social responsibility (CSR)

Provisions are recognised for all CSR activities undertaken by the Company for which an obligation has arisen during the year and are recognized in Statement of profit on loss on accrual basis. No provision is made against unspent amount, if any.

2.15 Government grants and subsidies

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the group will comply with all attached conditions. Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.

2.16 Borrowing Costs

Interest and other borrowing costs attributable to qualifying assets are capitalised. Other interest and borrowing costs are charged to Statement of Profit and Loss.

2.17 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

(a). Financial assets

[i] . Initial recognition and measurement

At initial recognition, financial asset is measured at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

(ii) . Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in following categories:

a) at amortized cost; or

b) at fair value through other comprehensive income; or

c) at fair value through profit or loss.

The classification depends on the entity''s business model for managing the financial assets and the contractual terms of the cash flows."

Amortized cost: Assets that are held for

collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Interest income from these financial assets is included in finance income using the effective interest rate method (EIR).

Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in Statement of Profit and Loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to Statement of Profit and Loss and recognized in other gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.

Fair value through profit or loss: Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit or loss. Interest income from these financial assets is included in other income.

Equity instruments:

Investments in subsidiaries are recognised at cost as per Ind AS 27 less impairment, if any, except where investments accounted for at cost shall be accounted for in accordance with Ind AS 105, Non-current Assets Held for Sale and Discontinued Operations, when they are classified as held for sale.

All other equity investments are measured at fair value. Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value (currently no such choice is made). The Company makes such election on an instrument- by-instrument basis. The classification is made on initial recognition and is irrevocable.

If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling

of the amounts from OCI to P&L, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.

Investment in Limited Liability Partnership (LLP):

Investments in capital of Limited liability partnership (LLP), where the Company has control over these LLP''s, are recognised at cost as per Ind AS 27 less impairment, if any.

(iii). Impairment of financial assets

"The Company assesses on a forward looking basis the expected credit losses(ECL) associated with its assets carried at amortised cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk."

The impairment methodology for each class of financial assets stated above is as follows:

Trade receivables from customers: The Company applies the simplified approach to providing for expected credit losses prescribed by Ind AS 109, which requires the use of the lifetime expected loss provision for all trade receivables.

"Debt investments measured at amortised cost and FVOCI: Debt investments at amortised cost and those at FVOCI where there has been a significant increase in credit risk, lifetime expected credit loss provision method is used and in all other cases, the impairment provision is determined as 12 months expected credit losses.

For recognition of impairment loss on financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If in subsequent years, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12 month ECL."

Life time ECLs are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12 month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the year end.

ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider all contractual terms of the financial instrument (including prepayment, extension etc.) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument.

ECL impairment loss allowance (or reversal) recognized during the year is recognized as income/expense in the statement of profit and loss. In balance sheet ECL for financial assets measured at amortized cost is presented as an allowance, i.e. as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write off criteria, the Company does not reduce impairment allowance from the gross carrying amount.

(iv). Derecognition of financial assets

"A financial asset is derecognized only when

a) the rights to receive cash flows from the financial asset is transferred or

b) retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients."

Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.

Where the financial asset is transferred then in that case financial asset is derecognized only if substantially all risks and rewards of ownership of the financial asset is transferred. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognized.

(b). Financial liabilities

(i). Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value

through profit or loss and at amortized cost, as appropriate.

All financial liabilities are recognized initially at fair value and, in the case of borrowings and payables, net of directly attributable transaction costs.

(ii) . Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognized in the Statement of Profit and Loss.

Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in Statement of Profit and Loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the Statement of Profit and Loss.

(iii) . Compound financial instruments

Compound financial instruments issued by the Company which can be converted into fixed number of equity shares for fixed price at the option of the holders irrespective of changes in the fair value of the instrument are accounted by separately recognising the liability and the equity components. The liability component is initially recognised at the fair value of a comparable liability that does not have an equity conversion option. The equity component is initially recognised at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. The directly attributable transaction costs are allocated to the liability and the equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of the compound financial

instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured subsequently."

(iv). Derecognition

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the Statement of Profit and Loss as finance costs.

(c}> Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

2.18 Employee benefits

(a) . Short-term obligations

Liabilities for wages and salaries, including nonmonetary benefits that are expected to be settled wholly within 12 months after the end of the year in which the employees render the related service are recognized in respect of employees'' services up to the end of the year and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.

(b) . Other long-term employee benefit obligations

"Compensated Absences: Accumulated compensated absences, which are expected to be availed or encashed within 12 months from the end of the year are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year end.

Accumulated compensated absences, which are

expected to be availed or encashed beyond 12 months from the end of the year end are treated as other long term employee benefits. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/gains are recognized in the statement of profit and loss in the year in which they arise.

Compensated absences can be encashed only on discontinuation of service by employee."

[c]. Post employment obligations

(i) . Defined contribution plan

Provident Fund: Contribution towards provident fund is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis which are charged to the Statement of Profit and Loss.

Employee''s State Insurance Scheme: Contribution towards employees'' state insurance scheme is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis which are charged to the Statement of Profit and Loss.

(ii) . Defined benefit plans

Gratuity: The Company provides for gratuity, a defined benefit plan (the ''Gratuity Plan") covering eligible employees in accordance with the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/gains are recognized in the other comprehensive income in the year in which they arise.

2.19 Earnings per share

"Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Earnings considered in ascertaining the Company''s earnings per share is the net profit or loss for the year after deducting preference dividends and

any attributable tax thereto for the year. The weighted average number of equity shares outstanding during the year and for all the years presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year is adjusted for the effects of all dilutive potential equity shares."

2.20 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker regularly monitors and reviews the operating result of the whole Company as one segment of manufacturing of technical textile. Thus, as defined in Ind AS 108 "Operating Segments", the Company''s entire business falls under this one operational segment and hence the necessary information has already been disclosed in the Balance Sheet and the Statement of Profit and Loss.

2.21 Contributed equity

"Equity Shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds."

2.22 Dividends

Provision is made for the amount of any dividend declared, being appropriately authorized and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

2.23 Rounding off amounts

All amounts disclosed in financial statements and notes have been rounded off to the nearest millions as per requirement of Schedule III of the Act, unless otherwise stated.

3. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of

revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future years.

3.1 Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the year end date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

(a) . Taxes

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

(b) . Defined benefit plans and other long term

benefits (gratuity benefits and compensated absences)

The cost of the defined benefit plans and other long term benefits such as gratuity and compensated absences are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each year end.

The principal assumptions are the discount and salary growth rate. The discount rate is based upon the market yields available on government bonds at the accounting date with a term that matches that of liabilities. Salary increase rate

takes into account of inflation, seniority, promotion and other relevant factors on long term basis.

(c) . Intangible asset under development

The Company capitalises intangible asset under development for a project in accordance with the accounting policy. Initial capitalisation of costs is based on management''s judgement that technological and economic feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model. In determining the amounts to be capitalised, management makes assumptions regarding the expected future cash generation of the project, discount rates to be applied and the expected period of benefits.

(d) . Foreign currency convertible bonds (FCCB)

FCCB issued by the company are converted into fixed number of equity shares for fixed price at the option of the holders at fixed rate of exchange. Hence, FCCB issued by the Company is Compound financial instrument and is accounted separately, recognising the liability and the equity components. Based on management estimate, the coupon rate at the time of issue of FCCB is same as coupon rate applicable to comparable liability that does not have an equity conversion option. On initial recognition, the fair value of liability component of FCCB is same as consideration received, resulting in Nil equity component. Hence, entire FCCB is recognised as liability.

(e) . Useful lives of property, plant and equipment

"The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods."

47. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company is exposed to various financial risks. These risks are categorized into market risk, credit risk and liquidity risk. The Company''s risk management is coordinated by the Board of Directors and focuses on securing long term and short term cash flows. The Company does not engage in trading of financial assets for speculative purposes.

(A) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include borrowings and derivative financial instruments.

(i) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to the risk of changes in market interest rates relates primarily to the Company''s long-term debt obligations with floating interest rates.

The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings.

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings. With all other variables held constant, the Company''s profit / loss before tax is affected through the impact on floating rate borrowings, as follows:

(B) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counter party to a financial instrument fails to meet its contractual obligations. Credit risk is primarily attributable to the Company''s trade and other receivables. The amounts presented in this standalone statement of financial position are net of allowances for doubtful receivables, estimated by management based on prior experience and their assessment of the current economic environment.

The Company measures the expected credit loss of trade receivables and loan from individual customers based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends. Based on the historical data, loss on collection of receivable is not material hence no additional provision considered.

(C) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. Processes and policies related to such risks are overseen by senior management who monitors the Company''s net liquidity position through rolling forecasts on the basis of expected cash flows.

48.CAPITAL MANAGEMENT

For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Company''s capital management is to maximize the shareholder value and to ensure the Company''s ability to continue as a going concern.

The Company has not distributed any dividend to its shareholders. The Company monitors its gearing ratio i.e. total debt in proportion to its overall financing structure, i.e. equity and debt. Total debt comprises of non-current borrowing (including current maturities from long term debts) and current borrowing of the Company. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.

Note 1 - Debt Equity Ratio: The increase in Ratio is on mainly account of losses incurred by the Company leading to fall in shareholder''s equity.

Note 2 - Debt Service Coverage Ratio: The ratio has improved due to increase in earning available for debt service. There is no major change in debt service with in a year due to continous defaults in repayment of loans and overutilisation of cash credit facilities.

Note 3 - Return on Equity: The fall in ratio is on account of the losses incurred by Company.

Note 4 - Inventory Turnover Ratio: Ratio has increased due to fall in average inventory levels at the end of current year and increase in Cost of goods sold (due to increase in Net Sales) as compared to previous year.

Note 5 - Net Capital Turnover Ratio: Ratio is decreased due to fall in turnover and the level of working capital as compared to previous year.

Note 6 - Net Profit Ratio: The ratio has decreased in current year due to one time gain on restructuring amounting to Rs. 599.70 million (Refer Note 51) included in net loss of previous year.

Note 7 - Return on capital employed: The return on capital employed has reduced due to increase in loss during current year and negative net worth at the end of current year.

* As the Company does not have any cashflow from its investments, hence Return on Investment ratio is not presented herewith.

52 . As on March 31, 2024, the Company has defaulted in repaying the principal and interest component of loan

instalments amounting to Rs 359.42 millions and Rs. 273.96 millions respectively to IFCI LTD (The interest default cited here is net of TDS (as applicable). Loan of IFCI Ltd has been assigned to Phoenix ARC Private Limited on 19^th April, 2024 vide confirmation letter dated 22^nd April, 2024.

As on March 31,2024, the Company was in default in repaying the principal and interest component for FCCB issued to TPG Growth II SF Pte. Ltd. amounting to Rs 1,875.91 millions and Rs 885.33 millions respectively and also was in default in redemption of FCCB from International Finance Corporation (IFC) amounting to Rs 750.37 millions. Interest accrued and payable to IFC amounts to Rs. 286.37 millions. The interest default cited here is net of TDS (as applicable) and before adjusting for the effects mentioned in Note 54 below.

As per correspondence with TPG Growth II SF Pte. Ltd. dated 15 February 2024, the Company has entered into a one time settlement of the FCCBs and waiver of interest. Settlement amount was payable on or before 31 March 2024. Time line for payment further extended uptill 30^th April, 2024 and the Company has paid settlement amount on 30^th April, 2024.

IFC has also agreed for a one time settlement of the FCCB and waiver of interest, Settlement amount was payable by 15^th February 2024. This time line further extended uptill 30^th April, 2024. The Comapny has paid settlement amount on 29^th April, 2024. As per the correspondence with IFC, the Company has received no dues certificate dated 8 May 2024.

Total gain to the company on one time settlement of principal amount of FCCBs is USD 21.42 Million.

The Company has devolved Letter of Credit issued by banks and such devolvement has resulted in over utilisation of cash credit facilities by Rs 2,196.92 millions (including interest) as on March 31, 2024, based on drawing power sanctioned by banks in the month of February 2024.

53 . The Company has incurred net losses of Rs. 1,850.88 millions during the year ended March 31, 2024 and has a net

current liability position of Rs. 7,416.39 millions as on that date. Further, in respect of certain loan arrangements for which the amounts have fallen due as mentioned in Note 52 above; the Company has entered into settlement agreements with its lenders for restructuring of loans through an Inter Creditor Agreement. Consequently, the Company''s ability to meet its obligations is dependent on restructuring of loans. The Company will also require further financing to sustain its operations in the normal course of business for which the Company is also contemplating monetisation of certain assets. These events along with other conditions cast significant doubt on the ability of the Company to continue as a going concern. The Company is confident that such cash flows would enable it to service its debt and discharge its obligations.

Accordingly, these financial statements of the Company have been prepared on a going concern basis.

54 .The Company has entered into a settlement with TPG Growth II SF Pte. Ltd. and International Finance Corporation

("lenders") for one time settlement of its FCCB and waiver of interest. Settlement amount has been paid to TPG and IFCon 30^th April, 2024 and 29^th April, 2024 respectively (Refer note 52 above). The Company has not accrued interest amounting to Rs 238.75 millions, Rs 272.62 millions, Rs 203.07 millions, Rs. 171.44 millions and Rs. 183.29 millions for the year ended March 31,2024, for the year ended March 31,2023, for the year ended March 31,2022, for the year ended March 31,2021 and for the year ended March 31,2020 respectively.

The aggregate interest not accrued for the period April 1, 2019 to March 31, 2024 amounts to Rs 1,069.17 millions. This amount of Rs 1,069.17 millions has been waiaved by FCCB''s holders.

56. Tuff Subsidy and Government Subsidy receivable by the Company Rs 69.03 millions which pertains to the period prior to financial year 2016-17. The Company is pursuing with respective banks and Ministry of Textiles through a Consultant. The Company is confident that the said government subsidy will be released, once the joint inspection (JIT) and other procedure laid down by the Ministry of Textile are completed.

57 . The Company was getting export incentive under Merchandise Export from India Scheme and recognized export

incentive receivable till 29^th January 2020. Government of India has withdrawn this scheme with retrospective that is from 7 March 2019. The Company has claims amounting to Rs 103.52 millions of export incentive receivable. FIBC manufacturer association (IFIBCA) has challenged retrospective withdrawal of incentive scheme by the Government before Hon''ble High Court, New Delhi. FIBC manufacturer association (IFIBCA) has challenged retrospective withdrawal of incentive scheme by the Government before Hon''ble High Court, New Delhi. The Hon''ble High Court has issued order in favour of the association. (IFIBCA). The Company has applied offline to DGFT for MEIS script.

58 . The Company had executed Business Transfer Agreement (BTA) with its subsidiary company, Flexituff Technology

International Limited on 28 August 2023 for sale of Flexible Intermediate Bulk Container (FIBC) business of Pithampur units of the Company. The sale is completed on 30 April 2024 via slump sale for a lump sum consideration of Rs. 319.00 Crores (Rupees Three Hundred Nineteen Crores only) on the terms and conditions outlined in the BTA.

59 . The Company has made financing arrangement with IFCI Limited. As a part of financing arrangement, the Company

has arranged security guarantee from certain parties ("guarantors"), who pledged the shares of the Company held by them as security with IFCI Limited. Consequent to the default in repayment of loan by the Company as mentioned in Note 22(d), IFCI Limited has forfeited the guarantees. Upon forfeiture of such security provided by guarantors, the Company has made compensation amounting to Rs 94.85 millions to guarantors as a part of security guarantee arrangement.

60. (a) The Company had executed Business Transfer Agreement (BTA) with company, Flexituff Technology International Limited on 28 August 2023 for sale of Flexible Intermediate Bulk Container (FIBC) business of Pithampur units of the Company. The sale is completed on 30 April 2024 via slump sale for a lump sum consideration of Rs. 319.00 Crores (Rupees Three Hundred Nineteen Crores only) on the terms and conditions outlined in the BTA. The Company is in process of transferring assets and liabilities of FIBC business of Pithampur units via slump sale at their book values as shown below:

(b) Assets and liabilities held for slump sale

As at 31 March 2024, following assets and liabilities included in total assets and liabilities are held for sale at their book values via slump sale w.e.f 30 April 2024:

61 . The Company does not have any Benami property, where any proceeding has been initiated or pending against the

company for holding any Benami property.

62 . The Company has borrowings from banks and financial institutions on the basis of security of current assets. The

quarterly returns or statements of current assets filed by the company with banks or financial institutions are in agreement with the books of accounts and there were no material discrepancies noted. However , in the view of restructuring proposal and holding-on-operations as requested to bankers, the Company could not make available such quarterly returns or statements to the Statutory Auditors.

63 . The company has defaulted in meeting its payment / repayment obligations of interest and Principal respectively as

mentioned in Note 22(d) and 25(c). However, the Company has not been declared wilful Defaulter by any Bank or Financial Institutions or other lender.

64 . The Company does not have any transactions with companies struck off under section 248 of the Companies Act,

2013 or section 560 of Companies Act, 1956.

65 . The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory

period.

66 . The company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with

the Companies (Restriction on number of Layers) Rules, 2017.

67 . Utilisation of Borrowed funds and share premium:

(i) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(ii) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

68 . There is no income surrendered or disclosed as income during the current or previous year in the tax assessments

under the Income Tax Act, 1961, that has not been recorded in the books of accounts.

69 . The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

70 . The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets

or both during the current or previous year.

71 . The borrowings obtained by the company from banks and financial institutions have been applied for the purposes

for which such loans were was taken.

72 . The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the

company towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released draft rules for the Code on Social Security, 2020 on November 13, 2020, and has invited suggestions from stakeholders which are under active consideration by the Ministry. The Company will assess the impact and its evaluation once the subject rules are notified and will give appropriate impact in its financial statements in the period in which, the Code becomes give appropriate impact in its financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.

73 . The Financials are presented in Rs Million and decimal thereof except for the per share information or as otherwise

stated.

74 . Previous year figures have been regrouped/ reclassified to confirm presentation as per Ind AS as required by

Schedule III of the Act.

As per our report of even date For and on behalf of the Board of Directors of

For Mahesh C. Solanki & Co. Flexituff Ventures International Limited

Chartered Accountants CIN: L25202MP1993PLC034616

Firm Registration No.: 006228C

Saurabh Kalani Rahul Chouhan

Mahesh Solanki Whole time director Whole time director

Partner DIN: 00699380 DIN: 03307553

Membership No.: 074991 Place: Pithampur Place: Pithampur

Place: Indore Date: May 30, 2024 Date: May 30, 2024

Date: May 30, 2024

Rishabh Kumar Jain Ramesh Chand Sharma

Company Secretary Chief Financial Officer

Membership No: F7271

Place: Pithampur Place: Pithampur

Date: May 30, 2024 Date: May 30, 2024

---

Mar 31, 2023

2.12 Provisions and contingent liabilities

"Provisions are recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date."

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

The Company records a provision for decommissioning costs. Decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash flows and are recognized as part of the cost of the particular asset. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to the decommissioning liability. The unwinding of the discount is expensed as incurred and recognized in the statement of profit and loss as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within

the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.

2.13 Cash and cash equivalents

"Cash and cash equivalent in the balance sheet comprise cash at banks, cash on hand and short-term deposits net of bank overdraft with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purposes of the cash flow statement, cash and cash equivalents include cash on hand, cash in banks and shortterm deposits net of bank overdraft."

2.14 Corporate social responsibility (CSR)

Provisions are recognised for all CSR activities undertaken by the Company for which an obligation has arisen during the year and are recognized in Statement of profit on loss on accrual basis. No provision is made against unspent amount, if any.

2.15 Government grants and subsidies

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the group will comply with all attached conditions. Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.

2.16 Borrowing Costs

Interest and other borrowing costs attributable to qualifying assets are capitalised. Other interest and borrowing costs are charged to Statement of Profit and Loss.

2.17 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

(a). Financial assets

(i). Initial recognition and measurement

At initial recognition, financial asset is measured at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in

profit or loss.

(ii). Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in following categories:

a) at amortized cost; or

b) at fair value through other comprehensive income; or

c) at fair value through profit or loss.

The classification depends on the entity''s business model for managing the financial assets and the contractual terms of the cash flows."

Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Interest income from these financial assets is included in finance income using the effective interest rate method (EIR).

Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in Statement of Profit and Loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to Statement of Profit and Loss and recognized in other gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.

Fair value through profit or loss: Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit or loss. Interest income from these financial assets is included in other income.

Equity instruments:

Investments in subsidiaries are recognised at cost as per Ind AS 27 less impairment, if any, except where investments accounted for at cost shall be accounted for in accordance with Ind AS 105, Non-current Assets Held for Sale and Discontinued Operations, when they are classified as held for sale.

All other equity investments are measured at fair value. Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value (currently no such choice is made). The Company makes such election on an instrument- by-instrument basis. The classification is made on initial recognition and is irrevocable.

If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to P&L, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.

Investment in Limited Liability Partnership (LLP):

Investments in capital of Limited liability partnership (LLP), where the Company has control over these LLP''s, are recognised at cost as per Ind AS 27 less impairment, if any.

(iii). Impairment of financial assets

"The Company assesses on a forward looking basis the expected credit losses (ECL) associated with its assets carried at amortised cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk. "

The impairment methodology for each class of financial assets stated above is as follows:

Trade receivables from customers: The Company applies the simplified approach to providing for expected credit losses prescribed by Ind AS 109, which requires the use of the lifetime expected loss provision for all trade receivables.

"Debt investments measured at amortised cost and FVOCI: Debt investments at amortised cost and those at FVOCI where there has been a significant increase in credit risk, lifetime expected credit loss provision method is used and in all other cases, the impairment provision is determined as 12 months expected credit losses.

For recognition of impairment loss on financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial

recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If in subsequent years, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12 month ECL. "

Life time ECLs are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12 month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the year end.

ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider all contractual terms of the financial instrument (including prepayment, extension etc.) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument.

ECL impairment loss allowance (or reversal) recognized during the year is recognized as income/expense in the statement of profit and loss. In balance sheet ECL for financial assets measured at amortized cost is presented as an allowance, i.e. as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write off criteria, the Company does not reduce impairment allowance from the gross carrying amount.

(iv). Derecognition of financial assets

"A financial asset is derecognized only when

a) the rights to receive cash flows from the financial asset is transferred or

b) retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients."

Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains

control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.

Where the financial asset is transferred then in that case financial asset is derecognized only if substantially all risks and rewards of ownership of the financial asset is transferred. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognized.

(b). Financial liabilities

(i) . Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss and at amortized cost, as appropriate.

All financial liabilities are recognized initially at fair value and, in the case of borrowings and payables, net of directly attributable transaction costs.

(ii) . Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognized in the Statement of Profit and Loss.

Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in Statement of Profit and Loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the Statement of Profit and Loss.

(iii) . Compound financial instruments

Compound financial instruments issued by the Company which can be converted into fixed number of equity shares for fixed price at the

option of the holders irrespective of changes in the fair value of the instrument are accounted by separately recognising the liability and the equity components. The liability component is initially recognised at the fair value of a comparable liability that does not have an equity conversion option. The equity component is initially recognised at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. The directly attributable transaction costs are allocated to the liability and the equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of the compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured subsequently."

(iv). Derecognition

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the Statement of Profit and Loss as finance costs.

(cl. Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

2.18 Employee benefits

(a). Short-term obligations

Liabilities for wages and salaries, including nonmonetary benefits that are expected to be settled wholly within 12 months after the end of the year in which the employees render the related service are recognized in respect of employees'' services up to the end of the year and are measured at the amounts expected to be

paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.

(b) . Other long-term employee benefit obligations

"Compensated Absences: Accumulated compensated absences, which are expected to be availed or encashed within 12 months from the end of the year are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year end.

Accumulated compensated absences, which are expected to be availed or encashed beyond 12 months from the end of the year end are treated as other long term employee benefits. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/gains are recognized in the statement of profit and loss in the year in which they arise.

Compensated absences can be encashed only on discontinuation of service by employee."

[c] . Post employment obligations

(i) . Defined contribution plan

Provident Fund: Contribution towards provident fund is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis which are charged to the Statement of Profit and Loss.

Employee''s State Insurance Scheme: Contribution towards employees'' state insurance scheme is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis which are charged to the Statement of Profit and Loss.

(ii) . Defined benefit plans

Gratuity: The Company provides for gratuity, a defined benefit plan (the ''Gratuity Plan") covering eligible employees in accordance with the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary. The

Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/gains are recognized in the other comprehensive income in the year in which they arise.

2.19 Earnings per share

"Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Earnings considered in ascertaining the Company''s earnings per share is the net profit or loss for the year after deducting preference dividends and any attributable tax thereto for the year. The weighted average number of equity shares outstanding during the year and for all the years presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year is adjusted for the effects of all dilutive potential equity shares."

2.20 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker regularly monitors and reviews the operating result of the whole Company as one segment of manufacturing of technical textile. Thus, as defined in Ind AS 108 "Operating Segments", the Company''s entire business falls under this one operational segment and hence the necessary information has already been disclosed in the Balance Sheet and the Statement of Profit and Loss.

2.21 Contributed equity

"Equity Shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds."

2.22 Dividends

Provision is made for the amount of any dividend declared, being appropriately authorized and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

2.23 Rounding off amounts

AH amounts disclosed in financial statements and notes have been rounded off to the nearest millions as per requirement of Schedule III of the Act, unless otherwise stated.

3. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future years.

3.1 Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the year end date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

(a) . Taxes

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

(b) . Defined benefit plans and other long term

benefits (gratuity benefits and compensated absences)

The cost of the defined benefit plans and other long term benefits such as gratuity and compensated absences are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may

differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each year end.

The principal assumptions are the discount and salary growth rate. The discount rate is based upon the market yields available on government bonds at the accounting date with a term that matches that of liabilities. Salary increase rate takes into account of inflation, seniority, promotion and other relevant factors on long term basis.

(c) . Intangible asset under development

The Company capitalises intangible asset under development for a project in accordance with the accounting policy. Initial capitalisation of costs is based on management''s judgement that technological and economic feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model. In determining the amounts to be capitalised, management makes assumptions regarding the expected future cash generation of the project, discount rates to be applied and the expected period of benefits.

(d) . Foreign currency convertible bonds (FCCB)

FCCB issued by the company are converted into fixed number of equity shares for fixed price at the option of the holders at fixed rate of exchange. Hence, FCCB issued by the Company is Compound financial instrument and is accounted separately, recognising the liability and the equity components. Based on management estimate, the coupon rate at the time of issue of FCCB is same as coupon rate applicable to comparable liability that does not have an equity conversion option. On initial recognition, the fair value of liability component of FCCB is same as consideration received, resulting in Nil equity component. Hence, entire FCCB is recognised as liability.

(e) . Useful lives of property, plant and equipment

"The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods."

4. RECENT PRONOUNCEMENTS

Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31,2023, MCA amended the Companies (Indian Accounting Standards) Rules, 2015 by issuing the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from April 1,2023, as below:

"Ind AS 1 - Presentation of Financial Statements

The amendments require companies to disclose their material accounting policies rather than their significant accounting policies.

Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general purpose financial statements. The Company does not expect this amendment to have any significant impact in its financial statements."

"Ind AS 12 - Income Taxes

This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company has evaluated the amendment and there is no impact on its financial statement."

"Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors

This amendment has introduced a definition of ''accounting estimates'' and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company has evaluated the amendment and there is no impact on its financial statements."

46. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company is exposed to various financial risks. These risks are categorized into market risk, credit risk and liquidity risk. The Company''s risk management is coordinated by the Board of Directors and focuses on securing long term and short term cash flows. The Company does not engage in trading of financial assets for speculative purposes.

(A) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include borrowings and derivative financial instruments.

(i) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to the risk of changes in market interest rates relates primarily to the Company''s long-term debt obligations with floating interest rates.

The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings.

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings. With all other variables held constant, the Company''s profit / loss before tax is affected through the impact on floating rate borrowings, as follows:

(B) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Credit risk is primarily attributable to the Company''s trade and other receivables. The amounts presented in this standalone statement of financial position are net of allowances for doubtful receivables, estimated by management based on prior experience and their assessment of the current economic environment.

The Company measures the expected credit loss of trade receivables and loan from individual customers based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends. Based on the historical data, loss on collection of receivable is not material hence no additional provision considered.

51 . The Company is in the process of approaching TPG Growth II SF Pte. Ltd. and International Finance Corporation

("lenders") for one time settlement of its loan and envisages that the lenders shall forgo the interest charge (including penal interest) accrued on its loans for the period April 1,2019 to March 31,2023.

Accordingly, the Company does not expect any outflow of interest (including penal interest) attributable for the period April 1, 2019 to March 31, 2023 on loans from the said lenders; hence, the Company has not provided for interest (including penal interest) amounting to Rs. 272.62, Rs. 203.07 million; Rs. 171.44 millions and Rs. 183.29 millions for the year ended March 31,2023, for the year ended March 31,2022, for the year ended March 31,2021 and for the year ended March 31,2020 respectively.

52 . The Company has incurred net losses of Rs. 1,045.02 millions during the year ended March 31, 2023 and has a net

current liability position of Rs. 5,457.64 millions as on that date. Further, in respect of certain loan arrangements for which the amounts have fallen due as mentioned in Note 22 (d) and 24 (c); the Company is pursuing with its lenders for restructuring of loans through an Inter Creditor Agreement. Consequently, the Company''s ability to meet its obligations is dependent on restructuring of loans. The Company will also require further financing to sustain its operations in the normal course of business for which the Company is also contemplating monetisation of certain assets. These events along with other conditions cast significant doubt on the ability of the Company to continue as a going concern. The Company is confident that such cash flows would enable it to service its debt and discharge its obligations. Accordingly, these financial statements of the Company have been prepared on a going concern basis.

53 . Tuff Subsidy and Government Subsidy receivable by the Company Rs. 1,243.15 lakhs which pertains to the period

prior to financial year 2016-17. The Company is pursuing with respective banks and Ministry of Textiles through a Consultant. The Company is confident that the said government subsidy will be released, once the joint inspection (JIT) and other procedure laid down by the Ministry of Textile are completed.

54 . The Company was getting export incentive under Merchandise Export from India Scheme and recognized export

incentive receivable till 30 June 2020. Government of India has withdrawn this scheme with retrospective that is from 7 March 2019. the company has Claims amounting to Rs. 1,499.22 lakhs of export incentive receivable. FIBC manufacturer association (IFIBCA) has challenged retrospective withdrawal of incentive scheme by the Government before Hon''ble High Court, New Delhi. The Hon''ble High Court has issued interim order and final order is awaited in this regard. The Company is confident that final order of High Court will be issued in favour of manufacturers.

55 . The Company has made financing arrangement with IFCI Limited. As a part of financing arrangement, the Company

has arranged security guarantee from certain parties ("guarantors"), who pledged the shares of the Company held by them as security with IFCI Limited. Consequent to the default in repayment of loan by the Company as mentioned in note 22(d), IFCI Limited has forfeited the guarantees. Upon forfeiture of such security provided by guarantors, the Company has made compensation amounting to Rs 94.85 millions to guarantors as a part of security guarantee arrangement.

56 . The Company does not have any Benami property, where any proceeding has been initiated or pending against the

company for holding any Benami property.

57 . The Company has borrowings from banks and financial institutions on the basis of security of current assets. The

quarterly returns or statements of current assets filed by the company with banks or financial institutions are in agreement with the books of accounts and there were no material discrepancies noted. However , in the view of restructuring proposal and holding-on-operations as requested to bankers, the Company could not make available

such quarterly returns or statements to the Statutory Auditors.

58 . The company has defaulted in meeting its payment / repayment obligations of interest and Principal respectively as

mentioned in Note 22(d) and 24(c). However, the Company has not been declared wilful Defaulter by any Bank or Financial Institutions or other lender.

59 . The Company does not have any transactions with companies struck off under section 248 of the Companies Act,

2013 or section 560 of Companies Act, 1956.

60 . The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory

period.

61 . The company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with

the Companies (Restriction on number of Layers) Rules, 2017.

62 . The Company has not entered into any scheme of arrangement which has an accounting impact on current or

previous financial year.

63 . Utilisation of Borrowed funds and share premium:

(i) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(ii) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

64 . There is no income surrendered or disclosed as income during the current or previous year in the tax assessments

under the Income Tax Act, 1961, that has not been recorded in the books of accounts.

65 . The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

66 . The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets

or both during the current or previous year.

67 . The borrowings obtained by the company from banks and financial institutions have been applied for the purposes

for which such loans were was taken.

68 . The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post - employment

benefits has received the Presidential assent in September 2020. The Ministry of Labour and Employment had released draft rules for the Code on November 13, 2020, and had invited suggestions from stakeholders which are under active consideration by the Ministry. However, the effective date from which the changes are applicable is yet to be notified. The Company will evaluate and will give appropriate impact in the financial statements in the period in which the Code becomes effective and the related rules are published.

69 . The Financials are presented in Rs. Million and decimal thereof except for the per share information or as otherwise

stated.

70 . Previous year figures have been regrouped/ reclassified to confirm presentation as per Ind AS as required by Schedule III of the Act.

As per our report of even date For and on behalf of the Board of Directors of

For Mahesh C. Solanki & Co. Flexituff Ventures International Limited

Chartered Accountants CIN: L25202MP1993PLC034616

Firm Registration No.: 006228C

Saurabh Kalani Rahul Chouhan

Mahesh Solanki Whole time director Whole time director

Partner DIN: 00699380 DIN: 03307553

Membership No.: 074991 Place: Pithampur Place: Pithampur

Place: Indore Date: May 30, 2023 Date: May 30, 2023

Date: May 30, 2023

Rishabh Kumar Jain Ramesh Chand Sharma

Company Secretary Chief Financial Officer

Membership No: F7271

Place: Pithampur Place: Pithampur

Date: May 30, 2023 Date: May 30, 2023

---

Mar 31, 2018

1 General Information

Flexituff International Limited (“the Company”) is engaged in the business of technical textile. Manufacturing units of the Company are located at Pithampur in Madhya Pradesh and at Kashipur in Uttarakhand. The Company is a public limited company domiciled in India and is incorporated under the provisions of the Companies Act. The Company is listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The registered office of the Company is located at C-41 50, SEZ, Sector - 3, Pithampur, Madhya Pradesh- 454 775.

These financial statements were authorised for issue by the Board of Directors on 30 May 2018.

2 Significant accounting judgments, estimates and assumptions

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future years.

2.1 Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the year end date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

(a) Taxes

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

(b) Defined benefit plans and other long term benefits (gratuity benefits and leave encashment)

The cost of the defined benefit plans and other long term benefits such as gratuity and leave encashment are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each year end.

The principal assumptions are the discount and salary growth rate. The discount rate is based upon the market yields available on government bonds at the accounting date with a term that matches that of liabilities. Salary increase rate takes into account of inflation, seniority, promotion and other relevant factors on long term basis.

(c) Intangible asset under development

The Company capitalises intangible asset under development for a project in accordance with the accounting policy. Initial capitalisation of costs is based on management’s judgement that technological and economic feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model. In determining the amounts to be capitalised, management makes assumptions regarding the expected future cash generation of the project, discount rates to be applied and the expected period of benefits.

(d) Foreign currency convertible bonds (FCCB)

FCCB issued by the company are converted into fixed number of equity shares for fixed price at the option of the holders at fixed rate of exchange. Hence, FCCB issued by the Company is Compound financial instrument and is accounted separately, recognising the liability and the equity components. Based on management estimate, the coupon rate at the time of issue of FCCB is same as coupon rate applicable to comparable liability that does not have an equity conversion option. On initial recognition, the fair value of liability component of FCCB is same as consideration received, resulting in nil equity component. Hence, entire FCCB is recognised as liability.

3 Standards (including amendments) issued but not yet effective

The standards and interpretations that are issued, but not yet effective up to the date of issuance of the financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective.

(a) Appendix B to Ind AS 21, Foreign currency transactions and advance consideration

On March 28, 2018, Ministry of Corporate Affairs (“MCA”) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 1, 2018. The Company is currently evaluating the requirements of amendments. The Company believe that the adoption of this amendment will not have a material effect on its financial statements.

(b) Ind AS 115- Revenue from Contract with Customers

On March 28, 2018, Ministry of Corporate Affairs (“MCA”) has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers.

The standard permits two possible methods of transition:

(i) Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8- Accounting Policies, Changes in Accounting Estimates and Errors

(ii) Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach) The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018.

4 First-time adoption of Ind-AS

These financial statements are the first set of Ind AS financial statements prepared by the Company. Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for year ending on 31 March 2018, together with the comparative year data as at and for the year ended 31 March 2017, as described in the significant accounting policies. In preparing these financial statements, the Company’s opening balance sheet was prepared as at 1 April 2016, being the Company’s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1 April 2016 and the financial statements as at and for the year ended 31 March 2017.

4.1 Exemptions availed on first time adoption of Ind AS

Ind AS 101, First-time Adoption of Indian Accounting Standards, allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has accordingly applied the following exemptions.

(a) Deemed Cost

The Company has opted para D7 AA and accordingly considered the carrying value of property, plant and equipment’s and Intangible assets as deemed cost as at transition date.

(b) Long term foreign currency monetary item

Ind AS 101 permits a first-time adopter to continue the accounting policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognized in the financial statements for the year ending March 31, 2017. The Company has opted to follow this exemption.

(c) Deemed cost of investment in subsidiary and limited liability partnership

The Company has opted para D14 and D15 and accordingly considered the Previous GAAP carrying amount of Investments as deemed cost as at the transition date.

4.2 Mandatory Exemption on first-time adoption of Ind AS

(a) Estimates

An entity’s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with Indian GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at 1 April 2016 and 31 March, 2017 are consistent with the estimates as at the same date made in conformity with Indian GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under Indian GAAP:

- Impairment of financial assets based on expected credit loss model.

(b) Derecognition of financial assets and financial liabilities

The Company has applied the derecognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after 1 April, 2016 (the transition date).

(c) Classification and measurement of financial assets

Ind AS 101, First-time Adoption of Indian Accounting Standards, requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

4.3 Reconciliations

The following reconciliations provide a quantification of the effect of significant differences arising from the transition from previous GAAP to Ind AS required under Ind AS 101:

(a) Reconciliation of Balance sheet as at 1 April 2016 (Transition Date)

(b) Reconciliation of Balance sheet as at 31 March 2017

(c) Reconciliation of statement of profit and loss for the year ended 31 March 2017

(d) Reconciliation of Equity as at 1 April 2016 and as at 31 March 2017

(e) Reconciliation of total comprehensive income for the year ended 31 March 2017

The presentation requirements under previous GAAP differs from Ind AS, and hence, previous GAAP information has been regrouped for ease of reconciliation with Ind AS. The regrouped previous GAAP/ Indian GAAP information is derived from the Financial Statements of the Company prepared in accordance with previous GAAP.

(f) Notes to first-time adoption

(i) Processing cost incurred on Borrowings

Under the previous GAAP, processing cost incurred for borrowings related to qualifying assets are capitalised fully. Remaining processing cost are charged to profit and loss.

As required under the IND AS 109 transactions costs incurred towards origination of borrowings have been deducted from the carrying amount of borrowings on initial recognition. These costs are amortised over the tenure of the borrowing as interest expense, computed using the effective interest rate method corresponding effect being in Long term borrowings and to the extent attributable to Current maturity of long term debts. Transaction cost amortised are accounted as follows:

1) capitalised to the extent amortised till date assets is capitalised, in case it is related to qualifying assets

2) charged to profit and loss as interest expenses in all other case except for (1) above.

On transition to Ind AS, all processing cost incurred are amortised over the period of borrowings and the unamortised amount of processing cost (including unamortised processing cost under Indian GAAP reclassified from prepaid expenses) as at the date of the transition is adjusted from the carrying amount of borrowings. Under Ind AS, processing cost incurred for borrowing related to qualifying assets, amortised till the date of capitalisation are capitalised. The Company has already capitalised the processing cost, incurred for borrowing related to qualifying assets, as a part of the cost of the property, plant & equipment. As a consequence, to restate the carrying amount of loan in accordance with paragraph 10 of Ind AS 101, the carrying amount of the property, plant & equipment as at the date of the transition is reduced by the amount of unamortised processing cost till the date of capitalisation (net of cumulative depreciation impact). The difference between the adjustments to the carrying amount of loan and to property, plant & equipment, respectively is recognised in the retained earnings as at the date of the transition.

(ii) Derecognition of financial instruments

Under Indian GAAP, trade receivables derecognised by way of bills of exchange have been shown as contingent liability since there is recourse clause. Under Ind AS, the trade receivables have been restated with corresponding recognition of short term borrowings.

(iii) Security Deposits

Under Indian GAAP, interest-free security deposit are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognized at fair value on initial recognition. Subsequently, these financial assets are carried at amortised cost using effective interest rate.

(iv) Deferred tax

Under previous GAAP, Minimum alternative tax (MAT) credit entitlement is disclosed under other non current/current assets as applicable. Under Ind AS, MAT credit entitlement is reclassified to Deferred tax. Further, Deferred tax is accounted on all Ind AS adjustments.

(v) Excise Duty

Under Previous GAAP, excise duty was netted off against sale of goods. However, under Ind AS, excise duty is included in sale of goods and is separately presented as expense on the face of the Statement of Profit and Loss. Thus, sale of goods under Ind AS has increased with a corresponding increase in expenses.

(vi) Defined benefit liabilities

Under Ind AS, remeasurements on defined benefit plans i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit and loss. Under the previous GAAP, these remeasurements were forming part of the profit and loss for the year.

(vii) Retained earnings

Retained earnings as at 1 April 2016 has been adjusted consequent to the above Ind AS adjustments

(viii) Statement of cash flows

No material impact on transition from Indian GAAP to Ind AS on the statement of cash flows.

(b) Rights, preferences and restrictions attached to shares

The Company has only one class of equity shares having par value of Rs. 10 per share. Each shareholder is entitled to one vote per share held. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended March 31, 2018, the amount of per share dividend recognized as distributions to equity shareholders was Nil (March 31, 2017: Nil).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

As per records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

(d) No class of shares have been issued as bonus shares or for consideration other than cash by the Company during the period of five years immediately preceding the current year end.

(e) No class of shares have been bought back by the Company during the period of five years immediately preceding the current year end.

b. Terms of unsecured borrowing are as under

i Foreign Currency Convertible Bonds

As at 31 March 2018, the Company has two foreign currency convertible bonds aggregating USD 34 millions :

i)The Companyhas issued 9,000,5.34% foreign currencyconvertible bond ofUSD 1,000 each aggregating to USD 9 millions on 24 December 2013.The bonds are convertible atthe option ofbondholders into equityshares ofRs. 10 each fullypaid atthe conversion price of Rs. 230 per share, subject to terms of issue, with fixed rate of exchange of Rs. 61.86 equal to USD 1 on 30 January 2019.

ii) The Company has issued 25,000, 5.44% foreign currency convertible bond of USD 1,000 each aggregating to USD 25 millions on 26 April 2013. The bonds are convertible at the option of bondholders into equity shares of Rs. 10 each fully paid at the conversion price of Rs. 218 per share, subject to terms of issue, with fixed rate of exchange of Rs. 54.16 equal to USD 1 on 26 April 2018

ii Finance Lease obligation

The Company has obtained finance lease from TATA capital and Netsal Mashinen, AG Switzerland for purchase of plant and machinery at fixed rate of interest 13% and floating rate of Libor 2.5% respectively. The balance of TATA lease as on 31 March 2018 amounts to Rs. 82.65 (including current maturities of Rs.16.84) repayable in monthly installments up to September 2022 and of Netstal amounts to Rs.8.81 (classified entirely to current maturities).

iii Loan from others

Loan from other parties is repayable over a period ranging between 12 to 36 months and has rate of interest ranging from 14% to 17.5%.

c. Nature of security :

(i) Term Loans from banks amounting to Rs. 48.27 (31 March 2017: Rs. 176.90; 1 April 2016: Rs. 628.40) and term loan from other parties amounting to Rs. 1,304.07 (31 March 2017 : Rs. 2,131.58; 1 April 2016 : Rs. 189.17) are secured by equitable mortgage on all immovable fixed assets of the Company, hypothecation of the entire moveable machinery and other fixed assets and a second charge on all current assets of the company. Above Term loans are further secured by Personal Guarantee of Mr. Manish Kalani and corporate guarantee of M/s Kalani Industries Private Limited

(ii) Term Loan from other parties amounting to Nil (31 March 2017: 100.00; 1 April 2016: 200.00) is secured by pari passu first charge on all current assets and pari passu second charge on entire fixed assets and further secured by personal guarantee of Mr. Saurabh Kalani and corporate guarantee of Kalani Industries Private Limited.

(iii) Term loan from banks amounting to Rs. 4.03 (31 March 2017: Rs. 4.09; 1 April 2016: Rs. 4.53) and term loans from others amounting to Nil (31 March 2017: Rs. 0.45; 1 April 2016: Rs. 1.33) is secured by hypothecation of vehicles.

d. Period and amount of default:

The Company has made no defaults in the payment of principal or interest in the current period.

a. Terms and conditions of loans:

i. Outstanding loans from banks carry interest from 5% to 14% p.a., repayable on demand

ii. Outstanding loans other parties carry interest rate of 15% to 16% p.a., repayable within 30 to 91 days

b. Nature of security :

i. Outstanding loans are secured by first charge on all current assets viz. raw material, stores & spares, work-in-progress, finished goods and book debts & second charge on all fixed assets of the Company

ii. Outstanding loans are further secured by personal guarantee of Mr. Manish Kalani and corporate guarantee of M/s Kalani Industries Private Limited.

iii. Outstanding loans are further secured by personal guarantee of Mr. Saurabh Kalani, director of the Company

c. Period and amount of default:

The Company has made no defaults in the payment of principal or interest in the current period

5 Leases

Operating leases where Company is a lessee:

The Company has entered into lease transactions mainly for leasing of office premise for a period between 1 to 6 years. The terms of lease include terms of renewal, increase in rents in future periods, which are in line with general inflation, and terms of cancellation. The operating lease payments recognized in the Statement of Profit and Loss amount to Rs.36.99 (31 March 2017: 26.20) included in Note 37.

Finance leases where Company is a lessee:

The Company has finance leases and hire purchase contracts for various items of plant and machinery. Future minimum lease payments under finance leases and hire purchase contracts together with the present value of the net minimum lease payments (MLP) are, as follows:

6 Segment reporting

The Company’s operations predominantly relate to manufacturing of technical textile. The Chief Operating Decision Maker (CODM) reviews the operations of the Company as one operating segment. Hence no separate segment information has been furnished herewith.

The Company does not receive 10% or more of its revenue from transactions with any single external customer.

The amount of its revenue from external customers, broken down by location of its customers is shown in the table below:

7 Fair values of financial assets and financial liabilities

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The amortized cost using effective interest rate (EIR) of non-current financial assets/liabilities are not significantly different from the carrying amount and therefore the impact of fair value is not considered for above disclosure.

Financial assets that are neither past due nor impaired include cash and cash equivalents, security deposits, term deposits, and other financial assets.

8 Fair value hierarchy

The following is the hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

-Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

-Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

-Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis:

9 Financial risk management objectives and policies

The Company is exposed to various financial risks. These risks are categorized into market risk, credit risk and liquidity risk. The Company’s risk management is coordinated by the Board of Directors and focuses on securing long term and short term cash flows. The Company does not engage in trading of financial assets for speculative purposes.

(A) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include borrowings and derivative financial instruments.

(i) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company exposure to the risk of changes in market interest rates relates primarily to the Company’s longterm debt obligations with floating interest rates.

The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings.

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings. With all other variables held constant, the Company’s profit before tax is affected through the impact on floating rate borrowings, as follows:

(ii) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense is denominated in a different currency from the Company’s functional currency).

Foreign currency sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in the foreign exchange rate, with all other variables held constant, of the Company’s profit before tax (due to changes in the fair value of monetary assets and liabilities).

(B) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Credit risk is primarily attributable to the Company’s trade and other receivables. The amounts presented in this standalone statement of financial position are net of allowances for doubtful receivables, estimated by management based on prior experience and their assessment of the current economic environment.

The Companymeasures the expected creditloss oftrade receivables and loan from individual customers based on historical trend,industry practices and the business environmentinwhich the entityoperates. Loss rates are based on actual creditloss experience andpasttrends. Based on the historical data, loss on collection of receivable is not material hence no additional provision considered.

(C) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. Processes and policies related to such risks are overseen by senior management who monitors the Company’s net liquidity position through rolling forecasts on the basis of expected cash flows.

10 Capital management

For the purpose of the Company’s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Company’s capital management is to maximize the shareholder value and to ensure the Company’s ability to continue as a going concern.

The Company has not distributed any dividend to its shareholders. The Company monitors gearing ratio i.e. total debt in proportion to its overall financing structure, i.e. equity and debt. Total debt comprises of non-current borrowing (including current maturrities from long term debts) and current borrowing of the Company. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.

11 Previous year figures have been regrouped/ reclassified to confirm presentation as per Ind AS as required by Schedule III of the Act.

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Mar 31, 2016

(b) Rights, preferences and restrictions attached to shares

The Company has only one class of equity shares having par value of Rs. 10 per share. Each shareholder is entitled to one vote per share held. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended March 31, 2016, the amount of per share dividend recognized as distributions to equity shareholders was Nil (March 31, 2015: Rs.1).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Notes:

a. Term Loans from banks amounting to Rs. 628.40 (previous year: Rs. 970.23) and term loan from other parties amounting to Rs.189.17 (previous year: Rs. 236.85) are secured by equitable mortgage on all immovable fixed assets of the Company, hypothecation of the entire moveable machinery and other fixed assets (except specific equipment finance through GE Capital Services India) and a second charge on all current assets of the company. Above Term loans are further secured by Personal Guarantee of Shri Manish Kalani and corporate guarantee of M/S Kalani Industries Private Limited.

b. Term loans from other parties amounting to Nil (previous year: Rs 38.32) - (i) First and exclusive charge over Equipment financed through the Facility in accordance with the Deed of Hypothecation. (ii) Personal Guarantee of Mr. Manish Kalani. (iii) Corporate Guarantee of M/s Kalani Industries Private Limited.

c. Term Loan from other parties amounting to Rs. 200.00 (previous year: Nil) is secured by pari passu first charge on all current assets and pari passu second charge on entire fixed assets and further secured by personal guarantee of Mr. Saurabh Kalani and corporate guarantee of Kalani Industries Private Limited.

d. Term loan from banks amounting to Rs. 4.53 (previous year Rs. 6.32) and term loans from others amounting to Rs. 1.33 (previous year: Rs. 2.11) is secured by hypothecation of vehicles.

e. As at March 31, 2016, the Company has two foreign currency convertible bonds aggregating USD 34 million :

i) The Company has issued 9,000, 5.34% foreign currency convertible bond of USD 1,000 each aggregating to USD 9 million on December 24, 2013. The bonds are convertible at the option of bondholders into equity shares of Rs. 10 each fully paid at the conversion price of Rs.230 per share, subject to terms of issue, with fixed rate of exchange of Rs. 61.86 equal to USD 1 on January 30, 2019.

ii) The Company has issued 25,000, 5.44% foreign currency convertible bond of USD 1,000 each aggregating to USD 25 million on April 26, 2013. The bonds are convertible at the option of bondholders into equity shares of Rs. 10 each fully paid at the conversion price of Rs. 218 per share, subject to terms of issue, with fixed rate of exchange of Rs. 54.16 equal to USD 1 on April 26, 2018.

1. Current assets and loans and advance

In the opinion of the Board, the Current assets and loans and advances are approximately of the value stated, if realized in the ordinary course or business, except otherwise stated. The provision for all the known liabilities is adequate and not in excess of amount considered reasonably necessary.

2. Managerial remuneration receivable

Employee benefit expenses include Rs. 9.69 paid/payable during the year towards remuneration paid to one of its whole time director. The maximum remuneration payable under the provisions of section 197 read with Schedule V to the Companies Act, 2013 is Rs 6.41.The Company is in the process of obtaining necessary approval from shareholders for remuneration payable to one of its whole time director. Pending receipt of such approval, the excess remuneration amounting to Rs. 3.28 paid to one of its whole time director is held in trust by the said director, which is shown as recoverable under loans and advances.

3. MAT credit

The Company has an unexpired MAT credit entitlement amounting to Rs. 258.67 as at March 31, 2016 which is classified under current asset based on management’s estimation. The management believes that the unexpired MAT credit entitlement will be utilized in the near future.

4. Segment Information (AS 17)

As per Accounting Standard 17 on “Segment Reporting”, segment information has been provided under the Notes to Consolidated Financial Statement

5. Previous year figures

Previous year figures have been regrouped/ reclassified, where necessary, to conform to this year’s classification. As per our report of even date

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Mar 31, 2015

A. Contingent liabilities and commitments

i. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 397.03 million (Previous Year Rs. 275.57 million).

ii. Guarantee given by Banks on behalf of the Company for Rs. 73.45 million (Previous year Rs. 47.06 million).)

iii. On account of Letter of Credit for Rs. 131.21 million (Previous year Rs. 40.36 million).

iv. Foreign Bills Discounted with Bank Rs. 287.04 million (Previous year Rs. 225.33 million).

v. Corporate Guarantee given by the Company is as under:

Sr. Given in Given on Amount favour of behalf of

1 Governor of Nanofil Rs. 0.2 million Uttarakhand Technologies (Previous Year

Pvt.Ltd., Rs. 0.2 million)

Kashipur

v. Outstanding of Taxes on account of disputes are as follows:

(a) The company filed appeal before CIT(A) / ITAT and contested Income Tax demand for the A.Y. 2004-05, 2005-06 and 2006-07 for Rs.26.19 million, Rs.22.62 million 8j Rs. 6.03 million respectively and also contested TDS demand for the A.Y.2005-06 to 2007-08 Rs. 0.71 million.

(b) The Income Tax department has filed an appeal before the M.P.High Court, challenging the order of ITAT passed in favor of Company for the A.Y.2003-04. The amount of tax and penalty is Rs 6.57 million and Rs. 1.45 million respectively.

(c) The company has contested M.P.VAT/CST. demand for F.Y. 2006-07, 2007-08, 2008- 09, 2009-10, 2010-11,2011-12 % 2012-13 for Rs. 3.85 million, Rs. 1.96 million, Rs. 1.05 million, Rs. 4.38 million, Rs.0. 92 million, Rs. 0.65 million 8j Rs.0.99 million respectively and Entry Tax demand for F.Y. 2006-07, 2007-08, 2008-09, 2009-10 $ 2010-11 for Rs. 2.42 million, Rs.2.77 million, Rs. 4.62 million, Rs. 3.72 million 8j Rs. 0.37 million respectively as per legal opinion obtained.

(d) The company has contested VAT/CST Demand for FY 2010-11, 2011-12, 2012-13,2013-14 % 2014-15 for Rs 20.55 million, Rs 8.92 million, Rs. 6.81 million, Rs 4.0 million $ Rs.2.0 million respectively at Kashipur unit.

B. In the opinion of the Board of Directors the Current Assets, Loans and Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.

C. During the year the Company has booked amount of interest subsidy of Rs.7.91 million (Previous year Rs. 13.83 million) and the same has been credited in interest paid on term loan account.

D. Segment Information (AS-17)

As per Accounting Standard (AS) 17 on "Segment Reporting", segment information has been provided under the Notes to Consolidated Financial Statements

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Mar 31, 2014

A. CONTINGENT LIABILITIES AND COMMITMENTS :-

Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.275.57 million (Previous Year Rs.318.02 million)

i. Guarantee given by Banks on behalf of the Company for Rs.47.06 million (Previous year Rs.79.78 million) iii. On account of Letter of Credit for Rs.40.36 million (Previous year Rs.139.98 million), iv. Foreign Bills Discounted with Bank Rs.225.33 million (Previous year Rs.354.97 million).

v. Claims against the Company/disputed liabilities not acknowledged as debts amounting to Rs. Nil (Previous year Rs.21.76 million) vi. Difference between the amount at which FCCB has been stated in the books and the amount of FCCB as calculated on the basis of rate of Foreign Currency on the date of reporting period Rs.174.74 million. (Previous year Nil)

vii. Corporate Guarantee given by the Company is as under

viii. Outstanding of Taxes on account of disputes are as follows- fa) The company filed appeal before CIT(A)/ITAT and contested Income Tax demand for the A.Y. 2004-05, 2005-06 and 2006-07 for Rs.17.14 million, Rs.1 5.39 million & Rs.6.03 million respectively and also contested TDS demand for the A.Y. 2005-06 to 2007-08 Rs.0.71 million

(b) The Income Tax department has filed an appeal before the M. P.High Court, challenging the order of ITAT passed in favor of Company for the A.Y.2003-04. The amount of tax and penalty is Rs.6.58 million and Rs.1.45 million respectively.

(c) The company has contested M.P.VAT/CST. demand for F.Y 2006-07,2007-08, 2008-09, 2009-10 & 2010-11 for Rs.3.85 million, Rs.1.96 million, Rs.1.06 million, Rs.4.38 million &Rs.0.92 million respectively and Entry Tax demand for F.Y. 2006-07,2007-08, 2008- 09, 2009-10 & 2010-11 forRs.2.41 million, Rs.2.77 million, Rs.4.62 million, Rs.3.72 million &Rs.0.38 million respectively as per legal opinion obtained

(d) The company has contested VAT/CST Demand for FY 2009-10, 2010-11 & 2011 -12 for Rs.1.74 million, Rs.23.30 million and Rs.7.82 million respectively at Kashipur unit.

D. During the year the Company has booked amount of interest subsidy of Rs.13.83 million (Previous year Rs.20.65 million) and the same has been credited in interest paid on term loan account.

E. During the year the Company has preferentially allotted 1902173 Equity shares of Rs.10/- each at a premium of Rs.220/- each through private placement to International Finance Corporation

F. The Company has fully disinvested from Satguru Polyfab Pvt. Ltd. on 02nd August 2013 hence it ceased to be subsidiary of the Company. Net loss on sale of investment of Rs.45.49 million considered in extra ordinary item

G. The Company has issued 5.44% Foreign Currency Convertible Bonds of USD 25.00 million to TPG Growth II SF Pte. Ltd. on 26th Apri 2013.As per the term of issue, the holder has an option to convert FCCBs into Equity Shares at a predetermined conversion rate of Rs.218/- per Equity Share on or before 5 years and one day.

H. Similarly Company has issued 5.34% Foreign Currency Convertible Bonds of USD 9.00 million to International Finance Corporation on 31st January 2014. As per the term of issue, the holder has an option to convert FCCBs into Equity Shares at a predetermined conversion rate of Rs.230/- per Equity Share on or before 5 years and one day.

Segment Information (AS-17)

As per Accounting Standard (AS) 17 on "Segment Reporting", segment information has been provided under the Notes to Consolidated

Financial Statements.

Names of related parties and description of relationship

1. Subsidiaries (i) Satguru Polyfab Pvt. Ltd. (till 02nd August 2013)

(ii) Flexiglobal Holdings Ltd., Cyprus- Wholly Owned Subsidiary (iii) Nanofil Technologies Pvt. Ltd.- Wholly Owned Subsidiary

2. Associates (i) Kalani Industries Pvt. Ltd

3. Key Management Personnel Mr. Saurabh Kalani, Mr. K K. Vijayvergiya and

Mr. Manoj Dwived

4. Relatives of Key Management Personnel Mrs. Padma Kalani,

Mr. Manish Kalani, Mr Kartikeya Kalani, Mr. Vinayak Kalani and Mrs. Kaushalya Vijayvergiya

K. Previous year figures are re-grouped or re-arranged to confirm to current year figures.

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Mar 31, 2013

A. CONTINGENT LIABILITIES AND COMMITMENTS :- i. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.318.02 million (Previous Year Rs.57.43 million).

ii. Guarantee given by Banks on behalf of the Company for Rs.79.78 million (Previous year Rs.73.10 million).

iii. On account of Letter of Credit for Rs.139.98 million ( Previous year Rs.176.37 million).

iv. Foreign Bills Discounted with Bank Rs. 354.97 million ( Previous year Rs.329.51 million).

v. Claims against the Company /disputed liabilities not acknowledged as debts amounting to Rs.21.76 million ( Previous year Rs.30.70 million ).

vi. Corporate Guarantee given by the Company is as under :

vii. Outstanding of Taxes on account of disputes are as follows- (a) The company filed appeal before CIT(A) / ITAT and contested Income Tax demand for the A.Y. 2004-05, 2005-06 and 2006-07 for Rs.17.14 million, Rs.15.39 million & Rs.6.03 million respectively and also contested TDS demand for the A.Y.2005-06 to 2007-08 Rs.0.71 million.

(b) The Income Tax department has filed an appeal before the M.P.High Court, challenging the order of ITAT passed in favor of Company for the A.Y.2003-04. The amount of tax and penalty is Rs.6.58 million and 1.45 million respectively.

(c) The company has contested M.P.VAT. demand for F.Y. 2007-08 , 2008-09 & 2009-10 for Rs.1.96 million, Rs.1.06 million & Rs.4.30 million respectively and Entry Tax demand for F.Y. 2006-07 , 2007-08, 2008-09 and 2009-10 for Rs.10.86 million, Rs.1.68 million, Rs.2.90 million & Rs.3.51 million respectively as per legal opinion obtained.

(d) The company has contested VAT Demand for FY 2009-10, 2010-11& 2011-12 for Rs.0.10 million, Rs.2.75 million and Rs.7.82 million respectively at Kashipur unit.

B. In the opinion of the Board of Directors the Current Assets, Loans and Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.

C. During the year the Company has booked the amount of interest subsidy of Rs.20.65 million ( Previous year 23.08 million ) and the same has been credited in interest paid on term loan account.

D. During the year the Company has preferentially allotted 1227273 Equity share of Rs.10/- each at a premium of Rs.210/- each through private placement to TPG Growth II SF Pte. Ltd.

E. Insurance Claim pertaining to damage on 01.10.2012, to the factory premises at Kashipur including stock, building, plant & machinery etc Rs.13.96 million is provided. Claim from Insurer is yet to be settled, against which sufficient insurance coverage is available.

F. Segment Information (AS-17)

As per Accounting Standard (AS) 17 on "Segment Reporting", segment information has been provided under the Notes to Consolidated Financial Statements.

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Mar 31, 2012

1.1 7554053 Shares out of the issued, subscribed and paid up share capital were allotted as Bonus Shares in the last five years by capitalisation of Securities Premium and Reserves (Previous year 7554053)

1.2 NIL Shares out of the issued, subscribed and paid up share capital were allotted on conversion of Fully convertible Debentures and exercise of warrants. (Previous year 5986492)

1.3 The Company has reserved issuance of 1075000 (Previous year 1075000) Options under Employees Stock Option Scheme (ESOP) 2011 for offering to eligible employees of the Company. The Company has granted 1068500 Options to the eligible employees at a price of Rs. 95/- per option. The options would vest over a maximum period of 5 years. During the year 2011- 12, 19700 options are exercised by the option holders (Previous year NIL).

Note 2

A. CONTINGENT LIABILITIES AND COMMITMENTS

i. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 57.43 million (Previous Year Rs. 8.47 million).

ii. Guarantee given by Bank on behalf of the Company for Rs.73.10 million (Previous year Rs. 30.38 million).

iii. Outstanding liabilities on account of Letter of Credit for Rs. 176.37 million (Previous year Rs. 53.05 million).

iv. Foreign Bills Discounted with Bank Rs.329.51 million ( Previous year Rs.77.95 million).

v. Forward purchase contracts remaining outstanding Rs. NIL against export sales (Previous year Euro 0.47 million and GBP 1.19 million ). The mark to market profit/(loss) of Rs.0.58 million (Previous year profit Rs.11.21 million) has been provided in the accounts.

vii. Outstanding of Taxes on account of disputes are as follows:

(a) The company filed appeal before CIT(A)/ITAT and contested the disputed Income Tax demand for the A.Y. 2004-05, 2005-06 and 2006-07 for Rs.17.13 million, Rs.15.39 million & Rs. 6.03 million respectively and also contested disputed of TDS demand for the A.Y.2005-06 to 2007-08 Rs.0.71 million .

(b) The company has contested disputed of M.P.C.T. demand for F.Y. 2005-06, 2007-08 & 2008-09 for Rs. 0.03 million , 1.96 million & 1.06 million respectively & Central Sales Tax demand for Rs. 1.96 million for the F.Y 2005-06 and Entry Tax demand for Rs. 1.67 million and 2.89 million for the F.Y 2007-08 and 2008-09 respectively as per legal opinion obtained.

(c) The company has contested disputed of Commercial Tax for FY 2010-11 for Rs 1.55 million at Kashipur unit.

viii. The Income Tax department has filed an appeal before the M.P.High Court, challenging the order of ITAT passed in favor of Company for the A.Y.2003-04. The amount of tax and penalty is Rs 6.58 million and 1.45 million respectively.

B. In the opinion of the Board of Directors the Current Assets, Loans and Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.

C. Earning per share (AS-20)

(a) Net Profit after Tax

(As per Profit / Loss Account) Number of fully paid up equity share

Rs. 343.60 million (Previous year Rs.274.36 million) 21731810 Equity Share of Rs. 10/- each (Previous year 17212110 EquityShares)

(b) Weighted average number of equity Shares outstanding during the year 19317368 Equity Shares

(Previous year 12650765 Equity shares)

(c) Effects of potential dilutive equity share

623292 Equity Shares

(Previous year 4078354 Equity Shares)

(d) Weighted average number of equity in computing diluted earning per share

19940660 Equity Shares

(Previous year 16729119 Equity Shares)

(e) Earning per share: – Basic [(a)/(b)]

Rs. 17.79

(Previous year Rs. 21.69)

– Diluted [(a)/(d)]

Rs. 17.23

(Previous year Rs. 16.40)

D. During the year the Company has booked the amount of interest subsidy of Rs.23.08 million (Previous year 11.07 million) and the same has been credited in interest paid on term loan account.

F. Insurance Claim pertaining to damage to the factory premises at Kasipur including stock, building, plant & machinery etc Rs 40.00 million (app.) is yet to be settled against which sufficient insurance coverage is available.The loss on account of this is provided in the books by valuation in case of inventory and repairs expenses in case of Plant & Machiney. Similar claim money stolen of Rs 2. 03 million is also yet to be settled against which sufficient insurance coverage is available. Loss of cash has been provided in the books.

G. Segment Information (AS-17) : As per Accounting Standard (AS) 17 on "Segment Reporting", segment information has been provided under the Notes to Consolidated Financial Statements.

Names of related parties and description of relationship:

1. Subsidiaries

(i) Satguru Polyfab Pvt. Ltd., Gandhidham- Subsidiary (ii) Flexiglobal Holdings Ltd., Cyprus- Wholly Owned Subsidiary (iii) Nanofil Technologies Pvt. Ltd.- Wholly Owned Subsidiary

2. Associates

(i) Kalani Industries Pvt. Ltd. (ii) Entertainment World Developers Limited,

3. Key Management Personnel Mr. Manish Kalani

4. Relatives of Key Management Personnel Mr. Saurabh Kalani

I. Prior period item :

The sum of Rs. NIL ( Previous year Rs. 4.42 million) MAT Credit debited to Other Expenses as Net Prior Period item.

J. Previous year figures are re-grouped or re-arranged to confirm to current year figures

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Mar 31, 2011

A. CONTINGENT LIABILITIES NOT PROVIDED FOR:

i. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 8.47 million (Previous Year Rs. 20.19 million)

ii. Guarantee given by Bank on behalf of the Company for Rs.30.38 million {Previous year Rs.25.60 million)

iii. Outstanding liabilities on account of letter of credit for Rs.53.05 million (Previous year Rs. 37.70 million).

iv. Foreign Bills Discounted with Bank Rs.77.95 million (Previous year Rs. 153.58 million).

v. Forward purchase contracts remaining outstanding equivalent to Euro 0.47 million and GBP 1.19 million against export sales (Previous year NIL). The marked to marked profit of Rs.11.21 million (Previous year Nil) has been provided in the accounts.

vi. Corporate Guarantee given by the Company is as under: Sr. GIVEN IN FAVOUR OF GIVEN ON BEHALF OF AMOUNT (Rs. in million)

1 Customs & Excise Department Entertainment World Developers Limited, Rs.4.55 million Mumbai (Previous Year Rs.4.55 million )

2 State Bank of Patiala Satguru Polyfab Pvt. Ltd., Gandhidham Rs.60.00 million (Previous Year Rs.60.00 million)

3 Governor of Uttarakhand Nanofil Technologies Pvt.Ltd., Kashipur Rs.0.20 million (Previous Year Nil)

vii. Outstanding of Taxes on account of disputes are as follows-

The company filed appeal before CIT(A)/ITAT and contested the disputed Income Tax demand for the A.Y 2004-05 and 2005- 06 for Rs.7.00 million & Rs.2.66 million respectively and also contested disputed of TDS demand for the A.Y.2005-06 to 2007- 08 Rs.0.71 million, A.Y.2009-10 Rs. 1.58 million and also contested disputed of M.P.Sales Tax demand for Rs. 0.02 million & Central Sales Tax demand for Rs. 1.96 million for the A.Y 2005-06 and Entry Tax demand for Rs. 1.68 million for the A.Y 2007- 08 as per legal opinion obtained.

viii. The Income Tax department has filed an appeal before the M.P.High Court, challenging the order of ITAT passed in favor of Company for the A. Y.2003-04. The amount of tax and penalty is Rs 6.58 million and 1.45 million respectively.

B. In the opinion of the Board of Directors the Current Assets, Loans and Advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.

C. To company with the requirement of the Micro, Small and Medium Enterprises Development Act 2006, the company requested its suppliers to confirm whether they are covered as Micro, Small or Medium enterprises as is defined in the said Act. Based on the confirmation received, the Company has recognized them for the necessary treatment as provided under the Act, from the date of receipt of such confirmations and there is no default in payment to such enterprises as specified in the said Act, However, the amounts outstanding as well as interest applicable are insignificant and hence not separately discounted.

D. Out of 15,00,000 warrants issued to M/s. Kalani Industries Private Limited Indore on 10th January, 2008 @ Rs.118/- per warrant, 10,68,000 warrants (previous year 4,32,000 warrants) have been converted into equivalent number of fully paid-up equity shares during the year on receipt of unpaid amount.

E. 92 Nos. of Zero Percent Fully Convertible Debentures of Rs. 5.0 million each issued to M/s Clearwater Capital Partners (Cyprus) Limited, Cyprus are converted into 4486492 equity shares @102.53 per share during the year.

F. During the period the Company has booked the amount of interest subsidy of Rs.11.07 million (Previous year 23.31 million) and the same has been credited in interest paid on term loan account.

G. Segment Information (AS-17)

The Company is principally engaged in the business of Manufacturing of HD/PP Woven sacks and FIBC/Jumbo Bags. Accordingly there is no reportable segment as per Accounting Standard No. 17 issued by Institute of Chartered Accountant of India on segment reporting.

Notes :

1 The Cash Flow Statement has been prepared in indirect method with corresponding adjustment in Assets & Liabilities.

2 Cash & Cash Equivalents represent Cash & Bank Balances which are short-term in nature.

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Mar 31, 2010

A. CONTINGENT LIABILITIES NOT PROVIDED FOR:

i. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 20.19 million (Previous Year Rs.9.07 million)

ii. Guarantee given by Bank on behalf of the Company for Rs. 25.60 million (Previous year Rs. 9.86 million)

iii. Outstanding liabilities on account of letter of credit for Rs. 37.70 million (Previous year Rs. 76.06 million).

iv. Foreign Bills Discounted with Bank Rs.153.58 million (Previous year Rs.241.73 million).

v. Forward purchase contracts equivalent to USD 11.23 million against import of raw material (Previous year NIL)

vii. Outstanding of Taxes on account of disputes are as follows- The company filed append before CIT(A) and contested the disputed Income Tax demand for the A. Y. 2003-04, 2004-05 and 2005-06 fir Rs. 2.10 milion, Rs. 7.00 milion & Rs. 2.66 milion respectively and also contested disputed M.P. Sales Tax demand for Rs. 0.02 milion and Central Tax demand for Rs. 1.96 milion for the A.Y 2005-06 as per legal opinion obtained.

B. In the opinion of the Board of Directors the Current Assets, Loans and Advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.

C. To company with the requirement of the Micro, Small and Medium Enterprises Development Act 2006, the company requested its suppliers to confirm whether they are covered as Micro, Small or Medium enterprises as is defined in the said Act. Based on the confirmation received, the Company has recognized them for the necessary treatment as provided under the Act, from the date of receipt of such confirmations and there is no default in payment to such enterprises as specified in the said Act, However, the amounts outstanding as well as interest applicable are insignificant and hence not separately discounted.

D. Out of 15,00,000 warrants issued to M/s. Kalanii Industries Private Limited Indore on 10th January, 2088 @ Rs. 118/- per warrant, 2,09,000 partly paid-up warrants (previous year 2,23,000 warrants) have been converted into equivalent number of fully paid-up equity shares during the year on receipt of unpaid amount. Balance 10,68,000 share warrants are to be converted into equity shares prior to the fresh issue of equities to the public.

E. 92 Nos. of Zero Percent Fully Convertible Debentures of Rs. 5.0 million each issued to M/s Clearwater Capital Partner (Cyprus) Limited, Cyprus are pending for conversion mino equity shares.

F. During the year under review company has incorporated one wholly owned subsidiary in the name of Nanofil Technologies Private. Limited, Kashipur.

G. During the year the Company has written off earlier years' of Rs. 4.91 million depreciation on Plant & Machinery on account of receipt of capital subsidy of Rs. 18.50 million.

H. During the year the Company has received interest subsidy of Rs. 23.31 million and the same has been credited in interest paid on term loan account.

I. Segment Information (A5-17)

The Company is principally engaged in the business of Manufacturing of HD/PP Woven sacks and FIBC/Jumbo Bags. Accordingly there is no reportable segment as per Accounting Standard No. 17 issued by Institute of Chartered Accountant of _ India on segment reporting.

J. Previous year figures are re-grouped or re-arranged to confirm to current year figures.