Notes to Accounts of Redtape Ltd.

Mar 31, 2025

XXII) Provisions, contingent liabilities and
contingent assets

Provision:

Provision is recognized in the accounts when
there is a present obligation as a result of past
event(s) and it is probable that an outflow of
resources will be required to settle the obligation
and a reliable estimate can be made.

Contingent Liabilities:

Wherever there is a possible obligation that
arises from past events and whose existence
will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future

events not wholly within the control of the entity
or a present obligation that arises from past
events but is not recognized because

(a) It is not probable that an outflow of
resources embodying economic benefits
will be required to settle the obligation; or

(b) The amount of the obligation cannot be
measured with sufficient reliability. Show
cause notices are not considered as
Contingent Liabilities unless converted
into demand.

Contingent Asset:

Contingent asset is neither recognized nor
disclosed in the financial statements.

XXIII) Government Grant

Grants from the government are recognized
at their fair value where there is a reasonable
assurance that the grant will be received, and
the Company will comply with all attached
conditions.

Government grants receivable as compensation
for expenses or financial support are recognized
in profit or loss of the period in which it becomes
available.

Government grants relating to the purchase of
property, plant and equipment are accounted
for as deferred Income by crediting the same to
a specific reserve and are credited to profit or
loss on a straight-line basis over the expected
lives of the related assets and presented within
other income.

The reserve to these Grants is diminished every
year by a prorate portion of the depreciation
of the assets, to amortize the grant overdue
life of the assets. Where the Grants carry
conditions of specific performance, the
contingent aspect is disclosed in due notes
to the accounts.

XXIV) Operating cycle for current and non-current
classification

Operating cycle for the business activities of
the company covers the duration of the specific
product line/ service including the defect
liability period wherever applicable and extends
up to the realization of receivables within the
agreed credit period normally applicable to the
respective lines of business.

2 (ii) New and amended standards adopted by
the Company

There are no new standards that became
effective during the year. Amendments that
became effective during the year did not have
any material effect.

2 (iii) Critical estimates and judgements

The preparation of standalone financial
statements requires the use of accounting
estimates which, by definition, will seldom equal
the actual results. Management also needs to
exercise judgement in applying the Company’s
accounting policies. Estimates and judgements
are continually evaluated. They are based
on historical experience and other factors,
including expectations of future events that
may have a financial impact on the Company
and that are believed to be reasonable under
the circumstances. This note provides detailed
information of the areas that involved a higher
degree of judgement or complexity, and of items
which are more likely to be materially adjusted
due to estimates and assumptions turning out
to be different than those originally assessed.
The areas involving critical judgements are:

I. Defined benefit plans estimates

The cost of the defined benefit gratuity
plan compensated absences and other
post-employment defined benefits

(Provident Fund) are determined using
actuarial valuations. An actuarial valuation
involves making various assumptions that
may differ from actual developments in the
future. These include the determination
of the discount rate, future salary
increases and mortality rates. Due to the
complexities involved in the valuation and
its long-term nature, a defined benefit
obligation is highly sensitive to changes
in these assumptions. All assumptions
are reviewed at each reporting date.
The parameter most subject to change
is the discount rate. In determining the
appropriate discount rate for plans, the
management considers the interest
rates of government bonds in currencies
consistent with the currencies of the
post-employment benefit obligation. The
underlying bonds are further reviewed
for quality. The mortality rate is based on

publicly available mortality tables for the
specific countries. Those mortality tables
tend to change only at interval in response
to demographic changes. Future salary
increases and gratuity increases are
based on expected future inflation rates.
Further details about gratuity obligations
are given in note 32.

II. Net Realizable Value of inventory

The Company has defined policy for
provision on inventory based on obsolete,
damaged and slow-moving inventories.
The Company provides provision based
on policy, past experience, current trend
and future expectations of these materials
depending on the category of goods.

III. Leases

The Company determines the lease
term as the non-cancellable term of the
lease, together with any periods covered
by an option to extend the lease if it is
reasonably certain to be exercised, or any
periods covered by an option to terminate
the lease, if it is reasonably certain not to
be exercised.

The Company has several lease contracts
that include extension and termination
options. The Company applies judgement
in evaluating whether it is reasonably
certain to exercise the option to renew or
terminate the lease. It considers all relevant
factors that create an economic incentive
for it to exercise either the renewal or
termination. After the commencement date,
the Company reassesses the lease term
if there is a significant event or change in
circumstances that is within its control
and affects its ability to exercise or not to
exercise the option to renew or to terminate.

IV. Provision for sales return

The Company provides for sales return
based on the Company’s return policy,
contract terms, forecast of sales volumes
and past history of quantum of return. The
Company reviews the same at regular
intervals to ensure the applicability of
the same in the changing scenario, and
based on the management’s assessment
of market conditions.

Note 11.2 Rights, preferences and restrictions attached to shares

a. Equity Shares

The Company has only one class of equity shares having a par value of '' 2 per share. Each holder of Equity Shares
is entitled to one vote per share.

The dividend if proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing
Annual General Meeting. 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.

The company has paid interim dividend of 100% (? 2 per equity share of '' 2/- each) during the year ended 31^st March
2025 and 0% (? Nil per equity share of '' 2/- each) during the year ended 31^st March 2024.

The Board of Directors have proposed final dividend of ''0.25 per share(face value ''2 each, fully paid up) for the year
ended 31^st March 2025.

The Company has incurred a net cash outflow of '' 2,764 lakhs during the year ended 31^st March 2025 (Previous year
31^st March 2024 : '' Nil) on account of the interim dividend.

b. Preference shares

The company has issue 9% Non-cumulative compulsorily redeemable preference shares in previous year’s.

Preference shares are redeemable preferences shares with a put and call option available to the shareholders and the
issuer company for early redemption.

Same has been classified and presented under ‘current liabilities’ as ‘borrowings’ and the disclosure requirements in
this regard applicable to such borrowings has been done (Refer note no.13).

Note 11.5 There are following shares issued without payment being received in cash:

(i) During the year, the Company has alloted Bonus Shares by capitalisation of Free Reserves of the Company. (Refer
note no. 11.7)

(ii) During the F.Y. 2023-24, Pursuant to the Scheme of arrangement the Company had issued 13,82,01,900 Equity
Shares to the Shareholders of Mirza International Limited. On 31^st March 2023 (Allotment date) Redtape Limited had
issued one equity share for every equity share held of Mirza International Limited on the date of 29^th March 2023
(Record date) for consideration other than cash.

Note 11.6 There are no buy back of equity shares during the last four years.

Note 11.7 The Bonus Issue in the ratio of 3:1 i.e., 3 (three) new fully paid up bonus equity shares of Rs. 2/- each for every
1 (one) existing fully paid up equity share of Rs.2/- each was approved by the Members of the Company on 23^rd
January 2025 in Extra-Ordinary General Meeting ("EGM"). Subsequently on 5^th February, 2025, the Company
alloted 41,46,05,700 fully paid up bonus equity shares of Rs.2/- each in the ratio of 3:1 to the eligible members of
the Company whose names appeared in the Register of Members as on 4^th February, 2025, (Record Date fixed
for this purpose) by capitalising '' 8,292 lakhs out of Free Reserves of the Company.

(1) HDFC Bank term loans amounting to '' 4,704 Lakh (Previous Year Rs. '' 5,091 Lakh) secured by exclusive charge
on moveable assets funded from HDFC Bank term loan and exclusive charge on industrial property measuring
2,72,646.39 square meters located in Industrial Area Unnao (Uttar Pradesh).

(2) HDFC Bank working capital loan of '' 17,532 Lakh (Previous Year Rs. '' 1,380 Lakh) is secured by Pari passu charge

on current & future stocks & book debts and exclusive charge on industrial property measuring 2,72,646.39 square

meters located in Industrial Area Unnao (Uttar Pradesh)

(3) CITI Bank working capital loan of '' 11,300 Lakh (Previous Year Rs. '' 7,400 Lakh) is secured by Pari passu charge

on present & future stocks & book debts and exclusive charge on property situated at Plot No.4,5,36&37, Sector-59,
Noida

(4) Federal Bank working capital loan of '' 3,000 Lakh (Previous Year Rs. '' 2,100 Lakh) is secured by First Pari passu
charge by way of hypothecation on entire current assets present & future stocks & book debts and exclusive charge
on property situated at Plot No.8, Sector-90, Noida

(5) Auto Loans are secured by the hypothecation of respective vehicle for which is availed.

(6) All the above secured Loans are guaranteed by Mr. Shuja Mirza (Managing Director).

(Non-cumulative) Compulsorily Redeemable Preference Shares

As per Clause 3.10 of Composite Scheme of Arrangement the pre-Scheme issued and paid-up share capital of the
Company which consists of 50,000 Equity Shares of ''2 each aggregating ''1,00,000, will be cancelled. 50,000 9%
Compulsorily Redeemable Preference Shares of ''2 each, credited as fully paid-up, aggregating ''1,00,000, will be
issued in place of such cancelled equity share capital.

50,000 9% Non-cumulative compulsorily redeemable preference shares of '' 2/- each fully paid up shall be redeemed
in terms of the provisions of the Companies Act, 2013, at Par within a period of 5 years from the date of issue
(maturity date is 30 March 2028) of such Redeemable Preference Shares with a put and call option available to the
Shareholders and the Issuer Company for early redemption.

* The business currently carried on by the Company was originally operated by M/s Mirza International Limited. Pursuant to
a Scheme of Arrangement approved by the Hon’ble National Company Law Tribunal, Allahabad Bench (“NCLT”), Prayagraj
vide its order dated 21.02.2023, the said business was demerged from M/s Mirza International Limited and vested with the
Company. The appointed date of the demerger, as per the Scheme, is 01.01.2022.

As per the terms of the NCLT-approved Scheme, the Company is entitled to the benefit of credit of taxes deducted at
source (TDS), tax collected at source (TCS), and advance tax paid under the PAN of M/s Mirza International Limited before
21.02.2023, to the extent such taxes pertain to the demerged business now carried on by the Company.

However, the credit for the above-mentioned taxes has not been reflected in the Company’s tax records for the A.Y. 2023¬
24 and demand of Rs. 3481.79 lakhs (inclusive of interest) have been raised by the Income Tax Department under Section
143(1)(a) of the Income-tax Act, 1961 (“Act”) for A.Y. 2023-24 as on 28.03.2024. In this regard, a rectification application
under Section 154 of the Income-tax Act, 1961(“Act”) has already been fled with the appropriate jurisdictional Assessing
Offcer/Authority as on 08.04.2024.

Note 32 Employee benefits

A. Defined benefit plan

-Gratuity

The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the gratuity plan, every employee who
has completed at least five years of service usually gets a gratuity on departure 15 days of last drawn basic salary for
each completed year of service. The present value of obligation is determined based on actuarial valuation using the
Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee
benefit entitlement and measures each unit separately to build up the final obligation.

(xi) Actuarial risks exposures:

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is
exposed to various risks as follows:

Interest Rate risk : The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result
in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the
liability (as shown in financial statements).

Liquidity Risk : This is the risk that the Company is not able to meet the short-term gratuity payouts. This may arise
due to non-availability of enough cash / cash equivalent to meet the liabilities or holding of illiquid assets not being
sold in time.

Salary Escalation Risk : The present value of the defined benefit plan is calculated with the assumption of salary
increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants
from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan’s
liability.

Demographic Risk : The Company has used certain mortality and attrition assumptions in valuation of the liability.
The Company is exposed to the risk of actual experience turning out to be worse compared to the assumption.

Regulatory Risk : Gratuity benefit is paid in accordance with the requirements of the Payment of Gratuity Act ,
1972(as amended from time to time). There is a risk of change in regulations requiring higher gratuity payouts (e.g.
Increase in the maximum limit on gratuity of Rs. 20,00,000).

The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient
to meet the obligations related to lease liabilities as and when they fall due.

Variable Lease Payment

Some leases contain variable payment terms that are linked to sales generated from a store. For some individual stores, up
to 100% of lease payments are on the basis of variable payment terms with percentages ranging from 8% to 10% of sales.
Variable payments terms are used for a variety of reasons, including minimizing the fixed costs base for newly established
stores. Variable lease payments that depend on sales are recognized in profit or loss in the period in which the condition
that triggers those payments occurs.

Expenses relating to short-term leases and expenses relating to variable lease payments not included in lease liabilities
(included in other expenses) were '' 228 Lakhs (31 March 2024- '' 432 Lakhs).

As at Balance Sheet date, the Company is not exposed to future cash flows for extension / termination options, residual
value guarantees, and leases not commenced to which lessee is committed.

Note 36 Financial Risk Management

The financial assets of the company include loans, trade and other receivables, security deposits and cash and bank
balances that derive directly from its operations. The financial liabilities of the company, other than derivatives, include
loans and borrowings, trade payables and other payables, and the main purpose of these financial liabilities is to finance
the day to day operations of the company. The Company also enters into derivative transactions.

The Company seeks to minimise the effects of these risks by using derivative financial instruments to hedge risk exposures.
The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative
purposes.

The Company’s senior management oversees the management of these risks and that advises on financial risks and the
appropriate financial risk governance framework for the Company.

The company is mainly exposed to the following risks that arise from financial instruments:

(i) Market risk (including currency risk, interest rate risk and other price risk)

(ii) Liquidity risk

(iii) Credit risk

This note explains the risks which the company is exposed to and policies and framework adopted by the company to
manage these risks:

(i) 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 prices comprise two types of risk: foreign currency risk and interest rate risk.The objective
of market risk management is to manage and control market risk exposures within acceptable parameters, while
optimising the return. The Company uses derivatives to manage market risks. Derivatives are only used for economic
hedging purposes and not as speculative investments. All such transactions are carried out within the guidelines set
by the Board of Directors.

There has been no significant changes to the Company’s exposure to market risk or the methods in which they are
managed or measured.

(a) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of
changes in foreign exchange rates. The Company undertakes transactions denominated in foreign currencies;
consequently, exposures to exchange rate fluctuations arise. The Company’s exposure to currency risk relates
primarily to the Company’s operating activities when transactions are denominated in a different currency from
the Company’s functional currency

The company imports finished goods from outside India and export finished goods. . The exchange rate
between the Indian rupee and foreign currencies has fluctuated in recent years and may fluctuate substantially
in the future. Consequently the company is exposed to foreign currency risk and the results of the company
may be affected as the rupee appreciates/ depreciates against foreign currencies. Foreign exchange risk arises
from the future probable transactions and recognized assets and liabilities denominated in a currency other
than company’s functional currency.

The company measures the risk through a forecast of highly probable foreign currency cash flows and manages
its foreign currency risk by hedging appropriately. The company manages its foreign currency risk through
the process of adjusting inward remittances in foreign currency for its payment of outward remittances (i.e.
considering it as natural hedge). The Company also holds derivative financial instruments such as foreign
exchange forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures.

During the year ended 31 March 2025 and 31 March 2024 the company has designated certain foreign exchange
contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast
cash transactions. The related hedge transactions for balance in cash flow hedge reserve as at 31 March 2025
are expected to occur and reclassified to statement of profit and loss within one year.

The company determines the existence of economic relationship between the hedging instrument and hedged
item based on the currency, amount and timings of its forecasted cash flows. Hedge effectiveness is determined
at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure
that an economic relationship exists between the hedged item and hedging instrument, including whether the
hedging instrument expected to offset changes in cash flows of hedged items.

If the hedge ratio for risk management purposes is no longer optimal but the risk management objective remains
unchanged and the hedge continues to qualify for hedge accounting, the hedge relationship will be rebalanced
by adjusting either the volume of the hedging instrument or the volume of the hedged item so that the hedge
ratio aligns with the ratio used for risk management purposes. Any hedge ineffectiveness is calculated and
accounted for in the Statement of Profit or Loss at the time of the hedge relationship rebalancing.

(b) Interest Rate Risk

The Company’s exposure to the risk of changes in market interest rates relates primarily to long term debt.
Borrowings at variable rates exposes to cash flow risk. With all other variables held constant, the following
table demonstrates composition of fixed and floating rate borrowing of the company and impact of floating rate
borrowings on company’s profitability. demonstrates composition of fixed and floating rate borrowing of the
company and impact of floating rate borrowings on company’s profitability.

(ii) Liquidity Risk

Financial liabilities of the company include borrowings, lease liabilities, trade and other payables. The company’s
principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations.

Liquidity Risk Management

The Management of the Company is responsible for liquidity risk management who has established an appropriate
liquidity risk management framework for the Company’s short, medium and long-term funding and liquidity
management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities
and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the
maturity profiles of financial assets and liabilities.

A) Trade Receivables

Sales to retail customers are required to be settled in cash or using credit cards, mitigating credit risk. There
are no significant concentrations of credit risk, whether through exposure to individual customers, specific
industry sectors and/or regions. For non-retail customers and sale through E-Commerce portal, the Company
assesses the credit quality of the customer and E-Commerce Portal, taking into account its financial position,
past experience and other factors. Individual risk limits are set based on internal or external ratings by the
management. The compliance with credit limits by customers is regularly monitored by line management.

To measure the expected credit losses, trade receivables have been grouped based on shared credit risk
characteristics and the days past due. The calculation is based on historical data. The maximum exposure
to credit risk at the reporting date is the carrying value of each class of financial assets. The credit risk to the
Company is limited in cases of retail sales since they are in nature of cash and carry and for non-retail sales,
The company has considered an allowance for doubtful debts in case of Trade receivables that are past due but
there has not been a significant change in the credit quality and the amounts are still considered recoverable.

B) Other Financial Assets

With regards to all the financial assets with contractual cashflows other than trade receivables, management
believes these to be high quality assets with negligible credit risk. The management believes that the parties
from which these financial assets are recoverable, have strong capacity to meet the obligations and where the
risk of default is negligible.

Credit risk on cash and bank balances is limited as the company generally invests in deposits with banks and
financial institutions with high credit ratings assigned by credit rating agencies.

The Company’s maximum exposure to credit risk for the components of the financial assets as at 31^st March
2025 and 31^st March 2024 is to the extent of their respective carrying amounts as disclosed in respective notes.

Note 37 Capital Management

The Company’s capital management objectives are:

- to ensure the Company’s ability to continue as a going concern.

- to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

- to maintain optimum capital structure to reduce cost of capital and to maximize the shareholder value

The company manages its capital structure and makes adjustments in light of changes in economic conditions and the
requirements of the financial covenants which otherwise would permit the banks to immediately call loans and borrowings.
In order to maintain or adjust the capital structure, the company may adjust the dividend payment to shareholders, return
capital to shareholders or issue new shares.

The Company monitors capital using a gearing ratio, which is calculated by dividing Net Debt from the Equity. The
Company’s gearing ratio was as follows:

Note 38 Disclosures Required Under Section 22 of The Micro, Small And Medium Enterprises
Development Act, 2006:

Micro enterprises and small enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 (as
amended till date) have been determined based on the confirmations received in response to intimation in this regard sent
by the Company to the suppliers.

Under the Micro, Small and Medium Enterprises Development Act, 2006, (MSMED) which came into force from 2 October
2006 (as amended till date), certain disclosures are required to be made relating to Micro, Small and Medium Enterprises.

No interest in terms of Section 16 of Micro, Small and Medium Enterprises Development Act, 2006 or otherwise has either
been paid or payable or accrued and remaining unpaid as at March 31,2025.

Based on the information and records available with the management, there are no outstanding dues to the Micro, Small
and Medium Enterprises development Act, 2006 beyond the statutory period of 45 days

The details of amounts outstanding to Micro, Small and Medium Enterprises under the Micro, Small and Medium Enterprises
Development Act, 2006 (MSMED Act), based on the available information with the Company are as under:

Note 40

The main business of the Company is retailing/ trading of merchandise which primarily consist of apparels and footwears.
All other operating activities of the Company are incidental to its main business. Accordingly, the Company has only one
identifiable segment reportable under Ind AS 108 “Operating Segment”. The chief operational decision maker monitors the
operating results of the entity’s business for the purpose of making decisions about resource allocation and performance
assessment.

Note 41

In accordance with the Ind AS-36 on Impairment of Assets, the Company has assessed as on the balance sheet date,
whether there are any indications with regard to the impairment of any of the assets. Based on such assessment it has been
ascertained that no potential loss is present and therefore, formal estimate of recoverable amount has not been made.
Accordingly, no impairment loss has been provided in the books of account.

Note 1: For Bank’s quarterly reporting, Certain categories of book debts were excluded in the quarterly returns filed
by the Company.

viii) The Company has never been declared as wilful defaulter by any bank or financial institution or other lenders.

ix) The company does not have any relationship with any struck off company.

x) All the charges are duly registered with the ROC within the prescribed time under the Companies Act 2013 & Rules
made there under.

xi) As at 31-Mar-2025, the Company have following subsidiary companies i.e.

i. Redtape Bangla Limited

ii. Redtape HK Limited

iii. Redtape London Limited (Step down subsidiary - Wholly Owned Subsidiary of Redtape HK Limited)

iv. Redtape (Quanzhou) Sports Goods Co. Limited (Step down subsidiary - Wholly Owned Subsidiary of Redtape
HK Limited)

The Company is in compliances of requirement of number of layer of companies.

xii) There is no scheme of Arrangement approved during the year.

xiii) 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.

The Company has not received any funds 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

xiv) The company has not traded or invested in Crypto currency or Virtual currency during the financial year.

xv) There is no income that has been surrendered or disclosed as income during the year in Tax Assessments under
Income Tax Act,1961.

Events after the Reporting Period

Note 46 The Board of Directors have proposed final dividend of ''0.25 per share(face value ''2 each, fully paid up) for the
year ended March 31,2025.

Note 47 The company has complied with the provisions of Section 186(4) of the companies act, 2013 in respect of
investments made (Refer note no:5)

Note 48 Previous year figures have been regrouped/recasted/rearranged wherever necessary to confirm to its
classification of the current year.

Note 49 Figures in bracket indicate deductions.

As per our report of even date attached

For Ashwani & Associates For and on behalf of the Board of Directors

Chartered Accountants

Firm Registration Number 000497N

Aditya Kumar Shuja Mirza Arvind Verma

Partner (Managing Director) (Whole Time Director)

M.No. 506955 DIN: 01453110 DIN: 09429834

Noida Noida

CA Abhinav Jain CS Akhilendra Bahadur Singh

(Chief Financial Officer) (Company Secretary)

Place : Noida M.No. 514284 M.No. 54305

Date : 27^th May 2025 Noida Noida

---

Mar 31, 2024

Note 11.2 Rights, preferences and restrictions attached to shares

Equity Shares

The Company has only one class of equity shares having a par value of '' 2 per share. Each holder of Equity Shares Is entitled to one vote per share.

The Company declares and pays dividend in Indian Rupees. 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.

The Company has not declared any dividend during the year.

Note:* as Nominee Shareholder on behalf of Mirza International Limited

Note 11.5 Pursuant to the Scheme of arrangement the Company had issued 13,82,01,900 Equity Shares to the Shareholders of Mirza International Limited. On 31^st March 2023 (Allotment date) Redtape Limited had issued one equity share for every equity share held of Mirza International Limited on the date of 29^th March 2023 (Record date) for consideration other than cash.

Note 11.6 There are no buy back of equity shares during the last one year.

Note 11.7 There are no bonus shares issued during the last one year.

Note 11.8 There is no holding / ultimate holding company of the company.

Nature and purpose of reserve

- Capital reserve

Surplus resulted pursuant to Scheme of Arrangement of Demerger.

- Retained earnings:

Retained earnings represents the net profits after all distributions and transfers to other reserves.

Other comprehensive income:

- Cash flow hedge reserve

The cumulative effective portion of gains or losses arising from changes in fair value of hedging instruments designated as cash flow hedges are recognised in cash flow hedge reserve. Such changes recognised are reclassified to the statement of profit and loss when the hedged item affects the profit or loss. The Company has designated certain foreign currency forward contracts as cash flow hedges in respect of foreign exchange risks.

- Remeasurements of defined benefit obligation

Remeasurements of defined benefit obligation comprises actuarial gains and losses and return on plan assets (excluding interest income).

(1) HDFC Bank term loans amounting to '' 5,091 Lakh secured by exclusive charge on moveable assets funded from HDFC Bank term loan, exclusive charge on industrial property measuring 2,72,646.39 square meters located in Industrial Area Unnao Site 2 (Uttar Pradesh) and Pari-passu charge on current & future stocks and book debts.

(2) HDFC Bank working capital loan of '' 1,380 Lakh is secured by Pari passu charge on current & future stocks & book debts and exclusive charge on industrial property measuring 2,72,646.39 square meters located in Industrial Area Unnao Site 2 (Uttar Pradesh),

(3) CITI Bank working capital loan of '' 7,400 Lakh is secured by First Pari passu charge on present & future stocks & book debts and exclusive charge on property situated at Plot No.4,5,36&37, Sector-59, Noida.

(4) Federal Bank working capital loan of '' 2,100 Lakh is secured by First Pari passu charge by way of hypothecation on entire current assets present & future stocks & book debts and exclusive charge on property situated at Plot No.8, Sector-90, Noida.

(5) Auto Loans are secured by the hypothecation of respective vehicle for which was availed.

(6) All the above secured Loans are guaranteed by Mr. Shuja Mirza (Non-cumulative) Compulsorily Redeemable Preference Shares

As per Clause 3.10 of Composite Scheme of Arrangement the pre-Scheme issued and paid-up share capital of the Company which consists of 50,000 Equity Shares of ''2 each aggregating ''1,00,000, will be cancelled. 50,000 9% Compulsorily Redeemable Preference Shares of ''2 each, credited as fully paid-up, aggregating ''1,00,000, will be issued in place of such cancelled equity share capital.

50,000 9% Non-cumulative compulsorily redeemable preference shares of '' 2/- each fully paid up shall be redeemed in terms of the provisions of the Companies Act, 2013, at Par within a period of 5 years from the date of issue (maturity date is 30 March 2028) of such Redeemable Preference Shares with a put and call option available to the Shareholders and the Issuer Company for early redemption.

Note 32 Employee benefits

A. Defined benefit plan -Gratuity

The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the gratuity plan, every employee who has completed at least five years of service usually gets a gratuity on departure 15 days of last drawn basic salary for each completed year of service. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The following table set out the funded status of the gratuity plan and the amount recognised in the company’s financial statement as at 31-March-2024 and 31-March-2023.

(viii) The salary growth rate indicated above is the Company’s best estimate of an increase in salary of the employees in future years, determined considering the general trend in inflation, seniority, promotions, past experience and other relevant factors such as demand and supply in employment market, etc.

(ix) Sensitivity Analysis:

Significant actuarial assumptions for the determination of the define benefit obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The result of sensitivity analysis is given below :

(xi) Actuarial risks exposures:

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to various risks as follows;

Interest Rate risk ; The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability (as shown in financial statements).

Liquidity Risk ; This is the risk that the Company is not able to meet the short-term gratuity payouts. This may arise due to non-availability of enough cash / cash equivalent to meet the liabilities or holding of illiquid assets not being sold in time.

Salary Escalation Risk ; The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan’s liability.

Demographic Risk ; The Company has used certain mortality and attrition assumptions in valuation of the liability. The Company is exposed to the risk of actual experience turning out to be worse compared to the assumption.

Regulatory Risk ; Gratuity benefit is paid in accordance with the requirements of the Payment of Gratuity Act , 1972(as amended from time to time). There is a risk of change in regulations requiring higher gratuity payouts (e.g. Increase in the maximum limit on gratuity of Rs. 2Q,QQ,QQQ).

B. Defined contribution plan Contribution to Provident Fund

The company has recognized an expense of '' 167 lakhs (Previous year '' 154 lakhs) in respect of contribution to Provident Fund.

(i) The transactions with related parties are made in the ordinary course of business and on terms equivalent to those that prevail in arm’s length transactions with other vendors. Outstanding balances at the year-end is unsecured and settlement occurs in cash.

*(ii) Long-term employee benefits for Key Managerial Personnel:

The managerial personnel are covered by Group’s gratuity policy and are eligible for compensated absences along with other employees of the Group. The proportionate amount of gratuity and compensated absences cost pertaining to managerial remuneration have not been included in aforementioned disclosures as these are not determined on individual basis.

(ii) The shortfall amount Is on account of funds that are allocated to the ongoing projects Initiated during the current year and being unspent as at 31-Mar-2024 has been transferred to the unspent CSR account within 30 days from the end of financial year in accordance with the Companies Act 2013, read with Companies (Corporate Social Responsibility Policy) Rules, 2014.

Note 35 Leases

Right-of-use assets and Lease Liability:

This note provides information for leases where the company is a lessee. The Company leases various warehouses and retail stores. Rental contracts are generally made for fixed periods of five years to twelve years

The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligations related to lease liabilities as and when they fall due.

Variable Lease Payment

Some leases contain variable payment terms that are linked to sales generated from a store. For some individual stores, up to 100% of lease payments are on the basis of variable payment terms with percentages ranging from 8% to 10% of sales. Variable payments terms are used for a variety of reasons, including minimizing the fixed costs base for newly established stores. Variable lease payments that depend on sales are recognized in profit or loss in the period in which the condition that triggers those payments occurs.

Expenses relating to short-term leases and expenses relating to variable lease payments not included in lease liabilities (included in other expenses) were '' 560 Lakhs (31 March 2023- '' 432 Lakhs).

As at Balance Sheet date, the Company is not exposed to future cash flows for extension / termination options, residual value guarantees, and leases not commenced to which lessee is committed.

Note 36 Financial risk management objective and policies

The financial assets of the company include loans, trade and other receivables, security deposits and cash and bank balances that derive directly from its operations. The financial liabilities of the company, other than derivatives, include loans and borrowings, trade payables and other payables, and the main purpose of these financial liabilities is to finance the day to day operations of the company. The Company also enters into derivative transactions.

The Company seeks to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The Company’s senior management oversees the management of these risks and advises on financial risks and the appropriate financial risk governance framework for the Company.

The company is mainly exposed to the following risks that arise from financial instruments:

A. Market risk (including currency risk, interest rate risk and other price risk)

B. Liquidity risk

C. Credit risk

This note explains the risks which the company is exposed to and policies and framework adopted by the company to manage these risks:

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 prices comprise two types of risk: foreign currency risk and interest rate risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. The Company uses derivatives to manage market risks. Derivatives are only used for economic hedging purposes

and not as speculative investments. All such transactions are carried out within the guidelines set by the Board of Directors. There have been no significant changes to the Company’s exposure to market risk or the methods in which they are managed or measured.

(a) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Company’s exposure to currency risk relates primarily to the Company’s operating activities when transactions are denominated in a different currency from the Company’s functional currency.

The company imports finished goods from outside India and export finished goods. The exchange rate between the Indian rupee and foreign currencies has fluctuated in recent years and may fluctuate substantially in the future. Consequently, the company is exposed to foreign currency risk and the results of the company may be affected as the rupee appreciates/ depreciates against foreign currencies. Foreign exchange risk arises from the future probable transactions and recognized assets and liabilities denominated in a currency other than company’s functional currency.

The company measures the risk through a forecast of highly probable foreign currency cash flows and manages its foreign currency risk by hedging appropriately. The Company also holds derivative financial instruments such as foreign exchange forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures.

Foreign currency sensitivity analysis

Any changes in the exchange rate of USD against '' is not expected to have significant impact on the Company’s profit due to the less exposure of these currencies. Accordingly, a 2% appreciation/depreciation of the INR as indicated below, against the USD would have reduced/increased profit by the amounts shown below. This analysis is based on the foreign currency exchange rate variances that the Company considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variable remains constant:

Derivatives designated as hedging instruments

The Company enters into hedging instruments in accordance with policies as approved by the Board of Directors with written principles which is consistent with the risk management strategy of the Company. The Company has decided to apply hedge accounting for derivative contracts that meets the qualifying criteria of hedging relationship entered.

Cash flow hedges

During the current year ended 31 March 2024 and previous year ended 31 March 2023, the Company has designated certain foreign exchange forward contracts as cash flow hedges to mitigate the risk of foreign exchange exposure. The Company does not use forward contracts for speculative purposes. The Counterparty for such contracts is generally a bank.

The critical terms of the foreign currency forward contracts match the terms of the expected highly probable forecast purchase transactions. As a result, no hedge ineffectiveness arises requiring recognition through profit or loss.

The cash flow hedges of the forecasted purchase transactions during the year ended 31 March 2023 were assessed to be highly effective and unrealized loss of '' 19 lakh (Previous year '' 310 lakh), with a deferred tax charge of '' 5 lakh (Previous year '' 80 lakh) relating to the hedging instruments, is included in other comprehensive income.

During the year ended 31 March 2024 and 31 March 2023 the company has designated certain foreign exchange contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast cash transactions. The related hedge transactions for balance in cash flow hedge reserve as at 31 March 2024 are expected to occur and reclassified to statement of profit and loss within one year.

The company determines the existence of economic relationship between the hedging instrument and hedged item based on the currency, amount and timings of its forecasted cash flows. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument, including whether the hedging instrument expected to offset changes in cash flows of hedged items.

If the hedge ratio for risk management purposes is no longer optimal but the risk management objective remains unchanged and the hedge continues to qualify for hedge accounting, the hedge relationship will be rebalanced by adjusting either the volume of the hedging instrument or the volume of the hedged item so that the hedge ratio aligns with the ratio used for risk management purposes. Any hedge ineffectiveness is calculated and accounted for in the Statement of Profit or Loss at the time of the hedge relationship rebalancing.

(b) Interest Rate Risk

The Company’s exposure to the risk of changes in market interest rates relates primarily to long term debt. Borrowings at variable rates exposes to cash flow risk. With all other variables held constant, the following table demonstrates composition of fixed and floating rate borrowing of the company and impact of floating rate borrowings on company’s profitability.

Cash flow sensitivity analysis for variable rate instruments

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. A change of 100 basis points in interest rates for variable rate instruments at the reporting date would have increased/(decreased) profit or loss for the below years by the amounts shown below. With all other variables held constant, the Company’s profit before tax is affected through the impact on floating rate borrowings, as follows:

B. Liquidity Risk

Financial liabilities of the company include borrowings, lease liabilities, trade and other payables. The company’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations.

Liquidity Risk Management

The Management of the Company is responsible for liquidity risk management who has established an appropriate liquidity risk management framework for the Company’s short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The company monitors its risk of shortage of funds to meet the financial liabilities. The company plans to maintain sufficient cash to meet the obligations as and when falls due.

C. Credit risk

Credit risk refers to the risk of default on its contractual terms or obligations by the counterparty resulting in a financial loss. The Company is exposed to credit risk from trade receivables, security deposit to landlord & cash and bank balances.

(a) Trade receivables

Sales to retail customers are required to be settled in cash or using credit cards, mitigating credit risk. There are no significant concentrations of credit risk, whether through exposure to individual customers, specific industry sectors and/ or regions. For non-retail customers and sale through E-Commerce portal, the Company assesses the credit quality of the customer and E-Commerce Portal, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings by the management. The compliance with credit limits by customers is regularly monitored by line management.

To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The calculation is based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The credit risk to the Company is limited in cases of retail sales since they are in nature of cash and carry and for non-retail sales, the Company’s exposure to customers is diversified and there is no concentration of credit risk with respect to any particular customer.

(b) Other Financial Assets

With regards to all the financial assets with contractual cashflows other than trade receivables, management believes these to be high quality assets with negligible credit risk. The management believes that the parties from which these financial assets are recoverable, have strong capacity to meet the obligations and where the risk of default is negligible.

Credit risk on cash and bank balances is limited as the company generally invests in deposits with banks and financial institutions with high credit ratings assigned by credit rating agencies.

The Company’s maximum exposure to credit risk for the components of the financial assets as at 31 March 2024 and 31 March 2023 is to the extent of their respective carrying amounts as disclosed in respective notes

Note 37 Capital Management

The Company’s capital management objectives are:

- to ensure the Company’s ability to continue as a going concern.

- to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

- to maintain optimum capital structure to reduce cost of capital and to maximize the shareholder value

The company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants which otherwise would permit the banks to immediately call loans and borrowings.

in order to maintain or adjust the capital structure, the company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

Further, there have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.

There were no changes in the objectives, policies or processes for managing capital during the year ended 31 Mar 2024 and 31 Mar 2023.

Note 38 Micro, Small and Medium Enterprises as defined under the MSMED Act, 2006

Micro enterprises and small enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 (as amended till date) have been determined based on the confirmations received in response to intimation in this regard sent by the Company to the suppliers.

Under the Micro, Small and Medium Enterprises Development Act, 2006, (MSMED) which came into force from 2 October 2006 (as amended till date), certain disclosures are required to be made relating to Micro, Small and Medium Enterprises.

No interest in terms of Section 16 of Micro, Small and Medium Enterprises Development Act, 2006 or otherwise has either been paid or payable or accrued and remaining unpaid as at March 31,2024.

Based on the information and records available with the management, there are no outstanding dues to the Micro, Small and Medium Enterprises development Act, 2006 beyond the statutory period of 45 days

(b) Basis of Fair value of Financial assets and liabilities (i) Fair value hierarchy

The Company categorizes financial assets and financial liabilities measured at fair value into one of three levels depending on the ability to observe inputs employed in their measurement which are described as follows:

i) Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

ii) Level 2 - Inputs are inputs that are observable, either directly or indirectly, other than quoted prices included within level 1 for the financial asset or financial liability.

iii) Level 3 - Inputs are unobservable inputs for the asset or liability reflecting significant modifications to observable related market data or Company’s assumptions about pricing by market participants.

i) Fair valuation of current financial liabilities is considered as approximate to respective carrying amount due to the short-term maturities of these instruments.

ii) Trade receivables, cash and cash equivalents, bank balances other than cash and cash equivalents, other financial assets, trade payables and other financial liabilities have fair values that approximate to their carrying amounts due to their short-term nature.

There are no transfers between Level 1, Level 2 and Level 3 during the year ended 31 March 2024 and 31 March 2023.

Note 40 The main business of the Company is retailing/ trading of merchandise which primarily consist of apparels and footwears. All other operating activities of the Company are incidental to its main business. Accordingly, the Company has only one identifiable segment reportable under Ind AS 108 “Operating Segment”. The chief operational decision maker monitors the operating results of the entity’s business for the purpose of making decisions about resource allocation and performance assessment.

Note 41 In accordance with the Ind AS-36 on Impairment of Assets, the Company has assessed as on the balance sheet date, whether there are any indications with regard to the impairment of any of the assets. Based on such assessment it has been ascertained that no potential loss is present and therefore, formal estimate of recoverable amount has not been made. Accordingly, no impairment loss has been provided in the books of account.

Note 43 “The Code on Social Security, 2020 (‘SS Code’) relating to employee benefits during employment and postemployment benefits received Presidential assent in September 2020. The SS Code has been published in the Gazette of India. However, the date on which the SS Code will come into effect has not been notified. The Company will assess the impact of the SS Code when it comes into effect and will record any related impact in the period when the SS Code becomes effective.”

The Company is operating certain retail stores where the respective lease agreements were made in the name of M/s Mirza International Limited (Transferee Company). The company is in process of preparing addendum to the said lease agreements to incorporate the name of the Company as lessee.

ii) The Company is not holding any investment property.

iii) The Company has not revalued any of its Property, Plant & Equipment and Right of use assets.

iv) The Company has not revalued any of its Intangible Assets

v) The Company has not given any loan or advances to its Promoters, Directors, KMP and related Parties as defined

under Companies Act, 2013.

vi) The Company does not hold any Benami property defined under the Benami Transactions (Prohibition) Act, 1988 (as amended in 2016) and rules made thereunder. Further, no proceedings have been initiated during the year or are pending against the Company as at 31-Mar-2024 for holding any benami property.

vii) The quarterly returns of current asset fled by the Company with Banks in agreement with the financial statements.

viii) The Company has never been declared as wilful defaulter by any bank or financial institution or other lenders.

ix) The company does not have any relationship with any struck off company.

x) All the charges are duly registered with the ROC within the prescribed time under the Companies Act 2013 & Rules made there under.

xi) As at 31-Mar-2024, the Company have following subsidiary companies i.e.

i. Redtape Bangla Limited

ii. Redtape HK Limited

iii. Redtape London Limited (Step down subsidiary - Wholly Owned Subsidiary of Redtape HK Limited)

iv. Redtape (Quanzhou) Sports Goods Co. Limited (Step down subsidiary - Wholly Owned Subsidiary of Redtape HK Limited)

The Company is in compliances of requirement of number of layer of companies.

xii) There is no scheme of Arrangement approved during the year.

xiii) The company has not received any share premium amount and the term loan availed during the year has been applied for the purpose for, which, they were obtained. The working capital borrowing has been utilised by the company in its own business, the company has not loaned or advanced or invested funds to any other person(s) or entity(ies), including foreign entities with any understanding.

xiv) The company has not traded or invested in Crypto currency or Virtual currency during the financial year.

xv) There is no income that has been surrendered or disclosed as income during the year in Tax Assessments under Income Tax Act,1961.

Note 46 The Company deals in Fashion Items such as Footwear, Apparel, Accessories etc. Company has made its sales network through its retail stores pan India at various remote locations. The Company operates these retail stores, through its owned stores or stores operated by its Franchisee. Due to remote locations and volumes of transactions, there are few instances where employees of the company misappropriated the Cash of the sale proceeds of the retail store.

During the year there are no such cases reported ( In previous year three cases reported amounting ''19.01 lakh which constitute even less than 0.01% of the total sales proceeds of company owned stores). This is general trend of the industry.

Note 47 The company has complied with the provisions of Section 186(4) of the companies act, 2013 in respect of investments made (refer note no:5)

Note 48 Previous year figures have been regrouped/ recasted/ rearranged wherever necessary to conform its classification of the current year.

Note 49 Figures in bracket indicate deductions.

Note: 1. The above mentioned analytical ratios for F.Y. 2022-23 at s.no.. 1 and 8 are being restated due to regrouping of previous year figure.

2. The ratio mentioned at s. no. 3, 4 & 10 is being restated for F.Y. 2022-23 due to change in formula.

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Mar 31, 2023

Rights attached to shares

a. Equity Shares

The Company has only one class of equity shares having a par value of '' 2 per share. Each holder of Equity Shares is entitled to one vote per share.

The Company declares and pays dividend in Indian Rupees. 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.

b. Preference Shares

Terms and Conditions for allotment of Preference Shares by the Company

1. As per Clause 3.10 of Composite Scheme of Arrangement the pre-Scheme issued and paid-up share capital of the Company which consists of 50,000 Equity Shares of ''2 each aggregating ''1,00,000, will be cancelled. 50,000 9% Compulsorily Redeemable Preference Shares of ''2 each, credited as fully paid-up, aggregating ''1,00,000, will be issued in place of such cancelled equity share capital.

2. Accordingly, upon the Scheme coming into effect, the Company will issue 1 (one) 9% Compulsorily Redeemable Preference Shares of ''2 each, credited as fully paid-up, for every 1 (one) Equity Share of ''2 each held in the Company.

3. 9% Compulsorily Redeemable Preference Shares to be issued in terms of the above, shall be redeemed in terms of the provisions of the Companies Act, 2013, at Par within a period of 5 years from the date of issue of such Redeemable Preference Shares with a put and call option available to the Shareholders and the Issuer Company for early redemption.

*(1) HDFC Bank term loans '' 7,600 Lakh secured by exclusive charged on moveable assets funded from HDFC Bank term loan and exclusive charge on industrial property measuring 2,72,646.39 square meters located in Industrial Area Unnao Site 2 (Uttar Pradesh),Pari-passu charge on current & future stocks and book debts

(2) HDFC Bank working capital '' 11,000 Lakh secured by Pari passu charge on current & future stocks & book debts, exclusive charge on industrial property measuring 2,72,646.39 square meters located in Industrial Area Unnao Site 2 (Uttar Pradesh),

(3) Auto Loans are secured by the respective vehicle for which was availed.

(4) All the above secured Loans are guaranteed by Mr. Shuja Mirza

* (1) HDFC Bank term loans '' 7600 Lakh secured by exclusive charged on moveable assets funded from HDFC Bank term loan and exclusive charge on industrial property measuring 2,72,646.39 square meters located in Industrial Area Unnao Site 2 (Uttar Pradesh),Pari-passu charge on current & future stocks and book debts

(2) HDFC Bank working capital '' 11,000 Lakh secured by Pari passu charge on current & future stocks & book debts, exclusive charge on industrial property measuring 2,72,646.39 square meters located in Industrial Area Unnao Site 2 (Uttar Pradesh),

(3) Auto Loans are secured by the respective vehicle for which was availed.

(4) CITI Bank working capital '' 12,000 Lakh secured by First Pari passu charge on present & future stocks & book debts, exclusive charge on property situated at Plot No.4,5,36&37, Sector-59, Noida.

(5) Federal Bank working capital '' 5,000 Lakh secured by First Pari passu charge by way of hypothecation on entire current assets present & future stocks & book debts, exclusive charge on property situated at Plot No.8, Sector-90, Noida.

(6) All the above secured Loans are guaranteed by Mr. Shuja Mirza

3. The discount rate indicated above reflects the estimated timing and currency of benefit payments. It is based on the yields / rates available on applicable bonds as on the current valuation date.

4. The salary growth rate indicated above is the Company’s best estimate of an increase in salary of the employees in future years, determined considering the general trend in inflation, seniority, promotions, past experience and other relevant factors such as demand and supply in employment market, etc.

5. Attrition rate indicated above represents the Company’s best estimate of employee turnover in future (other than on account of retirement, death or disablement) determined considering various factors such as nature of business, retention policy, industry factors, past experience, etc.

(i) The Company is organized into two main business segments, namely:

Garments and accessories Division

Shoe Division

Segments have been identified and reported considering the distinct nature of products and differing risks and returns accruing there from, the organization structure, and the internal financial reporting systems.

(ii) Segmental Revenue in each of the above business segments primarily include domestic and export sales, export incentives and other miscellaneous income and also includes inter Segment transfers, priced at cost plus a predetermined rate of profit.

(iii) The Segmental Revenue in the geographical segments considered for disclosure are as follows:

(a) Revenue within India includes sales to customers located within India and earnings in India.

(b) Revenue outside India includes sales to customers located outside India and earnings outside India.

(iv) Segmental Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segments and amounts allocated on a reasonable basis.

The Company’s risk management is carried out by a central treasury department (of the Company) under policies approved by the board of directors. The board of directors provides written principles for overall risk management, as well as policies covering specific areas, such as interest rate risk and credit risk.

(i) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Company’s exposure to market risk is primarily on account of foreign currency exchange rate risk.

Foreign currency exchange rate risk Company uses forward exchange contracts to hedge its foreign exchange risk of anticipated sales or purchase transactions in the normal course of business, which occur within the next twelve months, for which it has a firm commitment from a customer or to a supplier.

(ii) Interest rate risk

The Company’s policy is to minimize interest rate cash flow risk exposures on long-term financing. Further Company’s has no major investments in any interest-bearing instrument. Hence, the Company is not significantly exposed to interest rate risk.

(iii) Credit risk

Credit risk is the risk that a counterparty fails to discharge its obligation to the Company. The Company’s exposure to credit risk is influenced mainly by cash and cash equivalents and financial assets measured at amortized cost. The Company continuously monitors default of other counter parties and incorporates this information into its credit risk controls.

a) Credit risk management

The Company assesses and manages credit risk of financial assets based on the following categories arrived on the basis of assumptions, inputs and factors specific to the class of financial assets.

A. Low Credit Risk

B. Moderate Credit Risk

C. High Credit Risk

(iv) Other financial assets

Loans and receivable from related parties are periodically reviewed by the management in conjunction with the remeasured fair values of the Company’s investments in those parties. Where the carrying amount of any receivable exceeds the re-measured fair value of investment, an impairment loss, to that extent, is provided for in the financial statements.

Cash and bank balances are managed by the Company’s treasury department. Concentration risk is constantly monitored to mitigate financial loss.

The Company’s maximum exposure to credit risk for the components of the financial assets as at, March 31,2023 and March 31,2022 is to the extent of their respective carrying amounts as disclosed in respective notes.

(v) Liquidity risk

Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Company’s objective is to maintain optimum levels of liquidity to meet its cash and collateral requirements, both immediate and long-term. The finance needs are monitored and managed by the Company’s treasury department, in consultation with the project teams and management. The Company takes support from its secured lenders to finance and support the Company’s operations.

The following accounting treatment has been given to some of the issues pertaining to the Demerger:

i. REDTAPE Ltd has recorded the assets and liabilities pertaining to the Demerged Business vested in it pursuant to the Scheme, at the values as appearing in the books of the Transferee Company as on the Appointed Date.

ii. I n terms of the Scheme, the Company has issued 13,82,01,900 Equity Shares of ''2/- each, credited as fully paid up, aggregating ''27,64 Lakh to the members of the Transferee Company in exchange of 100% post-amalgamation share capital of the Transferee Company.

iii. Pursuant to the Scheme, the Company has issued 50,000 9% Compulsorily Redeemable Preference Shares of ''2/- each, credited as fully paid-up, aggregating ''1,00,000/-; and entire pre-Scheme issued and paid-up share capital of the Company consisting of 50,000 Equity Shares of ''2/- each aggregating ''1,00,000/- stands cancelled.

iv. Surplus of '' 273,82 Lakhs arising on Demerger being difference between the value of the assets and the liabilities pertaining to the Demerged Business after taking into account the face value of the Equity Shares issued by the Company has been credited to the Capital Reserve Account in the books of the Company.