OPERATIONS
The following discussion is intended to convey the managements perspective on our financial condition and results of operations for the six months period ended September 30, 2025 and Fiscals 2025, 2024 and 2023 and should be read in conjunction with "Restated Financial Information" on page 251.
This Red Herring Prospectus may include forward-looking statements that involve risks and uncertainties, and our actual financial performance may materially vary from the conditions contemplated in such forward-looking statements as a result of various factors, including those described below and elsewhere in this Red Herring Prospectus. For further information, see
"Forward-Looking Statements" on page 31. Also see "Risk Factors" and " Significant Factors Affecting our Financial Condition and Results of Operations" on pages 33 and 333, respectively, for a discussion of certain factors that may affect our business, financial condition or results of operations.
Our Companys financial year commences on April 1 and ends on March 31 of the immediately subsequent year, and references to a particular Fiscal are to the 12 months ended March 31 of that year. Unless otherwise indicated or the context otherwise requires, the financial information for the six months period ended September 30, 2025 and Fiscal 2025, 2024 and 2023 included herein is derived from the Restated Financial Information, included in this Red Herring Prospectus. Financial information for the six months period ended September 30, 2025 are not comparable with financial information for the years ended March 31, 2025, March 31, 2024 and March 31, 2023. For further information, see "Restated Financial Information" on page 251.
Unless otherwise indicated, industry and market data used in this section has been derived from the industry report titled
"Building Indias Home Story: Opportunity Landscape in Mattresses, Furniture, and Furnishings & Decor" dated November 19, 2025 (the "Redseer Report") prepared and issued by Redseer Strategy Consultants Private Limited, appointed by us pursuant to an engagement letter dated February 13, 2025 and exclusively commissioned and paid for by us to enable investors to understand the industry in which we operate in connection with the Offer. The data included herein includes excerpts from the Redseer Report and may have been re-ordered by us for the purposes of presentation. Unless otherwise indicated, financial, operational, industry and other related information derived from the Redseer Report and included herein with respect to any particular calendar year/ Fiscal refers to such information for the relevant calendar year/ Fiscal. For further information, see "Risk Factors Certain sections of this Red Herring Prospectus disclose information from the Redseer Report which is a paid report and commissioned and paid for by us exclusively in connection with the Offer and any reliance on such information for making an investment decision in the Offer is subject to inherent risks." on page 57. Also see, "Certain Conventions, Currency of Presentation, Use of Financial Information and Market Data Industry and Market Data" on page 29.
OVERVIEW
We offer a wide range of products, including mattresses, furniture, and furnishings, through our omnichannel presence, ensuring a seamless customer experience across all touchpoints, both online and offline. We are a full-stack vertically integrated company, enabling us to control every aspect of our operations, from conceptualizing, designing and engineering our products to manufacturing, distributing and providing customer experience and engagement. For details in relation to our business, see
" Our Business" on page 176.
SIGNIFICANT FACTORS AFFECTING OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our results of operations and financial condition are affected by a number of important factors including:
Product mix
We offer a wide range of products, including mattresses, furniture, and furnishings. Our results of operations are significantly influenced by the product mix. Our revenue from the sale of mattresses has consistently accounted for a significant portion of our revenue from operations, while the growth in the sale of our furniture and furnishings product categories reflects our successful diversification strategy. The table below sets forth details of our revenues from the sale of mattresses, furniture and furnishings for the period/ years indicated:
Product Category |
Six months period ended September 30, 2025 |
Fiscal 2025 |
Fiscal 2024 |
Fiscal 2023 |
||||
| Amount ( million) | Percentage of revenue from operations | Amount ( million) | Percentage of revenue from operations | Amount ( million) | Percentage of revenue from operations | Amount ( million) | Percentage of revenue from operations | |
| Mattresses | 4,390.78 | 60.65% | 7,813.73 | 61.35% | 5,675.18 | 57.54% | 5,159.77 | 63.50% |
| Furniture | 2,118.60 | 29.26% | 3,516.89 | 27.61% | 3,012.20 | 30.54% | 1,951.10 | 24.01% |
| Furnishings | 730.65 | 10.09% | 1,406.29 | 11.04% | 1,176.15 | 11.92% | 1,015.33 | 12.49% |
Total |
7,240.03 | 100.00% | 12,736.91 | 100.00% | 9,863.53 | 100.00% | 8,126.20 | 100.00% |
Several factors could affect the sales of our products, including changes in consumer preferences, market competition, economic conditions and seasonality. Changes in consumer preferences and demand for our products could significantly impact our sales. Our success depends to a significant extent on customer confidence and spending, which is influenced by general economic condition and discretionary income levels. Many factors affect the level of customer confidence and spending in the home and furnishing products, including recession, inflation, political uncertainty, availability of consumer credit, taxation and unemployment. Our performance may decline during recessionary periods or in other periods where one or more macroeconomic factors, or potential macro-economic factors, negatively affect the level of customer confidence and spending. Growth of retail is also linked to consumer needs, attitudes and behavior. Developments in the economy and the rate of urbanisation have in the past affected the supply and demand as well as pricing trends in home and furnishings market.
To compete successfully in our business, we must be able to identify and respond to changing consumer demands and preferences. If we fail to anticipate and meet industry trends and our products do not meet customers preferences, our results of operations will be adversely affected. Increased competition could result in aggressive pricing strategies, which could lead to reduced market share, and lower profit margins. Additionally, seasonal variations can cause fluctuations in sales, with certain products experiencing higher demand during specific times of the year.
Also, see "Risk Factors We derive a significant portion of our revenue from our mattress product category. Our revenue from the sale of mattresses accounted for 60.65%, 61.35%, 57.54% and 63.50%, of our revenue from operations in six months period ended September 30, 2025 and Fiscals 2025, 2024 and 2023, respectively. Any shifts in consumer preferences, any disruption in the supply chain, or heightened competition could adversely affect our business, results of operations, financial condition and cash flows." on page 34.
Ability to maintain brand image
We sell our products under the "Wakefit" brand. Our ability to develop and maintain the brand and consumer goodwill are dependent on public perception and recognition of product quality. We intend to enhance our brand salience and awareness through strategic initiatives. Our customer outreach strategy aims to foster lasting relationships and strengthen brand loyalty through a mix of community engagement, marketing, celebrity collaboration, and cultural integration. For further details, see
"Our Business Strengths Continue to develop, invest and increase brand salience and brand awareness" on page 191. We will focus on maintaining reasonable costs for our marketing efforts and that are relative to the value we expect to derive from our customers.The table below sets forth our advertisement and business promotion expenses as a percentage of our revenue from operations in the period/ years indicated:
Particulars |
Six months period ended September 30, 2025 | Fiscal 2025 | Fiscal 2024 | Fiscal 2023 |
Advertisement and business promotion ( million) |
368.91 | 963.25 | 773.64 | 959.09 |
Advertisement and business promotion as a percentage of Revenue from operations |
5.10% | 7.56% | 7.84% | 11.80% |
Continued growth of our own channels
We are present across both online and offline customer touch points through our omnichannel network. Our strong marketing initiatives ensure that customers can discover our brand through various touchpoints such as search engines, social media, OTT platforms, marketplaces, and physical retail stores. Once they find us, they have multiple options to engage with our brand, including our website, COCO Regular Stores, MBOs and e-commerce marketplaces. A significant portion of our revenue from operations is derived from the sale of our products through our own channels (i.e., our website and COCO Regular Stores). The table below sets forth details of revenue from our own channels for the period/years indicated:
Particulars |
Six months period ended September 30, 2025 | Fiscal 2025 | Fiscal 2024 | Fiscal 2023 |
| Revenue from our own channels ( million) | 4,699.28 | 7,255.68 | 5,750.60 | 4,672.55 |
Revenue from our own channels as a percentage of revenue from operations |
64.91% | 56.97% | 58.30% | 57.50% |
The continued growth in the sale of our products from our own channels is a pivotal factor influencing our results of operations. This growth is essential for enhancing our profitability, as products sold through these channels typically command higher margins due to the elimination of third-party costs. If this growth continues, we anticipate higher revenues, a stronger market position, and improved customer insights. Conversely, if growth from our own channels slows or declines, we may face lower revenue growth, increased competition, and challenges in engaging customers directly, potentially eroding brand trust and loyalty.
Our COCO Regular Stores also play a crucial role in our success. These outlets provide a branded environment with the Company controlling the narrative where customers can engage with our trained staff members and experience our products firsthand, fostering a deeper connection with our brand. These COCO Regular Stores help diversify our sales, enhancing our overall market penetration. By maintaining a presence in both online and offline channels, we ensure that customers have multiple touchpoints to discover and engage with our brand, ultimately supporting our long-term growth and profitability. Further, our strategy includes opening of additional COCO Regular Stores and opening of COCO Jumbo Stores. For further information, see "Objects of the Offer" and "Our Business - Strategic expansion of COCO Regular Stores and enhance sales on our website" on page 119 and 189. An inability to appropriately identify suitable locations, or set-up the most appropriate store-format at a particular location, or to negotiate commercially reasonable lease terms, may increase our payback periods, result in store closures, and adversely affect our results of operations and financial condition. Further, as we expand our network of COCO Regular Stores and introduce COCO Jumbo Stores, we anticipate an increase in rent expenses. If we are unable to generate adequate revenues from these new stores, the increased rent expenses could strain our financials, potentially leading to lower profit margins or even losses.
Availability and cost of raw materials consumed
A significant portion of our cost structure is attributed to the cost of materials consumed. Our ability to remain competitive and profitable depends on our ability to source and maintain a stable and sufficient supply of raw materials at cost effective prices. Our primary raw materials include chemicals, natural and processed wood, fabrics, glue, and metals. The table below provides our cost of materials consumed, as a percentage of our total expenses, in relevant period/ years:
Particulars |
September 30, 2025 | Fiscal 2025 | Fiscal 2024 | Fiscal 2023 |
Cost of materials consumed (in million) |
3,382.33 | 5,817.61 | 4,639.71 | 4,717.11 |
Cost of materials consumed as a percentage of Total expenses (%) |
47.93% | 43.40% | 44.94% | 48.85% |
We typically procure such materials through purchase orders and do not enter into any long-term agreements with our suppliers. If we were to experience a significant or prolonged shortage of raw materials for our products in the required volumes and at appropriate quality and reliability levels from any of our suppliers, and we are unable to procure the raw materials from other sources at cost effective prices our sales, profit margins and customer relations would be adversely affected. Further, we are exposed to fluctuations in availability and prices of our raw materials and we may not be able to effectively pass on all increases in cost of raw materials to our customers, which may affect our margins and results of operations. The price of our raw materials may fluctuate due to several reasons including market fluctuations, currency fluctuations, production and transportation costs and changes in domestic and international trade policies. Any inability on our part to procure sufficient quantities of raw materials and on commercially acceptable terms, could lead to a change in our manufacturing and sales volumes.
Competition
The home and furnishings industry in India is competitive, fragmented and largely unorganised. For further information, see
"Risk Factors The home and furnishings industry is competitive and our inability to compete effectively may adversely affect our business, results of operations, financial condition and cash flows" and "Our Business Competition" on pages 45 and 211, respectively. Our products compete with local retailers, non-branded products and products of other established brands. In the future, some of our competitors may develop alliances to compete against us, acquire greater resources, market presence and geographic reach, as well as develop products with better brand recognition than ours. Some of our competitors may be able to procure raw materials or finished products at lower costs than us, and consequently be able to sell their products at lower prices. As a result, our competitors may be able to withstand industry downturns better than us or sell their products at more competitive prices.
PRESENTATION OF FINANCIAL INFORMATION
The Restated Financial Information of our Company comprise the Restated Statement of Assets and Liabilities as at September 30, 2025, March 31, 2025, March 31, 2024 and March 31, 2023 and the Restated Statement of Profit and Loss (including Other Comprehensive Income), the Restated Statement of Changes in Equity, and the Restated Statement of Cash Flows for the six months period ended September 30, 2025 and years ended March 31, 2025, March 31, 2024 and March 31, 2023 , the material accounting policies and other explanatory information (collectively, the Restated Financial Information).
The Restated Financial Information have been prepared on a going concern basis. The accounting policies are applied consistently to all the period/years presented in the Restated Financial Information. These Restated Financial Information have been prepared by the management as required under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended ("ICDR Regulations") issued by the Securities and Exchange Board of India ("SEBI"), in pursuance of the Securities and Exchange Board of India Act, 1992, for the purpose of inclusion in the Red Herring Prospectus ("RHP") and the Prospectus in connection with proposed issue of equity shares of our Company comprising a fresh issue of the Equity Shares by our Company and an offer for sale of equity shares by the existing shareholders by way of initial public offer. Accordingly, the Restated Financial Information may not be suitable for any other purpose and this report should not be used, referred to or distributed for any other purpose.
These Restated Financial Information have been prepared by our Company in terms of the requirements of:
a) Section 26 of Part I of Chapter III of the Companies Act, 2013, as amended (the "Act");
b) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended; and
c) The Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the Institute of Chartered Accountants of India ("ICAI") (the "Guidance Note")
The Restated Financial Information have been prepared to comply in all material respects with the Indian Accounting Standards ("Ind AS") as specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time), presentation requirements of Division II of Schedule III to the Act, as applicable to the financial statements and other relevant provisions of the Act.
The Restated Financial Information has been compiled by our Company from:
a) Audited Special Purpose Interim Financial Statements of our Company as at and for the six months period ended September 30, 2025 prepared in accordance with Indian Accounting Standard 34 "Interim Financial Reporting" (Ind AS
34) as specified under Section 133 of the Act and other accounting principles generally accepted in India and presentation requirements of Schedule III of the Act, except for presenting Comparative financial information as required by Ind AS 34, which have been approved by the Board of Directors at their meeting held on November 20, 2025; and
b) Audited Financial Statements of our Company as at and for the years ended March 31, 2025, March 31, 2024 and March 31, 2023 prepared in accordance with the Ind AS as specified under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015, as amended, and other accounting principles generally accepted in India, which have been approved by the Board of Directors at their meetings held on September 26, 2025, September 26, 2024 and September 29, 2023 respectively;
The Restated Financial Information:
a) have been prepared after incorporating adjustments for the changes in accounting policies, material errors and regrouping/reclassifications retrospectively in the financial years ended March 31, 2025, March 31, 2024 and March 31, 2023 to reflect the same accounting treatment as per the accounting policies and grouping/classifications followed as at and for the six months period ended September 30, 2025;
b) does not contain any modification requiring adjustments. Moreover, matters in the Auditors report, which do not require any corrective adjustments in the Restated Financial Information have been disclosed in Part B of Annexure VII of the Restated Financial Information; and
c) have been prepared in accordance with the Act, ICDR Regulations and the Guidance Note.
These Restated Financial Information have been prepared in Indian Rupee ( ) which is the functional currency of our Company.
All amounts disclosed in the restated financial information and notes have been rounded off to the nearest million with two decimals, unless otherwise stated.
The Restated Financial Information are approved for issue by our Companys Board of Directors on November 20, 2025.
SUMMARY OF MATERIAL ACCOUNTING POLICIES
The material accounting policies applied by our Company in the preparation of the Restated Financial Information are listed below.
Current and non-current classification
All assets and liabilities are classified into current and non-current.
Assets
An asset is classified as current when it satisfies any of the following criteria:
- it expects to realize the asset, or intends to sell or consume it, in its normal operating cycle; - it holds the asset primarily for the purpose of trading; - it expects to realize the asset within twelve months after the reporting period; or
- the asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
Current assets include the current portion of non-current assets.
All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria:
- it is expected to be settled in the Companys normal operating cycle;
- it holds the liability primarily for the purpose of trading;
- the liability is due to be settled within twelve months after the reporting period; or
- it does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
All other liabilities are classified as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents.
The Companys normal operating cycle is twelve months.
Revenue recognition
The Company generates revenue from sale of products to the customers. Revenue is recognised when control of goods and services is transferred to the customer upon the satisfaction of performance obligation under the contract at a transaction price that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. In relation to revenue from contracts with customers, amounts are generally collected in advance.
(i) Revenue from sale of products
Revenue from the sale of products is recognised at a point in time when control of the product being sold is transferred to the customer and there is no unfulfilled obligation that could affect the customers acceptance of the products. The performance obligation is completed upon delivery of products to the customer.
Revenue is measured on the contract price net of any taxes collected from customers and variable consideration on account of various discounts and schemes offered by the Company. The transaction price is an amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods.
For contracts that permit the customer to return an item, revenue is recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. Therefore, the amount of revenue recognised is adjusted for expected returns, which are estimated based on the historical data. In these circumstances, a refund liability and a right to recover returned goods asset are recognised.
The refund liability, to the extent that the Company offers it in the form of a cash refund, is presented under "Other current financial liabilities". The refund liability offered in the form of a replacement or exchange of another good is presented under "Other current liabilities".
(ii) Assets and liabilities arising from right to return
The Company has contracts with customers which entitles them the unconditional right to return for a specified period as per the policy.
Right to return assets
A right of return gives an entity a contractual right to recover the products from a customer (right to return asset), if the customer exercises its option to return the products and obtain a refund. The asset is measured at the carrying amount of the inventory, less any expected costs to recover the products, including any potential decreases in the value of the returned products.
The Company has presented its right to return under "Inventory".
(iii) Other Operating revenue (Sale of scrap and others)
Revenue from sale of scrap in the course of ordinary activities is measured at the transaction price.
Revenue from contracts for sale of services is recognised when services are rendered at a point in time, and when the related costs are incurred.
Variable Consideration
If the consideration in a contract includes a variable amount (discounts and incentives), an estimate is made for the amount of consideration to which the Company will be entitled in exchange for transferring the goods/services to the customer and such discounts and incentives are estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved. The rights of return give rise to variable consideration.
Customer loyalty points
The Company has a loyalty points programme, which allows customers to accumulate points that can be redeemed for subsequent purchase. The loyalty points give rise to a separate performance obligation as they provide a material right to the customer.
A portion of the transaction price is allocated to the loyalty points awarded to customers based on relative stand-alone selling price and recognized as a contract liability until the points are redeemed. Revenue is recognized upon redemption of points by the customer.
When estimating the stand-alone selling price of the loyalty points, the likelihood that the customer will redeem the points is considered. Estimates of the points that will be redeemed on each reporting date are updated and any adjustments to the contract liability balance is charged against revenue.
Contract balances:
Trade receivables
A trade receivable is recognized if an amount of consideration is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets for initial recognition and subsequent measurement of financial assets.
Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the customer, where that right is conditioned on something other than the passage of time. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognized for the earned consideration that is conditional. Contract assets are subject to impairment assessment.
Contract liabilities
A contract liability is recognized if a payment is received, or a payment is due (whichever is earlier) from the customer before the Company transfers the related goods or services. Contract liabilities are recognized as revenue when the Company performs under the contract (i.e., transfers control of the related goods or services to the customer).
Other Income
Interest income:
Interest income is recognized using the effective interest method or time proportion method, based on rates implicit in the transaction.
338
Dividend income on investments is recognised in the restated statement of profit and loss when the Companys right to receive dividend is established.
Profit on sale of mutual funds and fair value impact on mark-to-market contracts are recognised on transaction completion and or on reporting date as applicable.
Property, plant, and equipment
(i) Recognition and measurement
The cost of an item of property, plant and equipment shall be recognised as an asset if, and only if it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
Items of property, plant and equipment (including capital-work-in progress) are measured at cost, which includes capitalised borrowing costs, less accumulated depreciation and any accumulated impairment losses.
Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located.
The cost of a self-constructed item of property, plant and equipment comprises the cost of materials and direct labour, any other costs directly attributable to bringing the item to working condition for its intended use, and estimated costs of dismantling and removing the item and restoring the site on which it is located (site restoration costs).
The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.
A property, plant and equipment is eliminated from the restated financial information on disposal or when no further benefit is expected from its use and disposal. Any gain or loss on disposal of an item of property, plant and equipment is recognised in the restated statement of profit and loss.
(ii) Transition to Ind AS
The cost of property, plant and equipment at April 1, 2021, the Companys date of transition to Ind AS, was determined with reference to its carrying value recognised as per the previous GAAP (deemed cost) as at the date of transition to Ind AS.
(iii) Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other expenses on existing property, plant, and equipment, including day-to-day repair and maintenance expenditure are charged to the restated statement of profit and loss for the period during which such expenses are incurred.
(iv) Capital advances and Capital work in progress
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other non-current assets. The costs of property, plant, and equipment, which are not ready for their intended use on such date, are disclosed as capital work in progress. The capital work-in-progress is carried at cost, comprising direct cost, related incidental expenses, and attributable interest. No depreciation is charged on the capital work in progress until the asset is ready for the intended use.
(v) Depreciation
Depreciable amount for assets is the cost of asset less its estimated residual value. Depreciation on property, plant and equipment is calculated on a straight-line basis using the rates arrived at based on the useful lives estimated by the management. Based on an internal technical evaluation, management believes that useful life as given below, which are different from those prescribed in Part C of schedule II of the Act, best represents the period over which management expects to use these assets.
Asset category |
Useful lives estimated by the management | Useful lives as per Schedule II |
| Plant and machinery | 8 Years | 15 Years |
| Office equipment | 5 Years | 5 Years |
| Computers | 3 Years | 3 Years |
| Furniture and Fixtures | 10 Years | 10 Years |
| Vehicles | 10 Years | 10 Years |
Lease hold improvements are depreciated over a period of 3 years or lease term whichever is lower.
Depreciation is calculated on a pro-rata basis for assets purchased/sold during the period/ year. The residual value, appropriateness of depreciation period and depreciation method is reviewed by the management each financial year, with the effect of any changes in estimate being accounted for on a prospective basis.
Intangible assets and amortisation
Intangible assets acquired separately are measured initially at cost. An intangible asset is recognised only if it is probable that future economic benefits attributable to the asset will flow to the Company and the cost of the asset can be measured reliably. After initial recognition, intangible assets are recorded at cost less accumulated amortisation and impairment cost, if any.
Amortisation is recognised on a straight-line basis over the estimated useful lives of the intangible assets. Computer software is amortized on a straight-line method over a period of three years. The amortisation period and method used for amortisation are reviewed at each period end. All intangible assets are assessed for impairment whenever there is an indication for impairment that an intangible asset may be impaired.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Any gain or loss on disposal of an intangible asset is recognised in the restated statement of profit and loss.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in the restated statement of profit and loss.
The cost of intangible assets as at April 1, 2021, the Companys date of transition to Ind AS, was determined with reference to its carrying value recognised as per the previous GAAP (deemed cost), as at the date of transition to Ind AS.
Measurement of Fair Values
Certain accounting policies and disclosures of the Company require the measurement of fair values, for both financial and non-financial assets and liabilities. The Company has an established control framework with respect to the measurement of fair values. The Company regularly reviews significant unobservable inputs and valuation adjustments. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in 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 asset or liability that are not based on observable market data (unobservable inputs).
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. (Refer note 38).
Impairment
Non- financial assets
At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the assets recoverable amount is estimated.
For the purpose of impairment testing, the recoverable amount (i.e., the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the cash generating unit ("CGU") to which the asset belongs. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflect current market assessments of time value of money and the risk specific to the CGU.
An impairment loss is recognised in the restated statement of profit and loss and is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the restated statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognized for the asset in prior periods/ years.
Financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss. The Company follows simplified approach for recognition of impairment loss allowance on trade receivables.
The Company considers a financial asset to be in default when:
the debtor is unlikely to pay its credit obligations to the Company in full; or the ageing is more than 12 months past due.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets i.e., investments, bank balances/deposits, etc., and risk exposure, the Company determines 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 period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the Company reverts to recognizing impairment loss allowance based on 12-month ECL.
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 Company expects to receive (i.e., all shortfalls), discounted at the original EIR.
The Company recognises loss allowances for expected credit losses on financial assets recorded at amortised cost. At each reporting date the Company assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is "credit-impaired" when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired included the following observable data:
significant financial difficulties of the borrower or issuer;
the restructuring of a loan or advance by the Company on terms that the Company would not consider otherwise; and the disappearance of an active market for a security because of financial difficulties.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Companys historical experience and informed credit assessment, that includes forward-looking information.
Presentation of allowance for ECL in the balance sheet
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.
Employee benefits
(i) Short term employee benefits
Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits and are measured on undiscounted basis. These benefits include salaries and wages, bonus etc., which are to be paid in exchange for the employee services and are recognised as an expense in the restated statement of profit and loss in the period in which the employee renders the related service.
(ii) Defined contribution plans
A defined contribution plan is a post-employment benefit plan where the Companys legal or constructive obligation is limited to the amount that it contributes to a separate legal entity. The employees provident fund scheme and employees state insurance scheme are defined contribution plans. The Companys contribution paid/payable under these schemes is recognised as an expense in the restated statement of profit and loss during the period/year in which the employee renders the related service. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
(iii) Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company has an obligation towards gratuity, which is a defined benefit retirement plan. The Companys net obligation in respect of gratuity is calculated by estimating the amount of future benefit that employees have earned in the current and prior periods and discounting that amount.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. The Company recognizes the net obligation of a defined benefit plan as liability in the restated statement of assets and liabilities. Actuarial gains and losses through re-measurements of the net defined benefit liability/ (asset) are recognized in other comprehensive income. In accordance with Ind AS, re-measurement gains and losses on defined benefit plans recognised in OCI are not to be subsequently reclassified to the restated statement of profit and loss.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the restated statement of profit and loss:
Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and
Net interest expense or income
(iv) Other long-term employee benefits- Compensated absences
Benefits under the Companys compensated absences constitute other long-term employee benefits, recognised as an expense in the restated statement of profit and loss for the period in which the employee has rendered services. Estimated benefits on account of these benefits is provided for based on the actuarial valuation using the projected unit credit method at the period/year end. Remeasurements are recognised in profit or loss in the period in which they arise.
The Company presents the entire compensated absences balance as a current liability in the balance sheet since, the Company does not have an unconditional right to defer its settlement for twelve months after the reporting date.
(v) Share based payments
Employees of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions). The Company measures compensation cost relating to employee stock options plans using the fair valuation method in accordance with Ind AS 102 "Share-Based Payment".
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using the Black Scholes model and the cost is recognized, together with a corresponding increase in share based payment reserve in equity, over the period in which the performance and/or service conditions are fulfilled in a graded vesting manner. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Companys best estimate of the number of equity instruments that will ultimately vest.
In case of cancellation or settlement of grant of equity instruments during the vesting period (other than a grant cancelled by forfeiture when the vesting conditions are not satisfied), the Company shall account for the cancellation or settlement as an acceleration of vesting and shall therefore recognise immediately the amount that otherwise would have been recognised for services received over the remainder of the vesting period.
Any payment made to the employee on the cancellation or settlement of the grant shall be accounted for as the repurchase of an equity interest, i.e., as a deduction from equity, except to the extent that the payment exceeds the fair value of the equity instruments granted, measured at the repurchase date. Any such excess shall be recognised as an expense in the restated statement of profit and loss.
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) Recognition and initial measurement
Trade receivables are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.
(b) Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as measured at:
Amortised cost;
Fair value through other comprehensive income debt instruments (FVOCI);
Fair value through other comprehensive income equity instruments; or (FVOCI)
Fair value through profit and loss (FVTPL).
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.
A financial asset is measured at amortized cost if it meets both the following conditions and is not designated as at FVTPL:
the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and the contractual terms of the financial assets give rise on a specified dates to cash flows that are solely payments of principal and interest on the principal amounts outstanding.
A debt instrument is measured at FVOCI if it meets both of the following conditions and is not designated as FVTPL: the asset is held within a business model whose objective is achieved by both collecting contractual cash flow and selling financial assets; and
the contractual terms of the financial assets give rise on a specified date to cash flows that are solely payments of principal and interest on the principal amounts outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investments fair value in OCI (designated as FVOCI- equity investment). This election is made on an investment-to-investment basis.
All financial assets not classified as amortized cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL, if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial Assets: Business model assessment
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.
Financial assets: Assessments whether contractual cash flows are solely payments of principal and interest.
For the purpose of this assessment, ‘principal is defined as the fair value of the financial asset on initial recognition. ‘Interest is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during the particular period of time and for the other basic lending risks and costs.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:
contingent events that would change the amount or timing of cash flows;
terms that may adjust the contractual coupon rate, including variable interest rate features; prepayment and extension features; and terms that limit the Company claim to cash flows from specified assets.
(c) Subsequent measurement
Financial assets at FVTPL- Subsequently measured at fair value. Net gains and losses, including any interest or dividend income are recognized in the restated statement of profit and loss.
Financial assets at amortized cost- Subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and
losses and impairment are recognized in the restated statement of profit and loss. Any gain or loss on derecognition is recognized in the restated statement of profit and loss.
Debt instruments at FVOCI Subsequently measured at fair value. Interest income under the effective interest method, foreign exchange gains and losses and impairment are recognized in the restated statement of profit and loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to the restated statement of profit and loss.
Equity instruments at FVOCI- Subsequently measured at fair value. Dividends are recognized as income in the restated statement of profit and loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in OCI and are not reclassified to the restated statement of profit and loss.
(d) Derecognition
The Company derecognises a financial asset when:
the contractual rights to the cash flows from the financial asset expire; or
it transfers the rights to receive the contractual cash flows in a transaction in which either: substantially all of the risks and rewards of ownership of the financial asset are transferred; or
the Company neither transfers nor retains substantially all of the risks and rewards of ownership it does not retain control of the financial asset.
(e) Offsetting
Financial assets and financial liabilities are offset, and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.
(f) Recognition of Interest income or expense
Interest income or expense is recognised using the effective interest rate.
The ‘effective interest rate is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument to:
The gross carrying amount of the financial asset; or
The amortized cost of the financial liability.
Financial instruments Financial liabilities
a) Recognition and initial measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss or amortized cost. All financial liabilities are initially measured at fair value plus or minus, for an item not at FVTPL, transaction costs that are directly attributable to its issue.
All financial liabilities are recognised initially at fair value and, in the case of borrowings and payables, net of directly attributable transaction costs. The Companys financial liabilities include trade and other payables, lease liabilities and borrowings.
b) Subsequent measurement
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
c) 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 restated statement of profit and loss.
d) Offsetting
Financial assets and financial liabilities are offset, and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.
Leases
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
To assess where the Company has the right to control the use of identified assets, the Company assesses whether the:
(i) the contract involves the use of identified assets,
(ii) whether the Company has the right to obtain substantially all the economic benefits from the use of assets throughout the period of use and
(iii) whether the Company has the right to direct the use of assets.
Company as a lessee
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use ("ROU") asset is initially measured at cost , which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of cost to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The right-of-use assets is periodically assessed for impairment.
The lease liability is initially measured at the present value of future lease payments, discounted using the implicit rate of interest or if that rate cannot be readily determined, the Companys incremental borrowing rate. Generally, the Company uses the incremental borrowing rate.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is change in future lease payments arising from a change in index or rate, or if there is change in the Companys estimate of amount expected to be payable under residual guaranteed value, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option.
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Company recognises the lease payments associated with these leases as an expense over the lease term.
Borrowing costs
Borrowing costs consist of interest and other costs that the Company incurs in connection with the borrowing of funds. Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized/inventoried as part of the cost of the respective asset. All other borrowing costs are charged to the restated statement of profit and loss in the period in which they are incurred.
Share issue expenses
Incremental costs directly attributable to the issue of shares are adjusted with the securities premium.
Inventories
Inventories are measured at the lower of cost and net realisable value.
The cost of inventories includes costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The cost of finished goods and work in progress includes an appropriate share of production overheads.
The methods of determination of cost of various categories of inventories are as follows:
| Raw material, packing material and traded goods | - Moving average method. |
| Work-in-progress and finished goods | - Moving average method. |
| Goods in transit | - At purchase cost |
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated costs necessary to make the sale. The comparison of cost and net realizable value is made on item-by-item basis.
The net realisable value of work-in-progress is determined with reference to the selling prices of related finished goods in the ordinary course of business, less estimated cost of completion and estimated costs necessary to make the sale. Raw materials, packing materials and other supplies held for use in production of inventories are not written below cost except in cases where material prices have declined, and it is estimated that the cost of the finished products will exceed their net realisable value.
Due allowance is estimated and provided by the management for slow moving / non-moving items of inventories, wherever necessary, based on the past experience and such allowances are adjusted against the carrying value of inventory.
Sale of raw materials
Sale of raw materials are considered as a recovery of cost of materials and adjusted against cost of materials consumed.
Income Taxes
Income tax expense comprises current tax and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.
(i) Current Tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the period/ year and any adjustment to the tax payable or receivable in respect of previous periods/ years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.
Current tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
(ii) Deferred Tax
Deferred tax is recognized on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction and does not give rise to equal taxable and deductible temporary differences.
Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity.
Provisions, Contingent liabilities, and Contingent assets
Provisions:
Provisions are recognised when the Company has a present obligation (legal or constructive) 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 a reliable estimate can be made of the amount of the obligation. Expected future operating losses are not provided for.
Where the Company expects some or all of the expenditure required to settle a provision will be reimbursed by another party, the reimbursement is recognised when, and only when, it is virtually certain that reimbursement will be received if the Company settles the obligation. The reimbursement is treated as a separate asset.
Provisions for onerous contracts, i.e., contracts where the expected unavoidable costs of meeting obligations under a contract exceed the economic benefits expected to be received, are recognized when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligating event, based on a reliable estimate of such obligation.
Contingent liability:
Contingent liability is a possible obligation arising 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 Company or a present obligation that arises from past events but is not recognized because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. The Company does not recognize a contingent liability but discloses its existence in the restated financial information.
Contingent asset:
Contingent asset is not recognised in restated financial information since this may result in the recognition of income that may never be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and is recognized.
Provisions, contingent liabilities, and contingent assets are reviewed at each balance sheet date.
Warranty
The estimated liability for product warranties is recorded when products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future incidence based on corrective actions on product failures. The timing of outflows will vary as and when warranty claim will arise, being typically between three months to twenty years.
Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (Consolidation of shares) that will change the number of equity shares outstanding, without a corresponding change in resources.
Diluted earnings per share is computed by dividing the profit/(loss) after tax as adjusted for dividend, interest (net of any attributable taxes) other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.
Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share or increase the net loss per share. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date.
Foreign currency translations
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at period/ year end exchange rates are recognised in the restated statement of profit and loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.
The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively).
Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM).
The Companys CODM is the Chief Executive Officer (CEO). The Company is engaged in manufacture and sale of mattress, furniture and accessories and its principal geographical segment is India. The Companys operating businesses are organized and managed as a single operating segment. Consequently, the CODM believes that there are no reportable segments as required under Ind AS 108 Operating segments
Cash and cash equivalents
Cash and cash equivalents comprise cash at banks and in hand, cheque at hand / remittance in transit and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
Statement of cash flows
Cash flows are reported using the indirect method as set out in Indian Accounting Standard (Ind AS ) 7 on Statement of Cash Flows, whereby profit/(loss) for the period/year is adjusted for the effects of transactions of a non-cash nature, any deferrals, or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing, and financing activities of the Company are segregated.
Earnings before finance costs, depreciation and amortisation expense, exceptional items and tax
As permitted by the Guidance Note on Division II - Ind AS Schedule III to the Companies Act 2013, the Company has elected to present earnings before finance costs, depreciation and amortisation expense, and tax as a separate line item on the face of the restated statement of profit and loss. The Company measures earnings before finance costs, depreciation and amortisation expense, and tax on the basis of profit/(loss). In its measurement, the Company does not include finance costs, depreciation and amortisation expense, and income tax expenses.
Recent accounting pronouncements
The Ministry of Corporate Affairs (MCA), through the Companies (Indian Accounting Standards) Amendment Rules, 2025 and Companies (Indian Accounting Standards) Second Amendment Rules, 2025, has issued amendments to various Ind AS, which will be effective from April 1, 2025 and April 1, 2026. The Company will evaluate the requirements and apply these amendments from the effective date.
A. Amendments effective from April 1, 2025:
(a) Ind AS 21 Effects of Changes in Foreign Exchange Rates (Lack of Exchangeability).
These amendments aim to provide clearer guidance on assessing currency exchangeability and estimating exchange rates when currencies are not readily exchangeable.
Impact: The Company currently does not deal in such currencies and hence there is no impact on the financial statements. The Company will assess the implications of this amendment for future periods.
(b) Ind AS 7 Statement of Cash Flows and Ind AS 107 Financial Instruments: Disclosures (Supplier Finance Arrangements).
The amendments introduce additional disclosure requirements for supplier finance arrangements to enhance transparency regarding their effect on liabilities and cash flows.
Impact: The Company does not have any supplier finance arrangements; hence, no material impact is expected.
(c) Ind AS 12 Income Taxes (Pillar Two Model Rules) Ind AS 12, International Tax Reform Pillar Two Model Rules applicable immediately
The amendments provide a temporary mandatory relief from deferred tax accounting for top-up tax and require companies to disclose that they have applied the relief. This relief is immediate and applies retrospectively. The amendments also require companies to provide new disclosures to compensate for potential loss of information resulting from the relief. Such disclosures are to be provided for annual reporting periods beginning on or after April 01, 2025.
Impact: These amendments does not have impact on the Companys financial statements.
(d) Ind AS 1, Presentation of Financial Statements.
The amendment relates to classification of liabilities as current or non -current and non-current liabilities with covenants. In the context of classifying a liability as current, it removes the requirement of existence of a right to defer settlement for at least 12 months after the reporting date and instead requires that the said right should exist on the reporting date and have substance. The amendment also introduces guidance on classification of liabilities with covenants.
Impact: These amendments does not have impact on the Companys financial statements.
(e) Other Amendments (Ind AS 115, Ind AS 116)
Other amendments include: Removed the conflict between Ind AS 109 and Ind AS 115 over the amount at which a trade receivable is initially measured (Ind AS 115 and Ind AS 116).
Impact: These amendments does not have a material impact on the Companys financial statements.
B. Amendments notified but not yet effective (effective from April 1, 2026)
Ind AS 1, Presentation of Financial Statements This amendment removes the carve-outs in Ind AS 1 from IAS 1 when there is a breach of a material covenant that transforms the liability from non-current to current. However, the Company does not see any material impact on the financial statements.
PRINCIPAL COMPONENTS OF INCOME AND EXPENDITURE
Total Income
Total Income comprises revenue from operations and other income.
Revenue from operations
Revenue from operations comprise (i) sale of products: (a) manufactured goods and (b) traded goods; and (ii) other operating income from (a) scrap sales and (b) others.
Other income
Other income includes (i) interest income under the effective interest method on financial assets carried at amortised cost: (a) bank deposits and (b) interest income on security deposit; (ii) profit on sale of investments, net; (iii) fair valuation gain from investments designated at FVTPL, net; (iv) gain on termination of leases, net; (v) foreign exchange gain, net; (vi) profit on sale of property, plant and equipment, net; and (viii) miscellaneous income (such as vendor bill discounting and insurance claims).
Expenses
Total expenses comprise (i) cost of materials consumed; (ii) purchases of stock-in-trade; (iii) changes in inventories of finished goods, work in progress and stock in trade; (iv) employee benefit expense; (v) other expenses; (vi) finance costs; and (vii) depreciation and amortisation expense.
Cost of materials consumed
Cost of materials consumed consists of costs for raw materials such as chemicals, wood, fabric, metal and packaging materials.
Purchases of Stock in trade
Purchases of Stock in trade consists of purchases of d?cor items such as lighting, rugs and mats.
Changes in inventories of finished goods, work in progress and stock in trade
Changes in inventories of finished goods, work in progress and stock in trade denotes inventories of finished goods, work in progress and stock-in-trade between beginning and end dates of a reporting period/year.
Employee benefits expense
Employee benefits expense comprises (i) salaries, wages and bonus; (ii) contribution to provident fund and other funds; (iii) share based payments expense; (iv) staff welfare expenses; and (v) gratuity.
Finance costs
Finance costs primarily comprise interest expense on financial liabilities measured at amortized cost of (i) interest expense on working capital loan; (ii) interest expense on lease liabilities; and (iii) unwinding of discount on site restoration provision.
Depreciation and amortisation expense
Depreciation and amortisation expense include (i) depreciation on property, plant and equipment; (ii) depreciation on right of use asset; and (iii) amortisation of intangible assets.
Other expenses
Other expenses primarily include (i) consumption of stores and spares; (ii) power and fuel; (iii) commission; (iv) courier and delivery charges; (v) advertisement and business promotion; (vi) contract labour charges; (vii) job work charges; (viii) rent; (ix) professional and consultancy charges; (x) rates and taxes; (xi) warranty; (xii) travelling and conveyance; (xiii) repairs and maintenance comprising machinery, building and others; (xiv) printing and stationery; (xv) foreign exchange loss, net; (xvi) communication; (xvii) software support and maintenance; (xviii) payment gateway charges; (xix) security charges; (xx) insurance; (xi) provision for doubtful advances; (xxii) loss on sale of property, plant and equipment, net; (xxiii) write off of property, plant and equipment; (xxiv) corporate social responsibility; (xxv) bank charges; and (xxvi) miscellaneous expenses such as samples procurement costs for research and development.
NON-GAAP MEASURES
EBIT, EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Capital Employed and Return on Capital Employed, PAT Margin, Net Worth and Return on Net Worth (%), Net Asset Value per Equity Share, and Net working capital days ("Non-GAAP Measures") presented in this Red Herring Prospectus is a supplemental measure of our performance and liquidity that is not required by, or presented in accordance with, Ind AS, Indian GAAP, IFRS or US GAAP. Further, EBITDA, EBITDA Margin and Return on Equity is not a measurement of our financial performance or liquidity under Ind AS, Indian GAAP, IFRS or US GAAP and should not be considered in isolation or construed as an alternative to cash flows, profit/(loss) for the years or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities derived in accordance with Ind AS, Indian GAAP, IFRS or US GAAP. In addition, Non-GAAP Measures are not standardised terms, hence a direct comparison of Non-GAAP Measures between companies may not be possible. Other companies may calculate the Non-GAAP Measure differently from us, limiting its usefulness as a comparative measure. Although Non-GAAP Measures is not a measure of performance calculated in accordance with applicable accounting standards, our Companys management believes that it is useful to an investor in evaluating us because it is a widely used measure to evaluate a companys operating performance.
Reconciliation of Profit/(Loss) for the period/year to EBITDA, Adjusted EBITDA, EBITDA Margin and Adjusted EBITDA Margin
Particulars |
Six months period ended September 30, 2025 | Fiscal 2025 | Fiscal 2024 | Fiscal 2023 |
| ( millions, unless otherwise stated) | ||||
| Profit/(loss) for the period/year (I) | 355.74 | (350.04) | (150.53) | (1,456.83) |
| Finance costs (II) | 148.03 | 295.92 | 170.13 | 126.57 |
| Depreciation and amortisation expense (III) | 528.17 | 962.42 | 638.89 | 472.74 |
EBITDA (IV = I + II + III) |
1,031.94 | 908.30 | 658.49 | (857.52) |
| Share based payment expense (V) | 7.10 | 117.41 | 130.20 | 71.90 |
Adjusted EBITDA (VI= IV+V) |
1,039.04 | 1,025.71 | 788.69 | (785.62) |
| Revenue from operations (VII) | 7,240.03 | 12,736.91 | 9,863.53 | 8,126.20 |
EBITDA Margin (%) (VIII= IV/VII) |
14.25% | 7.13% | 6.68% | (10.55)% |
Adjusted EBITDA Margin (%) |
14.35% | 8.05% | 8.00% | (9.67)% |
(IX =VI/VII) |
||||
Notes:
(1) EBITDA is calculated as Profit/(loss) for the period/year plus Tax Expense plus Finance Costs plus Depreciation and Amortisation.
(2) Adjusted EBITDA is calculated as Profit/(loss) for the period/year plus Tax Expense plus Finance Costs plus Depreciation and Amortisation plus Share based payment expense. (3) EBITDA Margin is calculated as EBITDA as a percentage of revenue from operations (4) Adjusted EBITDA Margin is calculated as Adjusted EBITDA as a percentage of revenue from operations.
Reconciliation of Net Worth and Return on Net Worth
Particulars |
Six months period ended September 30, 2025 | Fiscal 2025 | Fiscal 2024 | Fiscal 2023 |
| ( millions, unless otherwise stated) | ||||
| Equity share capital (I) | 157.53 | 10.52 | 10.34 | 10.11 |
| Instruments entirely equity in nature (II) | 192.45 | 192.45 | 192.45 | 170.75 |
| Other equity (III) | 5,223.38 | 5,002.73 | 5,233.27 | 4,869.93 |
Net Worth (IV) = (I + II+III) |
5,573.36 | 5,205.70 | 5,436.06 | 5,050.79 |
| Profit/(loss) for the period / year (V) | 355.74 | (350.04) | (150.53) | (1,456.83) |
Return on Net Worth (%) (VI) = (V / (IV) |
6.38%* | (6.72)% | (2.77)% | (28.84)% |
* Figures for six months period ended September 30, 2025 have not been annualized Notes:
Return on Net Worth (%) is computed as Profit/(loss) for the period/year divided by Net Worth as at the end of the period/year. As per Regulation 2(1)(hh) of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended, Net Worth means the aggregate value of the paid-up share capital and all reserves created out of the profits and securities premium account and debit or credit balance of profit and loss account, after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off as per the restated statement of assets and liabilities, but does not include reserves created out of revaluation of assets, write-back of depreciation and amalgamation. Further, Net worth has been computed as a sum of equity share capital, instruments entirely equity in nature and other equity as of the end of the period/year.
Reconciliation of Capital Employed, Earning Before Interest and Tax (EBIT) and Return on Capital Employed
Particulars |
Six months period ended September 30, 2025 | Fiscal 2025 | Fiscal 2024 | Fiscal 2023 |
| ( millions, unless otherwise stated) | ||||
| Total equity (I) | 5,573.36 | 5,205.70 | 5,436.06 | 5,050.79 |
Current financial liabilities (II) |
781.13 | 709.90 | 522.71 | 304.73 |
| (i) Borrowings | - | - | 73.61 | - |
| (ii) Lease liabilities | 781.13 | 709.90 | 449.11 | 304.73 |
| Non Current financial liabilities (III) | 1,988.76 | 2,023.37 | 1,376.29 | 1,134.57 |
| (i) Borrowings | - | - | - | - |
| (ii) Lease liabilities | 1,988.76 | 2,023.37 | 1,376.29 | 1,134.57 |
| Capital Employed (IV = I+II+III)) | 8,343.25 | 7,938.97 | 7,335.06 | 6,490.09 |
| Profit/(loss) for the period/year (V) | 355.74 | (350.04) | (150.53) | (1,456.83) |
| Finance costs (VI) | 148.03 | 295.92 | 170.13 | 126.57 |
| Tax expenses (VII) | - | - | - | - |
Earnings Before Interest, Tax (EBIT) (VIII = V + VI + VII)) |
503.77 | (54.12) | 19.60 | (1,330.26) |
Return on Capital Employed (%) |
6.04%* | (0.68)% | 0.27% | (20.50)% |
(XI=VIII/IV) |
||||
*Figures for six months period ended September 30, 2025 have not been annualized Notes:
Return on Capital Employed is calculated as (Earnings before interest and taxes("EBIT") divided by capital employed) *100. EBIT is calculated as Profit/(loss) for the period/year plus tax expenses plus finance costs. Capital Employed is calculated as the sum of total equity, current borrowings, current lease liabilities, non-current borrowings, non-current lease liabilities.
Reconciliation of PAT Margin
Particulars |
Six months period ended September 30, 2025 | Fiscal 2025 | Fiscal 2024 | Fiscal 2023 |
| ( millions, unless otherwise stated) | ||||
| Profit/(loss) for the period/year (I) | 355.74 | (350.04) | (150.53) | (1,456.83) |
| Revenue from operations (II) | 7,240.03 | 12,736.91 | 9,863.53 | 8,126.20 |
PAT Margin (%) (III = I/II) |
4.91% | (2.75)% | (1.53)% | (17.93)% |
Notes:
PAT Margin is calculated as Profit/(loss) for the period/year as a percentage of revenue from operations.
Reconciliation of Net Asset Value per Equity Share
Particulars |
Six months period ended September 30, 2025 | Fiscal 2025 | Fiscal 2024 | Fiscal 2023 |
Equity share capital (I) (in million) |
157.53 | 10.52 | 10.34 | 10.11 |
Instruments entirely equity in nature (II) (in million) |
192.45 | 192.45 | 192.45 | 170.75 |
| Other equity (III) (in million) | 5,223.38 | 5,002.73 | 5,233.27 | 4,869.93 |
Net Worth (IV) = (I + II+III) (in million) |
5,573.36 | 5,205.70 | 5,436.06 | 5,050.79 |
Number of equity shares and employee stock options outstanding at the end of the period/ year (V) |
311,283,359 | 306,875,833 | 303,429,204 | 259,234,377 |
Net Asset Value per Equity Share (in ) (VI) = (IV/V) |
17.90 | 16.96 | 17.92 | 19.48 |
Notes: Net Asset Value per equity share represents Net Worth at the end of the period/ year divided by number of Equity shares and employee stock options outstanding at the end of the period/year.
Net working capital days
Particulars |
Six months period ended September 30, 2025 | Fiscal 2025 | Fiscal 2024 | Fiscal 2023 |
| ( millions, unless otherwise stated) | ||||
| Inventories (I) | 2,617.94 | 1,636.29 | 1,306.83 | 1,155.85 |
| Trade receivables (II) | 36.62 | 58.58 | 280.88 | 168.30 |
| Trade payables (III) | 2,697.25 | 1,570.08 | 1,444.20 | 1,095.19 |
| Net working capital (I+II-III) | (42.69) | 124.79 | 143.51 | 228.96 |
| Average net working capital (IV) | 41.05 | 134.15 | 186.24 | 455.09 |
| Revenue from operations (V) | 7,240.03 | 12,736.91 | 9,863.53 | 8,126.20 |
| Net working capital days (IV/V) | 1.04 | 3.84 | 6.89 | 20.44 |
| Number of days in the period/ year* | ||||
Notes:
*
Net working capital days is calculated as (Average Net working capital divided by Revenue from operations) * by 365. However, for the six months ended September 30, 2025, Net working capital days is calculated as (Average Net working capital divided by Revenue from operations) * by 183. Net working capital is calculated as Inventories plus Trade Receivables minus Trade Payables.RESULTS OF OPERATIONS
The following table sets forth certain information with respect to our results of operations for the six months ended September 30, 2025 and Fiscals 2025, 2024, 2023:
Particulars |
Six months period ended September 30, 2025 |
Fiscal 2025 |
Fiscal 2024 |
Fiscal 2023 |
||||
| ( millions) | Percentage of Total Income | ( millions) | Percentag e of Total Income | ( millions) | Percentage of Total Income | ( millions) | Percentage of Total Income | |
Income |
||||||||
Revenue from operations |
7,240.03 | 97.67% | 12,736.91 | 97.57% | 9,863.53 | 96.95% | 8,126.20 | 99.10% |
| Other income | 172.98 | 2.33% | 317.35 | 2.43% | 309.81 | 3.05% | 73.89 | 0.90% |
Total Income Expenses |
7,413.01 | 100.00% | 13,054.26 | 100.00% | 10,173.34 | 100.00% | 8,200.09 | 100.00% |
Cost of materials consumed |
3,382.33 | 45.63% | 5,817.61 | 44.56% | 4,639.71 | 45.61% | 4,717.11 | 57.53% |
Purchases of stock-in- trade |
25.67 | 0.35% | 47.96 | 0.37% | 22.61 | 0.22% | 49.32 | 0.60% |
Changes in inventories of finished |
(278.62) | (3.76)% | (132.20) | (1.01)% | (12.10) | (0.12)% | (106.72) | (1.30)% |
Particulars |
Six months period ended September 30, 2025 |
Fiscal 2025 |
Fiscal 2024 |
Fiscal 2023 |
||||
| ( millions) | Percentage of Total Income | ( millions) | Percentag e of Total Income | ( millions) | Percentage of Total Income | ( millions) | Percentage of Total Income | |
goods, work in progress and stock in trade |
||||||||
Employee benefits expense |
795.07 | 10.73% | 1,657.43 | 12.70% | 1,346.32 | 13.23% | 1,057.72 | 12.90% |
Other expenses |
2,456.62 | 33.14% | 4,755.16 | 36.43% | 3,518.31 | 34.58% | 3,340.18 | 40.73% |
Expenses before finance costs, depreciation s and amortisation |
6,381.07 | 86.08% | 12,145.96 | 93.04% | 9,514.85 | 93.53% | 9,057.61 | 110.46% |
Earnings before finance costs, depreciation and amortisation and tax |
1,031.94 | 13.92% | 908.30 | 6.96% | 658.49 | 6.47% | (857.52) | (10.46)% |
| Finance costs | 148.03 | 2.00% | 295.92 | 2.27% | 170.13 | 1.67% | 126.57 | 1.54% |
Depreciation and amortisation expense |
528.17 | 7.12% | 962.42 | 7.37% | 638.89 | 6.28% | 472.74 | 5.77% |
Total expenses |
7,057.27 | 95.20% | 13,404.30 | 102.68% | 10,323.87 | 101.48% | 9,656.92 | 117.77% |
Profit/(loss) before tax |
355.74 | 4.80% | (350.04) | (2.68)% | (150.53) | (1.48)% | (1,456.83) | (17.77)% |
Tax expense |
||||||||
| Current tax | - | - | - | - | - | - | - | - |
| Deferred tax | - | - | - | - | - | - | - | - |
Profit/(loss) for the period/year |
355.74 | 4.80% | (350.04) | (2.68)% | (150.53) | (1.48)% | (1,456.83) | (17.77)% |
SIX MONTHS PERIOD ENDED SEPTEMBER 30, 2025
Total Income
Total Income was 7,413.01 million for six months period ended September 30, 2025. This was primarily attributable to our revenue from operations amounting to 7,240.03 million for the six months ended September 30, 2025.
Revenue from operations
Revenue from operations was 7,240.03 million for six months period ended September 30, 2025, primarily due to sale of manufactured goods of 7,132.56 million, sale of traded goods of 37.54 million, scrap sales of 55.68 million and other sales of 14.25 million. Our sale of manufactured goods is primarily driven by our sale of mattresses, furniture and furnishings. The table below sets forth the revenues from mattresses, furniture and furnishings, expressed as a percentage of revenue from operations for the years indicated:
Product Category |
Six months period ended September 30, 2025 | |
| ( millions) | As a percentage of revenue from operations | |
| Mattresses | 4,390.78 | 60.65% |
| Furniture | 2,118.60 | 29.26% |
| Furnishings | 730.65 | 10.09% |
Total |
7,240.03 | 100.00% |
Other income
Other income was 172.98 million in the six months period ended September 30, 2025, primarily due to interest income under the effective interest method on financial assets carried at amortised cost - bank deposits of 124.31 million, profit on sale of investments, net of 20.24 million and interest income under the effective interest method on financial assets carried at amortised cost - others of 17.46 million.
Expenses
Total expenses were 7,057.27 million in the six months period ended September 30, 2025, which was primarily attributable to cost of materials consumed of 3,382.33 million and other expenses of 2,456.62 million and employee benefits expense of 795.07 million.
Cost of materials consumed
Cost of materials consumed was 3,382.33 million for six months period ended September 30, 2025.
Purchases of stock-in-trade
Purchases of stock-in-trade were 25.67 million for six months period ended September 30, 2025.
Changes in inventories of finished goods, work in progress and stock in trade
Changes in inventories of finished goods, work in progress and stock in trade was (278.62) million for six months period ended September 30, 2025.
Employee benefits expense
Employee benefits expense was 795.07 million for six months period ended September 30, 2025, primarily due to salaries, wages and bonus of 730.36 million.
Other expenses
Our other expenses were 2,456.62 million for six months period ended September 30, 2025, primarily due to courier and delivery charges of 599.66 million, advertisement and business promotion of 368.91 million, commission of 288.05 million, contract labour charges of 324.62 million, job work charges of 100.23 million and software support and maintenance of 116.50 million.
Finance costs
Finance costs was 148.03 million for six months period ended September 30, 2025, primarily due to interest expense on lease liabilities of 142.86 million.
Depreciation and amortisation expense
Depreciation and amortisation expense was 528.17 million for six months period ended September 30, 2025, primarily due to depreciation on property, plant and equipment of 204.91 million and depreciation of right-of-use assets of 320.88 million.
Profit/(Loss) before tax
For the reasons discussed above, profit/(loss) before tax was 355.74 million for six months period ended September 30, 2025.
Tax expense
Our tax expense was nil for six months period ended September 30, 2025.
Profit/(Loss) for the period
As a result of the foregoing, the amount of profit/(loss) for the six months period ended September 30, 2025 is 355.74 million.
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