NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
1. General information
Advait Energy Transition Limited (formerly known as
Advait Infratech Limited) (“the Company"), incorporated
in the year 2009, is one of the well-established companies
in India operating in the manufacturing and supply of
power transmission products such as Stringing Tools,
OPGW (Optical Fibre Ground Wire), OFC (Optical Fibre
Cables), ACS (Aluminium Clad Steel Wire), ERS (Emergency
Restoration System), RDSS (Revamped Distribution Sector
Scheme), Re-conductoring and HTLS (High Temperature
Low Sag) conductors, and OPGW joint boxes. The Company
is also engaged in new and renewable energy businesses,
including Carbon Credit trading and, Green Hydrogen,
and Solar EPC.
The Company is a public limited company incorporated and
domiciled in India, having its Corporate Identity Number
(CIN) as L45201GJ2010PLC059878. The registered office
of the Company is situated at KIFS Corporate House, 1st &
2nd Floor, Iscon Ambli Road, Beside Hotel Planet Landmark,
Near Ashok Vatika, Ambli, Ahmedabad - 380058.
The equity shares of the Company are listed on BSE
Limited, and during the year, the Company also got its
equity shares listed on the National Stock Exchange of
India Limited.
2. Basis of preparation of financial statements
The standalone financial statements of the company have
been prepared in accordance with Indian Accounting
Standards (Ind AS) notified under section 133 of the
companies Act, 2013 read with the Companies (Indian
Accounting Standards) Rules , 2015 (as amended from
time to time).
These Standalone Ind AS Financial statements are
presented in Indian Rupees (INR), which is company
presentation currency. All amounts have been rounded
off to the nearest lacs, unless otherwise stated.
These financial statements were approved for issue by the
Company's Board of Directors on May 27, 2026.
The financial statements have been prepared on a going
concern basis using historical cost convention basis
except for the following items:
• certain financial assets and liabilities (including mutual
fund investments and derivatives) that are measured
at fair value;
• defined benefit plans - plan assets measured at fair
value; and
• share-based payments.
Recent accounting pronouncements
New and amended Ind ASs effective from April 01, 2025
The Ministry of Corporate Affairs (MCA) notifies new standards
| amendments to the existing standards under Companies
(Indian Accounting Standards) Rules as issued from time to time.
During the year, the MCA has amended the Ind AS as below:
Ind AS 1 - Presentation of Financial Statements:
The amendments clarify requirements relating to classification
of liabilities as current or non-current, including the effect
of covenants and the Company's right to defer settlement.
The amendments also introduce specific disclosure
requirements where liabilities arising from loan arrangements
are classified as non-current and the Company's right to defer
settlement is subject to compliance with covenants within
twelve months after the reporting period.
Ind AS 7 - Statement of Cash Flows and Ind AS 107 - Financial
Instruments:
Disclosures:
The amendments introduce disclosure requirements in respect
of supplier finance arrangements, including information about
the terms and conditions, carrying amounts of related financial
liabilities, amounts for which suppliers have received payment
from finance providers, ranges of payment due dates and the
effect of non-cash changes. Supplier finance arrangements are
also relevant to the Company's liquidity-risk disclosures.
Ind AS 12 - Income Taxes:
The amendments relating to International Tax Reform - Pillar
Two Model Rules introduce a mandatory temporary exception
from recognising and disclosing deferred tax assets and
liabilities related to Pillar Two income taxes and introduce
additional disclosures relating to Pillar Two income taxes, where
applicable.
Ind AS 21 - The Effects of Changes in Foreign Exchange Rates:
The amendments provide guidance for assessing whether
a currency is exchangeable into another currency and for
estimating the spot exchange rate where exchangeability
is lacking. Additional disclosures are required in such
circumstances.
The Company has evaluated the applicability of the above
amendments. Based on the nature of the Company's
transactions, arrangements and operations, the amendments
did not have a material impact on recognition and measurement.
The Company has incorporated the additional disclosures
required by the applicable amendments.
3. Key estimates and assumptions
The preparation of financial statements in accordance
with Ind AS requires use of estimates and assumptions,
which might have an effect on their recognition and
measurement in the (i) balance sheet and (ii) statement
of profit and loss. The actual amounts may differ from
these estimates.
Estimates and assumptions are required in particular for:
• Determination of the estimated useful lives of
tangible assets and intangible assets
Useful lives of assets are based on the life prescribed
in Schedule II of the Companies Act, 2013. In cases,
where the useful lives are different from that
prescribed in Schedule II, they are based on technical
advice, taking into account the nature of the asset,
the estimated usage of the asset, the operating
conditions of the asset, past history of replacement,
anticipated technological changes, manufacturers'
warranties and maintenance support.
• Recognition and measurement of defined benefit
obligations
The obligation arising from defined benefit plan is
determined on the basis of actuarial assumptions.
Key actuarial assumptions include discount rate,
trends in salary escalation, actuarial rates and
life expectancy. The discount rate is determined
by reference to market yields at the end of the
reporting period on government bonds. The period
to maturity of the underlying bonds corresponds
to the probable maturity of the post-employment
benefit obligations.
• Recognition of deferred tax assets
Deferred tax assets and liabilities are recognized
for the future tax consequences of temporary
differences between the carrying values of assets
and liabilities and their respective tax bases,
and unutilized business loss and unabsorbed
depreciation and tax credits. Deferred tax assets
are recognized to the extent that it is probable that
future taxable income will be available against which
the deductible temporary differences, unused tax
losses, unabsorbed depreciation and unused tax
credits could be utilized.
• Recognition and measurement of other
provisions
The recognition and measurement of other
provisions are based on the assessment of the
probability of an outflow of resources, and on past
experience and circumstances known at the balance
sheet date. The actual outflow of resources at a future
date may therefore vary from the amount included
in other provisions.
• Fair value of financial instruments
Investments in mutual funds and equity instrument
are carried at fair value.
4. Measurement of fair values
The Company's accounting policies and disclosures
require the measurement of fair values for financial
instruments. The Company has an established control
framework with respect to the measurement of fair values.
The management regularly reviews significant observable
inputs and valuation adjustments.
5. Significant accounting policies followed by
the company
A. Foreign currency
Items included in the financial statements of the
Company ore measured using the currency of
the primary economic environment in which the
Company operates (functional currency). For each
foreign operation outside India, the Company
determines the functional currency and items
included in the financial statements of each foreign
operation are measured using that functional
currency of that respective foreign operation.
The functional and presentation currency of the
Company is Indian Rupees (INR). The financial
statements ore presented in Indian rupees (INR).
Accounting for transactions and balances in
foreign currencies
Foreign currency transactions are recorded in the
functional currency using the exchange rates at the
dates of the transactions. Foreign exchange gain
and losses resulting from the settlement of such
transactions and from translation of monetary assets
and liabilities denominated in foreign currency at the
year-end exchange rate are generally recognised in
profit or loss except for transactions entered into in
order to hedge.
Non-monetary items carried at fair value that are
denominated in foreign currencies are retranslated
at the rates prevailing at the date when the fair
value was determined. Non-monetary items that
are measured in terms of historical cost in foreign
currencies are not retranslated at year end.
Translation of foreign operations whose functional
currency is other than presentation currency
The results and financial position of foreign
operations that have a functional currency different
from the presentation currency are translated in to
presentation currency as follows:
• assets and liabilities, both monetary and non
monetary are translated at the rates prevailing at
the end of each reporting period
• Income and expense items are translated at the
exchange rates at the dates of the transactions
• resulting exchange differences ore accumulated in
the exchange differences on translation of foreign
operations in the statement of changes in equity.
On the disposal of a foreign operation all of the exchange
differences accumulated in other comprehensive income
relating to that particular foreign operation attributable to
the owners of the Company is reclassified in the statement
of profit and loss
B. Revenue Recognition
i) Revenue from contract with customers for sale of
goods and provision of services
The Company recognizes revenue from contracts
with the customers based on five step model defined
in Ind AS 115. The Company satisfies a performance
obligation and recognizes revenue over time, if any
of the conditions given in Ind AS 115 are satisfied;
else revenue is recognized at point in time at which
the performance obligation is satisfied. When the
Company satisfies a performance obligation by
delivering the promised goods or services it creates a
contract-based asset on the amount of consideration
earned by the performance. Where the amount of
consideration received from a customer exceeds the
amount of revenue recognized, this gives rise to a
contract liability.
Revenue is measured at the fair value of the
consideration received or receivable, net of returns
and allowances, trade discounts and volume
rebates. Revenues are recognized to the extent it is
probable that the economic benefits will flow to the
Company and the revenue & costs, if applicable, can
be measured reliably.
a. Performance Obligation
The Company derives its revenue from selling
products and services in Power Transmission
Stringing Tools, OPGW (Optical Fibre Ground Wire),
OFC cables, ACS (Aluminium Clad Steel Wire),
ERS (Emergency Restoration System), RDSS, HTLS
Re-conductor and OPGW joint boxes etc.
The Company is required to assess each of its
contracts with customers to determine whether
performance obligation is satisfied over time or at a
point in time in order to determine the appropriate
method for recognizing of revenue. The Company
recognizes the revenue over time only if it satisfies
the criteria given in Ind AS 115. Where the criteria as
per Ind AS 115 are not met, revenue is recognized at
a point in time.
In cases where the Company determines that
performance obligation is satisfied at a point in
time, revenue is recognized when the control
over the goods is transferred to the customer or
benefits of the services being provided is received
by the customer. The Company considers that the
customer has obtained the control of promised
goods or services; when the goods have been
dispatched/delivered to the destination as per terms
of the contract or services has been provided to the
customer as per agreed terms and the Company has
unconditional right to consideration.
In cases where the Company determines that
performance obligation is satisfied over time, then
revenue is recognised when the outcome of a
transaction can be estimated reliably by reference
to the stage of completion of the transaction (Input
Method). The outcome of a transaction can be
estimated reliably when all the following conditions
are satisfied:
1. The amount of revenue can be
measured reliably;
2. It is probable that the economic benefits
associated with the transaction will flow to
the Company;
3. The stage of completion of the transaction
at the end of the reporting period can be
measured reliably; and
4. The costs incurred or to be incurred in respect
of the transaction can be measured reliably.
Stage of completion is determined by the proportion
of actual costs incurred to-date, to the estimated
total costs of the transaction.
b. Transaction Price
The Company is required to determine the
transaction price in respect of each of its contracts
with customers.
Contract with customers for sale of goods or services
are either on a fixed price or on variable price basis.
For allocating the transaction price, the Company
measures the revenue in respect of each performance
obligation of contract at its relative standalone
selling price. The price that is regularly charged for
an item when sold separately is the best evidence
of its standalone selling price. In making judgment
about the standalone selling price, the Company also
assesses the impact of any variable consideration
in the contract, due to discounts or penalties, the
existence of any significant financing component
and any non-cash consideration in the contract.
ii) Interest income is accrued on a time basis, by
reference to the principal outstanding and
effective interest rate applicable.
iii) Dividend income is recognised when the right
to receive the payment is established.
iv) Duty drawback and other export incentive
benefits are recognised as income in the
Statement of Profit and Loss when the amount
is received, as the Company recognises such
benefits only upon receipt. Such income is
presented as Other Income.
C. Employee benefits
i. Short term employee benefits
Short term employee benefits such as Salaries,
wages, short term compensated absences, bonus,
ex-gratia and performance linked rewords including
non-monetary benefits that ore expected to be
settled wholly within12 months after the end of
period in which the employees rendered the related
services ore recognised in respect of employee
services up to the end of reporting period and ore
measured at the amounts expected to be paid when
the liabilities ore settled. The liabilities ore presented
as current employee benefits obligations in the
balance sheet.
Liabilities recognised in respect of short-term
employee benefits ore measured at the undiscounted
amount of the benefits expected to be paid in
exchange for the related service.
ii. Defined contribution plans
• Provident Fund Scheme
The Company makes specified monthly
contributions towards employee provident
fund directly to the Government under the
Employees Provident Fund Act, 1952.
iii. Defined benefit plans
The following post - employment benefit plans are
covered under the defined benefit plans:
• Gratuity Fund
The Company's net obligation in respect of
defined benefit plans is calculated separately
for each plan by estimating the amount of
future benefit that employees have earned in
the current and prior periods, discounting that
amount and deducting the fair value of any
plan assets.
The calculation of defined benefit obligations is
performed annually by a qualified actuary using
the Projected Unit Credit Method. When the
calculation results in a potential asset for the
Company, the recognised asset is limited to the
present value of economic benefits available in
the form of any future refunds from the plan or
reductions in future contributions to the plan.
To calculate the present value of economic
benefits, consideration is given to any
applicable minimum funding requirements.
Re-measurement of the net defined benefit/
liability, which comprise actuarial gains and
losses, the return on plan assets (excluding
interest) and the effect of the asset ceiling,
if any (excluding interest), are recognised
immediately in OCI. Net interest expense/
(income) on the net defined liability/(assets) is
computed by applying the discount rate, used
to measure the net defined liability/(asset), to
the net defined liability/(asset) at the start of
the financial year after taking into account any
changes as a result of contribution and benefit
payments during the year. Net interest expense
and other expenses related to defined benefit
plans are recognised in profit or loss. When the
benefits of a plan are changed or when a plan
is curtailed, the resulting change in benefit that
relates to past service or the gain or loss on
curtailment is recognised immediately in profit
or loss. The Company recognises gains and
losses on the settlement of a defined benefit
plan when the settlement occurs.
D. Finance income and finance costs
The Company's finance income and finance costs include:
• interest income;
• interest expense;
• the net gain or loss on financial assets at FVTPL
• exchange differences arising from monetary assets
and liabilities
• Interest income or expense is recognised using the
effective interest rate method.
E. Grants/ Subsidies
Government grants are recognised when there is
reasonable assurance that the Company will comply with
the conditions attached to the grants and that the grants
will be received.
Benefits received under the Export Promotion Capital
Goods (EPCG) Scheme in the form of exemption from
payment of customs duty on the import of eligible capital
assets are recognised as government grants. Such grants
are recognised as deferred income upon acquisition of the
related assets.
The related capital assets are recognised at their gross
carrying amount, and the deferred income is recognised
in the Statement of Profit and Loss on a systematic basis
over the useful life of the related assets in proportion to
the depreciation charged thereon.
Government grants related to revenue are recognised in
the Statement of Profit and Loss on a systematic basis over
the periods in which the related expenses, for which the
grants are intended to compensate, are recognised.
F. Borrowing cost
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which
are assets that necessarily take a substantial period of
time to get ready for their intended use or sale, are added
to the cost of those assets, until such time as the assets
are substantially ready for their intended use or sale.
The Company considers a period of twelve months or more
as a substantial period of time. Interest income earned on
the temporary investment of specific borrowings pending
their expenditure on qualifying assets is deducted from
the borrowing costs eligible for capitalisation.
Finance expenses are recognised immediately in the
Statement of Profit and Loss, unless they are directly
attributable to qualifying assets, in which case they are
capitalised in accordance with the Company's policy on
borrowing costs.
All other borrowing costs are recognised in the Statement
of Profit and Loss in the period in which they are incurred.
G. Income taxes
Income tax expense comprises Current tax and deferred
tax. Current and deferred tax are recognised in the
statement of profit or loss, except when they relate
to items that are recognised in other comprehensive
income or directly in equity, in which case, the current and
deferred tax are also recognised in other comprehensive
income or directly in equity respectively.
i) Current income taxes
The Company's current tax is calculated using
tax rates and tax lows thot have been enacted or
substantively enacted by the end of the reporting
period in the countries where the Company, its
branches and jointly controlled operations operate
and generate taxable income.
ii) Deferred income taxes
Deferred tax is recognized on temporary differences
between the carrying amounts of assets and liabilities
in the financial statements and the corresponding
tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognized
for all taxable temporary differences. Deferred tax
assets are generally recognised for all deductible
temporary differences to the extent that it is
probable that taxable profits will be available against
which those deductible temporary differences can
be utilised. Such deferred tax assets and liabilities
are not recognised if the temporary difference
arises from the initial recognition (other than in a
business combination) of assets and liabilities in a
transaction that affects neither the taxable profit nor
the accounting profit.
The carrying amount of deferred tax assets is
reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to
allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at
the tax rates that are expected to apply in the period
in which the liability is settled or the asset realised,
based on tax rates (and tax laws) that have been
enacted or substantively enacted by the end of the
reporting period.
The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from
the manner in which the Company expects, at the
end of the reporting period, to recover or settle the
carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when
there is legally enforceable right to offset current
tox assets and liabilities and when the deferred
tax balances relate to the same taxation authority.
Current tax assets and liabilities ore offset when the
company has legally enforceable right to offset and
intends either to settle on a net basis, or to realise the
asset and settle the liability simultaneously.
Deferred tax assets are not recognised for temporary
differences between the carrying amount and tax
bases of investments in subsidiaries, branches and
associates and interest in joint arrangements where
it is not probable that the differences will reverse in
the foreseeable future and taxable profit will not be
available against which the temporary differences
can be utilized.
H. Inventories
Inventories are measured at the lower of cost and net
realizable value. Inventory of scrap is valued at estimated
realizable value. The cost of inventories is determined using
FIFO method. Cost includes direct materials, labour, other
direct cost and manufacturing overheads. Inventories of
finished goods also includes applicable taxes.
Net realisable value is the estimated selling price in
the ordinary course of business less estimated costs
of completion and estimated costs necessary to
make the sale.
I. Property, plant and equipment
i) Recognition and measurement
Items of property, plant and equipment are
measured at cost less accumulated depreciation and
any accumulated impairment losses.
The cost of an item of property, plant and equipment
comprises:
a) its purchase price, including import duties
and non-refundable purchase taxes, after
deducting trade discounts and rebates.
b) any costs directly attributable to bringing the
asset to the location and condition necessary
for it to be capable of operating in the manner
intended by management.
c) the initial estimate of the costs of dismantling
and removing the item and restoring the site on
which it is located, the obligation for which an
entity incurs either when the item is acquired
or as a consequence of having used the item
during a particular period for purposes other
than to produce inventories during that period.
Income and expenses related to the incidental
operations, not necessary to bring the item
to the location and condition necessary for
it to be capable of operating in the manner
intended by management, are recognised in
profit or loss.
If significant parts of an item of property, plant
and equipment have different useful lives,
then they are accounted and depreciated
for as separate items (major components) of
property, plant and equipment
Any gain or loss on disposal of an item of
property, plant and equipment is recognised
in statement of profit and loss.
ii) 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.
iii) Depreciation
Depreciation is provided, pro rata to the period of
use, based on useful lives specified in Schedule II to
the Companies Act, 2013 except in the case where
the estimated useful life based on management
experience and technical evaluation differs.
Depreciation is charged on the Straight-Line method
(SLM) in the Company. Depreciation methods,
useful lives and residual values are reviewed at each
reporting date and adjusted, if appropriate.
Assets held under finance leases are depreciated
over their expected useful lives on the same basis as
owned assets. However, when there is no reasonable
certainty that ownership will be obtained by the end
of the lease term, assets are depreciated over the
shorter of the lease term and their useful lives.
Leasehold land is amortised over the period of lease
on a straight-line basis.
Short term leases and leases of low value assets
Payments associated with short-term leases of
equipment and all leases of low-value assets are
recognised on a straight-line basis as an expense
in profit or loss. Short-term leases are leases with a
lease term of 12 months or less.
An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected to arise from the
continued use of the asset. Any gain or loss arising
on the disposal or retirement of an item of property,
plant and equipment is determined as the difference
between the sales proceeds and the carrying amount
of the asset and is recognised in the Statement of
Profit and Loss.
iv) Capital work-in-progress
Capital work-in-progress comprises of assets in the
course of construction for production or/and supply
of goods or services or administrative purposes,
or for purposes not yet determined, are carried at
cost, less any recognised impairment loss. At the
point when an asset is operating at management's
intended use, the cost of construction is transferred
to the appropriate category of property, plant and
equipment. Costs associated with the commissioning
of an asset are capitalised where the asset is available
for use and commissioning has been completed.
J. Share-based payments:
a) Employees of the Company receives remuneration
in the form of share-based payments, whereby
employees render services as consideration for
equity instruments (equity-settled transactions).
b) The cost of equity-settled transactions is determined
by the fair value at the date when the grant is made
using an appropriate valuation model.
c) That cost is recognised, together with a
corresponding increase in share-based payment
(SBP) reserves in equity, over the period in which
the performance and/ or service conditions are
fulfilled. The cumulative expense recognised for
equity-settled transactions at each reporting date
until the vesting date reflects the extent to which
the vesting period has expired and the Company's
best estimate of the number of equity instruments
that will ultimately vest.
d) When the terms of an equity-settled award are
modified, the minimum expense recognised is the
expense had the terms not been modified, if the
original terms of the award are met. An additional
expense is recognised for any modification that
increases the total fair value of the share-based
payment transaction or is otherwise beneficial to the
employee as measured at the date of modification.
Where an award is cancelled by the entity or by the
counterparty, any remaining element of the fair
value of the award is expensed immediately through
profit or loss.
e) The dilutive effect of outstanding options is reflected
as additional share dilution in the computation of
diluted earnings per share.
K. Leases
The Company has adopted Ind AS 116, effective from
annual reporting period beginning April 1, 2019 and
applied the standard to its existing leases, with the
modified retrospective method. This has resulted into
recognition of Right of use assets at an amount equal to
Lease liability on date of initial application.
The Company considers whether a contract is, or contains
a lease. A lease is defined as a contract, or part of a contract,
that conveys the right to use an asset (the underlying
asset) for a period of time in exchange for consideration.
To apply this definition the Company assesses whether the
contract meets three key evaluations which ore whether:
• the contract contains an identified asset, which is
either explicitly identified in the contract or implicitly
specified by being identified at the time the asset is
made available to the Company.
• the Company has the right to obtain substantially all
of the economic benefits from use of the identified
asset throughout the period of use, considering its
rights within the defined scope of the contract.
• the Company has the right to direct the use of
the identified asset throughout the period of use.
The Company assesses whether it has the right to
direct 'how and for what purpose' the asset is used
throughout the period of use.
Measurement and recognition of leases as a lessee
At lease commencement date, the Company recognizes a
right-of-use asset and a lease liability on the balance sheet.
The right-of-use asset is measured at cost, which is made
up of the initial measurement of the lease liability, any
initial direct costs incurred by the Company, an estimate
of any costs to dismantle and remove the asset at the end
of the lease, and any lease payments made in advance
of the lease commencement date (net of any incentives
received).
The company depreciates the right-of-use assets on a
straight-line basis from the lease 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 Company also
assesses the right-of-use asset for impairment when such
indicators exist.
At the commencement date, the Company measures the
lease liability at the present value of the lease payments
unpaid at that date, discounted using the interest rate
implicit in the lease if that rate is readily available or the
Company's incremental borrowing rate.
The Company has elected to account for short-term leases
using the practical expedients. Instead of recognizing a
right-of-use asset and lease liability, the payments in
relation to these are recognized as an expense in profit
or loss on a straight-line basis over the lease term.
Short-term leases ore leases with a lease term of 12
months or less.
Certain lease arrangements include the option to extend
or terminate the lease before the end of the lease term.
The right-of-use assets and lease liabilities include these
options when it is reasonably certain that the option will
be exercised.
L. Financial Instruments
Financial assets and financial liabilities are recognized
when the Company becomes a party to the contractual
provisions of the instruments.
a) Financial Assets
Financial assets comprises of investments in equity
instruments, cash and cash equivalents, loans and
other financial assets.
Initial Recognition:
All financial assets are recognized initially at fair value
plus, in the case of financial assets not recorded at
fair value through Profit or loss, transaction costs
that are attributable to the acquisition of financial
assets. Purchase or sales of financial assets that
requires delivery of assets within a period of time
frame established by regulation or convention in
the market place are recognized on the trade date,
i.e. the date the company committed to purchase or
sell the assets.
Subsequent Measurement:
i) . Financial assets measured at amortized Cost:
Financial assets are subsequently measured
at amortized cost if theses financial assets
are held within a business whose objective
is to hold theses assets in order to collect
contractual cash flows and where contractual
terms of financial assets give rise on specified
dates to cash flows that are solely payments of
principal and interest on the principal amount
outstanding.
ii) . Financial assets at Fair Value through Other
Comprehensive Income (FVTOCI):
Financial Assets that are held within a business
model whose objective is achieved by both
collective contractual cash flows and selling
financial assets and the contractual terms
of financial assets give rise on specified
dates to cash flows that are solely payments
of principal and interest on the principal
amount outstanding are subsequently
measure at FVTOCI are recognized in Other
Comprehensive Income.
Equity instruments held for trading are
classified as at fair value through profit or
loss (FVTPL). For other equity instruments
the company classifieds the same as FVTOCI.
The classification is made on initial recognition
and is irrevocable. Fair Value changes on equity
instruments at FVTOCI, excluding dividends
are recognized in Other Comprehensive
Income (OCI)
iii). Fair Value through Profit or Loss (FVTPL):
Financial Assets are measured at FVTPL if
does not meet the criteria for classification as
measured at amortized cost or at FVTOCI. All fair
changes are recognized in the Statement of
Profit and Loss.
De-recognition of Financial Assets:
Financial Assets are derecognized when the
contractual rights to cash flows from the financial
assets expire or the financial assets is transferred,
and he transfer qualifies for de-recognition.
On de-recognition of the financial assets in its
entirety, the difference between the carrying amount
(measured at the date of de-recognition) and the
consideration received (including any new assets
obtained less any new liabilities assumed) shall be
recognized in the statement of Profit and Loss.
b) Financial Liabilities
The Company's financial liabilities include following:
o Borrowing from Banks
o Borrowing from Others
o Trade Payables
o Other Financial Liabilities
Classification
The company's financial liabilities are measured at
amortized cost.
Initial Recognition and Measurement
Financial liabilities are initially recognized at fair
value plus any transaction costs, (if any) which are
attributable to acquisition of the financial liabilities.
Subsequent Measurement:
Financial liabilities are subsequently measured
at amortised cost using the effective interest
rate method.
The Effective Interest Rate Method is a method of
calculating the amortised cost of a financial liability
and of allocating interest expenses over the relevant
period. The effective interest rate is the rate that
exactly discounts estimated future cash payments
(including transaction costs and other premiums or
discounts) through the expected life of the financial
liability.
De-recognition of Financial Liabilities:
Financial liabilities shall be derecognized when, and
only when it is extinguished i.e. when the obligation
specified in the contract is discharged or cancelled
or expires.
c) Offsetting of Financial assets and Financial
Liabilities:
Financial assets and Financial Liabilities are offset
and the net amount is presented in Balance Sheet
when, and only when, the Company has legal right
to offset the recognized amounts and intends either
to settle on the net basis or to realize the assets and
liabilities simultaneously.
d) Reclassification of Financial Instruments:
The Company determines classification of financial
assets and liabilities on initial recognition. After initial
recognition, no reclassification is made for financial
assets which are categorized as equity instruments
at FVTOCI, and financial assets or liabilities that
are specifically designated as FVTPL. For financial
assets which are debt instruments, a reclassification
is made only if there is a change in business
model for managing those assets. Changes to the
business model are expected to be very infrequent.
The management determines the change in a
business model as a results of external of internal
changes which are significant to the Company's
Operations. A Change in business occurs when
the company either befins or ceases to perform an
activity that is significant to its operations. IF the
Company reclassifies financial assets, it applies the
reclassification prospectively effective from the
reclassification date which is the first day of the
immediately next reporting period following the
change in business model. The Company does not
restate any previously recognized gains, losses
(including impairment gains or losses) or interest.
M. Fair Value Measurement
A number of Company's accounting policies and
disclosures require the determination of fair value, for both
financial and non-financial assets and liabilities. Fair value
is the price that would be received on sell of an assets
or plaid to transfer a liability in an orderly transaction
between market participants at the measurement date.
A fair value measurement assumes that the transaction
to sell the asset or transfer the liability takes place either
in the principal market for the assets or liabilities or in the
absence of a principal market, in the most advantageous
market for the assets or liability. The principal market or
the most advantageous market must be accessible to
the Company.
The fair value of an asset or liability is measured using
the assumptions that market participants would use
when pricing the assets or liability, assuming that market
participants act in their economic best interest.
A fair value measurement of a non-financial asset takes
into account a market participant's ability to generate
economic benefits by using the assets in its highest the
best use or by selling it to another market participant that
would use the assets in its highest and best use.
The Company uses valuation techniques that are
appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximizing the
use of relevant observable inputs and minimizing the use
of unobservable inputs.
All assets and liabilities for which fair value is measured
or disclosed in the Ind As Financial Statements are
categorized within the fair value hierarchy based on
the lowest level input that is significant to the fair value
measurement as a whole. The fair value hierarchy is
described as below;
a) Level 1 - unadjusted quoted prices in active
markets for identical assets and liabilities.
b) Level 2 - Input other than quoted prices included
within Level 1 that are observable for the asset or
liabilities, either directly or indirectly.
c) Level 3 - unobservable inputs for the asset or
liability.
For assets and liabilities that are recognized in the
Ind As Financial Statement at fari value on a recurring
basis, the company determines whether transfers have
occurred between levels in the hierarchy by re-assessing
categorization at the end of each reporting period.
For the purpose of fair value disclosures, the Company has
determined classes of assets and liabilities on the basis of
the nature, characteristics and risk of the asset or liability
and the level of fair value hierarchy.
Fair values have been determined for measurement
and / or disclosure purposes based on the following
methods. When appliable, further information about the
assumptions made in determining fair values is disclosed
in the notes specific to that assets or liability.
a) Investment in equity and debt securities
The fair value is determined by reference to their
quoted price at the reporting date. In the absence
of quoted price, the value of the financial asset is
measured using valuation techniques.
b) Trade and other receivables
The fair value of trade and other receivables is
estimated as the present value of future cash flows,
discounted at the market rate of interest at the
reporting date. However, in respect of such financial
instruments, fair value generally approximates
the carrying amount due to short term nature of
such assets.
c) Non derivative financial liabilities
Fair value, which is determined for disclosure
purposes, is calculated based on the present value of
future principal and interest cash flows, discounted
at the market rate of interest at the reporting date.
For finance leases, the market rate of interest is
determined by reference to similar lease agreements.
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