3. Significant Accounting Policies
A Financial Instruments
A Financial Instrument is defined as a Contract that gives rise to a financial asset and a financial
liability or Equity instrument of another entity. Trade receivables and payables, loan receivables,
investments in securities, debt securities and other borrowings, preferential and equity capital etc. are
some example of financial instruments.
All Financial Instruments are recognised on the date when the Company becomes party to the
contractual provisions of the Financial instruments. For tradable securities, the Company recognises
the financial instruments on settlement date.
i. Financial assets include Cash, or an equity instrument of another entity, or a contractual right to
receive cash or another financial assets from another entity. The Company derecognises a financial
assets when:
> The right to receive cash flows from the asset have expired, or
> The Company has transferred its right to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under an
assignment arrangement and the Company has transferred substantially all the risks and rewards of
the assets. Once the asset is derecognised, the Company does not have any continuing involvement
in the same.
> The Financial assets are written off in full, when there is no realistic prospect of recovery.
ii Financial liabilities include liabilities that represent a contractual obligation to deliver cash or another
financial assets to another entity or a contract that may or will be settled in the entities own equity
instruments.
All financial liabilities are recognised initially at fair value and, in the case of borrowings and payables,
net of directly attributable transaction costs. After initial recognition, all financial liabilities are
subsequently measured at amortised cost by using the EIR. Any gain or losses arising on derecognition
of liabilities are recognised in the statement of profit & loss.
The Company derecognises a financial liability when the obligation under the liability is discharged,
cancelled or expired.
B Use of Estimates
The preparation of Financial Statements in conformity with Ind AS requires the Management to make
estimates and assumptions that affect the reported balances of assets and liabilities and the
disclosures of contingent assets and liabilities on the date of Financial Statements and the reported
income and expenses during the year. Although estimates are based on management knowledge &
skill of financial market events and actions, the actual result could differ from those estimates and
revisions if any, are recognised in the current & future periods.
C Property, Plant and Equipment
Property, Plant & Equipment are stated at cost, less accumulated depreciation and impairment
losses, if any. Cost comprises the purchase price and any attributable cost of bringing the assets to its
working condition for its intended use. Any trade discounts and rebates are deducted in arriving at the
purchase prices.
Property, Plant and Equipment are derecognised from financial statement, either on disposal or when
no economic benefits are expected its use or disposal. The gain or loss arising form disposal of
property, plant and equipment are determined by comparing the proceeds from disposal with the
carrying amount of Property, Plant and Equipment recognised in the statement of profit and loss
account in the year of occurrence.
Subsequent expenditure is capitalised only if it is probable that the future economic benefits
associated with the expenditure will flow to the Company in the succeeding years.
D Depreciation on Property, Plant & Equipment
Depreciation on Property, Plant & Equipment has been provided to the extent of depreciable amount
on the basis of straight line method (SLM). Depreciation is provided based on useful life of the assets
as prescribed in schedule III to the Companies Act, 2013. Depreciation on the Property, Plant &
Equipment is provided from the date the said asset is put to use for its intended use.
E Impairment of Non Financial Assets
The Company assesses at each balance sheet date whether there is any indication that an asset may
be impaired. If any such indication exists, the Company estimates the recoverable amount of the
asset, and such recoverable amount of the assets or the recoverable amount of the cash generating
unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its
recoverable amount and the reduction is treated as an impairment loss and is recognised in the
Statement of Profit and Loss. On the balance sheet date, if there is any indication that previously
assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is
reflected at the recoverable amount subject to maximum of depreciated historical cost and
accordingly reversed in the Statement of Profit and Loss.
F Investments
On initial recognition, all investments are measured at cost. The cost comprises purchase price and
directly attributable acquisition charges. If an investment is acquired, or partly acquired, by the issue
of shares or other securities, the acquisition cost is the fair value of the securities issued.
Current Investment are carried at cost or market value whichever is less. Long term investment are
carried at cost. However, provision for diminution in value is made to recognise a decline other than
temporary in the value of long term Investments.
On disposal of an investment, the difference between its carrying amount and net disposal proceeds
is charged or credited to the statement of profit and loss.
G Loans and Advances
Loans and advances are stated at the amount advanced, as reduced by the amounts received up to
the Balance sheet date.
H Cash and cash equivalent
Cash and Cash equivalents for the purpose of Cash Flow Statement comprise cash at bank and in
hand and short term investment with an original maturity of One year or less.
I Taxes
Tax expenses comprises of Current and Deferred Tax.
Current income tax is the amount of tax payable as determined in advance in accordance with the
provisions of the Income Tax Act, 1961 and other relevant tax laws and tax rates in force.
Deferred tax is provided using the Balance Sheet approach on temporary differences between the tax
bases of assets & liabilities and their carrying amounts for financial reporting purposes at the reporting
date. Deferred tax liabilities are recognised for all temporary differences and deferred tax assets are
recognised for deductible temporary differences to the extent that it is probable that taxable profits
will be available against which the deductible temporary differences can be utilised. The deferred tax
asset is recognised and carried forward only to the extent that there is a reasonable certainty that the
asset will be realised in future.
J Employee Benefits
The employees either avail their leave during a particular financial year or are encashed in the same
financial year and therefore the balance is not carried forward.
Expenses in respect of other short term benefit is recognised on the basis of amount paid or payable
for the period during which services are rendered by the employee.
K Earning per share
Basic Earning per share are calculated by dividing the net profit or loss for the year attributable to
equity shareholders by the weighted average number of equity shares outstanding during the year. The
weighted average number of equity shares outstanding during the year is adjusted for events of bonus
issue.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable
to equity shareholders and the weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
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