B. SIGNIFICANT ACCOUNTING POLICIES
1. Basis of Preparation
These financial statements of the Company have been prepared in accordance with IFRS converged Indian Accounting Standards
(IndAS) notified under the Companies (Indian Accounting Standards) Rules, 2015 ("IndAS”).
The standalone Ind AS financial statements have been prepared on a historical cost basis except for certain financial assets and
financial liabilities (including financial instruments) which have been measured at fair value at the end of each reporting period as
explained in the accounting policies stated below. All the assets and liabilities have been classified as current and non-current as
per the Company's normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature
of business operations, the Company has ascertained its operating cycle as 12 months for the purpose of current and non- current
classification of assets and liabilities.
2. Statement of Compliance
These standalone financial statements have been prepared in accordance with the Indian Accounting Standards (referred to as "Ind
AS”) as prescribed under section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules as
amended from time to time.
3. Accounting policies requiring management judgement and key sources of estimation uncertainty
The accounting policies which have the most significant effect on the figures disclosed in these financial statements are mentioned
below and these should be read in conjunction with the disclosure of the significant IndAS accounting policies provided below:
a. Revenue Recognition
Revenue recognition requires management judgement of deciding the most appropriate basis for presenting revenue or costs
of revenue after reviewing both the legal form and substance of the agreement. Determining the amount of revenue to be
recognized for multiple element arrangements also requires management judgement.
b. Useful life of Property, Plant and Equipment
The assessment of the useful life of each asset by considering the historical experience and expectations regarding future
operations and expected usage, estimated technical obsolescence, residual value, physical wear and tear and the operating
environment in which the asset is located needs significant judgement by the management.
c. Income Taxes
The calculation of income taxes requires judgment in interpreting tax rules and regulations. Management judgment is used to
determine the amounts of deferred tax assets and liabilities and future tax liabilities to be recognized.
d. Fair Value
Certain financial instruments, such as investments in equity securities, derivative financial instruments and certain elements
of borrowings, are carried in the financial statements at fair value, with changes in fair value reflected in the income
statements. Fair values are estimated by reference to published price quotations or by using other valuation techniques that
may include inputs that are not based on observable market data, such as discounted cash flows analysis.
e. Inventory Valuation
Valuation of Inventory of Cut & Polished diamonds is a technical subject requires technical skill, knowledge and judgment. Its
valuation is derived based on assessment by the Management and valuation carried out by the independent Government
approved valuer based on physical verification of goods.
4. Summary of Significant Accounting Policies
a. Use of Estimates
Preparation of these financial statements in accordance with IndAS requires management to make judgments on the basis of
certain estimates and assumptions. In addition, the application of accounting policies requires management judgment.
Estimates are based on the managements view on past events and future development and strategies. Management reviews
the estimates and assumptions on a continuous basis, by reference to past experiences and other factors that can reasonably
be used to assess the book values of assets and liabilities.
b. Presentation of True and Fair View
These financial Statements have been prepared by applying IndAS principles and necessary disclosures have been made which
present a true and fair view of the financial position, financial performance and cash flows of the Company.
c. Going Concern
These financial statements have been prepared on a going concern basis and it is assumed that the company will continue in
operation in the foreseeable future and neither there is an intention nor need to materially curtail the scale of operations.
d. Accrual Basis
These financial statements, except for cash flow information, have been prepared using the accrual basis of accounting.
e. Materiality
Each material class of similar items has been presented separately in these financial Statements.
f. Basis of Measurement
These financial statements have been prepared on an accrual basis, except for certain properties and financial instruments
that have been measured at fair values or revalued amounts as required by the relevant IndAS.
g. Offsetting
In preparation of these financial Statements, the Company has not offset assets and liabilities or income and expenses, unless
required or permitted by Ind AS.
h. Current v/s Non Current Classification
The Company presents assets and liabilities in the balance sheet based on current/ noncurrent classification. An asset is
treated as current when it is:
i. Expected to be realized or intended to be sold or consumed in normal operating cycle:
ii. Held primarily for the purpose of trading:
iii. Expected to be realized within twelve months after the reporting period, or
iv. Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months
after the reporting period
All other assets are classified as non-current.
A liability is current when:
i. It is expected to be settled in normal operating cycle:
ii. It is held primarily for the purpose of trading:
iii. It is due to be settled within twelve months after the reporting period, or
iv. There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets or settlement of liabilities for processing and / or their
realisation in cash and cash equivalents. The Company has identified 12 months as its operating cycle.
i. Functional and Presentation Currency
IndAS 21 requires that functional currency and presentation currency be determined. Functional currency is the currency of
the primary economic environment in which the entity operates. Presentation currency is the currency in which the financial
statements are presented.
These financial statements are presented in Indian Rupee, which is the functional currency and presentation currency of the
Company.
j. Foreign Currency Transactions
All foreign currency transactions are expressed in the functional currency using the exchange rate at the transaction date.
Foreign currency balances representing cash or amounts to be received or paid in cash (monetary items) are retranslated at
the end of the year using the exchange rate on that date. Exchange differences on such monetary items are recognized as
income or expense for the year.
Non-monetary balances that are not remeasured at fair value and are denominated in a foreign currency are expressed in the
functional currency using the exchange rate at the transaction date. Where a non-monetary item is remeasured at fair value in
the financial statements, the exchange rate at the date when fair value was determined is used.
k. Property, Plant & Equipment
Presentation
Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any.
Such cost includes the cost of replacing part of the plant and equipment and borrowing costs of a qualifying asset, if the
recognition criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the
Company depreciates them separately based on their specific useful lives. All repair and maintenance costs are recognised in
profit or loss as incurred.
In the first year of Transition to IND AS, the Company has revalued its various items of PPE where the revaluation is available
and in other cases carrying amount of assets have been considered as 'Deemed Cost' in accordance with IND AS 101.
Capital work in progress (CWIP) comprises of cost of acquisition of assets, duties, levies and any cost directly attributable to
bringing the asset to its working condition for the intended use. Expenditure incurred on project under implementation is
treated as incidental expenditure incurred during construction and is pending allocation to the assets which will be allocated /
apportioned on completion of the project.
Derecognition
Gains or losses arising from derecognition of property, plant and equipment are measured as the difference between the net
disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is
derecognized.
Depreciation on Property, Plant and Equipment
Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. Depreciable amount for
assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.
The depreciable amount of PPE (being the gross carrying value less the estimated residual value) is depreciated over its
useful life as prescribed in Schedule II to the companies Act, 2013 on straight line basis. Depreciation on recognition of asset is
provided on pro-rata basis from the date of such additions. Depreciation on de-recognition or disposal of the same is provided
on pro-rata basis till the date of such derecognition or disposal.
The property, plant and equipment acquired under finance leases is depreciated over the asset's useful life or over the shorter
of the asset's useful life and the lease term if there is no reasonable certainty that the Company will obtain ownership at the
end of the lease term.
There has been a change in the useful life of the years for Fixed Assets as compared to what is suggested in Companies Act,
2013. The company is permitted to do so as per the provisions of Schedule II. This adjustment reflects the company's
commitment to ensure that the financial statements provide a true and fair view of the financial position and performance of
the company. The management believes that the new useful lives better represent the pattern in which the economic benefits
of the assets are consumed.
Residual value is taken at the rate of 5% which notified under Schedule II of Companies Act 2013. Class of tangible fixed assets
and their estimated useful life is as under:
l. Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. Cost comprises the acquisition price,
development cost and any attributable / allocable incidental cost of bringing the asset to its working condition for its intended
use. The useful life of intangible assets is assessed as either finite or infinite. All finite lived intangible assets, are accounted
for using the cost model whereby intangible assets are stated at cost less accumulated amortization and impairment losses, if
any. Intangible assets are amortized over the estimated useful economic life. Residual values and useful lives are reviewed at
each reporting date.
When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference between the proceeds and
the carrying amount of the asset, and is recognised in the statement of profit and loss within 'other income' or 'other expenses'
respectively.
m. Investment Property
During the year, the Company has classified a property as held for sale in accordance with Ind AS 105 - Non-current Assets
Held for Sale and Discontinued Operations, as its carrying amount is expected to be recovered principally through a sale
transaction rather than through continuing use. The Company has initiated an active plan to sell the asset and expects the sale
to be completed in near future from the date of classification. The asset is measured at the lower of its carrying amount and fair
value less costs to sell. No impairment loss has been recognized as the fair value less cost to sell exceeds the carrying amount.
n. Loans & Borrowings
Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in
profit or loss over the period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan
arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the
reporting date, the Company does not classify the liability as current, if the lender agreed, after the reporting period and
before the approval of the financial statements for issue, not to demand payment as a consequence of the breach.
Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expired. When an
existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement
of profit or loss.
o. Borrowing Costs
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Interest
expense is calculated using the effective interest method as described in Ind AS 109. Borrowing costs are expensed in the
period in which they occur.
p. Inventories
Stock of raw materials, i.e. Rough diamonds - is valued using specific identification method or net realizable value whichever
is lower & Gold - is stated at weighted average cost or net realizable value whichever is lower. Stock of polished diamonds (for
jewellery operations) is valued at using 'Specific Identification' method, where such 'specific identification' of cost is not
possible, it is valued at technically evaluated cost or net realizable value whichever is lower. Specific items of cost are
allocated and assigned to inventory wherever practicable.
Work in Process is valued at technically evaluated cost. Finished goods i.e. mainly cut & polished diamonds and diamond
studded jewellery are valued at cost or net realizable value whichever is lower.
Finished goods, i.e. Inventory of cut & polished diamonds, where 'specific identification' is possible is valued using 'Specific
Identification' method. In case of inventory of cut & polished diamonds where such 'specific identification' of cost is not
possible, valuation is done using 'retail' method. Cost includes cost of material and related conversion cost.
Consumables are valued at cost.
Valuation of Diamonds and Jewellery is a technical subject requiring specialized knowledge and skills. Valuation is derived
based on assessment by the management and valuations carried on by Government Approved Valuer.
q. Revenue Recognition
Operating Revenue
Revenue arising from Sale of Goods
Revenue from sale of goods is recognized when the significant risks and rewards of ownership have been transferred to the
buyer, recovery of the consideration is probable, the associated cost can be estimated reliably, there is no continuing effective
control or managerial involvement with the goods, and the amount of revenue can be measured reliably.
Revenue from sale of goods is measured at the fair value of the consideration received or receivable, taking into account
contractually defined terms of payment and excluding taxes or duties collected on behalf of the government. Any discount or
rebate in any form, including cash discounts is recorded as a reduction from revenues.
Revenue arising from Sale of Services
Revenue from rendering of services is recognized when the performance of agreed contractual task has been completed.
Revenue arising from Other non-operating Income
Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Company
and the amount of income can be measured reliably. Interest income is accrued on a time basis.
In case of sale of Investments difference between the sale price and fair value of investment as determined at the end of the
previous year is recognized as profit or loss on sale / redemption of investment on trade date of transaction.
Dividends, if any, on equity instruments are recognized in profit or loss when it is received.
r. Government Grants
Grants from government are recognized at their fair value where reasonable assurance that the grant will be received and the
company will comply with all attached conditions.
Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as
deferred income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets and
presented within other income.
s. Retirement and other Employee Benefits
i. Short Term Employee Benefits
Short term employee benefits such as salaries, wages, leave salary, expected cost of bonus, ex-gratia and performance-
linked rewards falling due wholly within twelve months of rendering the service are classified as short term employee
benefits and are recognized in the period during which the service has been rendered.
ii. Post Employment benefits
Defined Contribution Plans
Benefits under Provident Fund Act, Family Pension Fund & Employees State Insurance Scheme.
As per Provident Fund Act, 1952 all employees of the Company are entitled to receive benefits under the provident fund &
family pension fund which is a defined contribution plan. These contributions are made to the fund administrated and
managed by the Government of India. In addition some employees of the Company are covered under Employees State
Insurance Scheme Act, 1948, which are also defined contribution schemes recognized and administered by Government of
India.
The Company's contributions to these schemes are recognized as expense in Profit and Loss Statement during the period in
which the employee renders the related services. The Company has no further obligation under this plan beyond its monthly
contributions.
The cost of defined contribution plans is the contribution payable by the employer for that accounting period.
Defined Benefit Plans
The Company provides for gratuity obligation through a Defined Benefit Retirement Plan ('The Gratuity Plan') covering its
employees. The present value of the obligation under such Defined plan is determined based on actuarial valuation. The
liability or asset recognized in the balance sheet in respect of defined benefit pension and gratuity plans is the present value of
the defined benefit obligation at the end of the reporting period less the fair value of plan assets. Actuarial gains and losses are
recognized in Profit & Loss Statement as and when determined. The Company makes annual contribution to LIC for the
Gratuity plan in respect of employees.
Remeasurement gains and losses comprise actuarial gains and losses, return on plan assets (comprise amounts included in
net interest on the net defined benefit liability or asset) and any change in the effect of the asset ceiling (excluding amounts
included in net interest on the net defined benefit liability or asset). Remeasurements are recognized in other comprehensive
income.
t. Taxes on Income
The tax expenses for the period comprises of current tax and deferred income tax. Tax is recognised in Statement of Profit and
Loss, except to the extent that it relates to items recognised in the Other Comprehensive Income. In which case, the tax is also
recognised in Other Comprehensive Income.
Current Tax
Current tax expense is based on the taxable and deductible amounts to be used for the computation of the taxable income for
the current year. A liability is recognized in the balance sheet in respect of current tax expense for the current and prior
periods to the extent unpaid. An asset is recognized if current tax has been overpaid.
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be paid to
(recovered from) the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by
the balance sheet date.
Deferred Tax
Deferred tax is provided in full for all temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is
realised or the liability is settled based on tax rates (and tax laws) that have been enacted or substantively enacted by the
balance sheet date.
A deferred tax asset is recognized for deductible temporary differences to the extent that it is probable that taxable profit will
be available against which the deductible temporary difference can be utilised.
Current and deferred tax is recognized in profit or loss for the period, unless the tax arises from a business combination or a
transaction or event that is recognized outside profit or loss, either in other comprehensive income or directly in equity in the
same or different period.
u. Earnings Per Share
Basic EPS is calculated by dividing the profit or loss for the period attributable to the equity holders of the parent company by
the weighted average number of ordinary shares outstanding (including adjustments for bonus and rights issues).
Diluted EPS is calculated by adjusting the profit or loss and the weighted average number of ordinary shares by taking into
account the conversion of any dilutive potential ordinary shares.
Basic and diluted EPS are presented in the statement of profit and loss for each class of ordinary shares in accordance with
IndAS 33.
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