1) Material accounting policy information1.1. Basis of preparationa) Statement of compliance
The standalone financial statements of the
Company have been prepared in accordance
with the Indian Accounting Standards (Ind
AS) as notified under the Companies (Indian
Accounting Standards) Rules 2015 (as
amended) and presentation requirements of
Division II of Schedule III to the Companies
Act, 2013.
b) Historical cost and Going Concern
These Standalone Financial Statements have
been prepared and presented under the
historical cost convention, on the accrual
basis of accounting except for certain
financialassets and financial liabilities that
are measured at fair values at the end of each
reporting period, as stated in the accounting
policies set out below.
The Company has prepared the financial
statements on the basis that it will continue to
operate as a going concern.
c) Consistency in preparation
The standalone financial statements provide
comparative information in respect of the
previous period. The accounting policies are
applied consistently to all the period presented
in the standalone financial statements, unless
stated otherwise.
d) Presentation Currency
The standalone financialstatements are
presented in Indian Rupees (^) (which is also
the functional currency of the Company). All
values are presented in ^ Lakh and rounded
off to the extent of two decimals, except when
otherwise indicated.
1.2. Current/non-current classification
Any asset or liability is classified as current if it
satisfies any of the following conditions :
- the asset/liability is expected to be realised/
settled in the Company's normal operating
cycle;
- the asset is intended for sale or consumption;
- the asset/liability is held primarily for the
purpose of trading
- the asset/liability is expected to be realised/
settled within twelve months after the
reporting period;
- the asset is cash or cash equivalent unless it
is restricted from being exchanged or used to
settle a liability for at least twelve months after
the reporting date;
- the liability wherein the Company does not
have the right at the end of reporting period
to defer its settlement for at least twelve
months after the reporting date.
All other assets and liabilities are classified as non
current.
For the purpose of current/non-current
classification of assets and liabilities, the Company
has ascertained its normal operating cycle as
twelve months. This is based on the nature of
services and the time between the acquisition
of assets or inventories for processing and their
realisation in cash and cash equivalents.
1.3. Property, plant and equipment ("PPE")
Recognition and initial measurement
Property, plant and equipment are stated at cost
net of accumulated depreciation and accumulated
impairment losses, if any.
The cost of an item of PPE comprises of its
purchase price net of discounts, if any including
import duties and other non-refundable taxes or
levies and directly attributable cost of bringing
the asset to its working condition for its intended
use and the initial estimate of decommissioning,
restoration and similar liabilities, if any. Cost
includes cost of replacing PPE 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.
PPE which are not ready for the intended use
are disclosed as 'Capital work-in-progress'.
Capital work-in-progress is stated at cost net of
accumulated impairment losses, if any.
The Company had elected to consider the carrying
value of all its PPE appearing in the Standalone
Financial Statements and used the same as
deemed cost in the opening Ind AS Balance Sheet
prepared on April 1,2019.
Subsequent measurement (depreciation,
useful life and residual value)
Subsequent costs are included in the asset's
carrying amount or recognised as a separate
asset, as appropriate, only when 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. The carrying amount of
any component accounted for as a separate asset
is de-recognised when replaced. All other repairs
and maintenance are charged to the Statement
of Profit and Loss, during the reporting period in
which they are incurred.
The residual values, useful lives and methods of
depreciation of property, plant and equipment
are reviewed at each reporting date and adjusted
prospectively, if appropriate.
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. The Company has used
the following rates to provide depreciation on its
tangible fixed assets:
The Company, based on technical assessment
made by technical expert and management
estimate, depreciates air conditioner over
estimated useful life, which is different from the
useful life as prescribed in Schedule II to the
Companies Act, 2013. The management believes
that such estimated useful life is realistic and
reflects fair approximation of the period over
which the assets are likely to be used.
Cost of the leasehold improvements are amortised
over the period of the lease.
De-recognition
PPE are derecognised either when they have
been disposed of or when they are permanently
withdrawn from use and no future economic
benefit is expected from their disposal. The
difference between the net disposal proceeds and
the carrying amount of the asset is recognised in
the Statement of Profit and Loss in the period of
de-recognition.
1.4. Intangible assets
Recognition and initial measurement
Intangible assets are stated at cost less
accumulated amortisation and impairment. The
cost of intangible assets acquired in a business
combination is their fair value at the date of
acquisition. Internally generated intangibles,
excluding capitalised development costs, are not
capitalised and the related expenditure is reflected
in the Statement of Profit and Loss, in the period in
which the expenditure is incurred.
The Company had elected to consider the carrying
value of all its intangible assets appearing in the
Standalone Financial Statements and used the
same as deemed cost in the opening Ind AS
Balance Sheet prepared on April 1, 2019
Subsequent measurement (amortisation and
useful life)
Intangible assets with finite life are amortised
over the useful economic life and assessed for
impairment, whenever there is an indication
that the intangible asset may be impaired. The
amortisation period and the amortisation method
for an intangible asset with a finite useful life are
reviewed at least at the end of each reporting
period and changes if any, made on prospective
basis. The amortisation expense on intangible
assets with finite lives is recognised in the
Statement of Profit and loss
De-recognition
Gains or losses arising from de-recognition of an
intangible asset are measured as the difference
between the net disposal proceeds and the
carrying amount of the asset and are recognised
in the Statement of Profit and Loss when the asset
is de-recognised.
1.5. Impairment of non-financial assets
Assessment for impairment is done at each
Balance Sheet date as to whether there is any
indication that a non-financial asset may be
impaired. Assets that have an indefinite useful life
are not subject to amortisation and are tested for
impairment annually and whenever there is an
indication that the asset may be impaired. Assets
that are subject to depreciation and amortisation
and assets representing investments in subsidiary
are reviewed for impairment, whenever events
or changes in circumstances indicate that
carrying amount may not be recoverable. Such
circumstances include, though are not limited
to, significant or sustained decline in revenues
or earnings and material adverse changes in the
economic environment. An impairment loss is
recognised whenever the carrying amount of an
asset or its CGU exceeds its recoverable amount.
The recoverable amount of an asset is the greater
of its fair value less cost to sell and value in use. To
calculate value in use, the estimated future cash
flows are discounted to their present value using a
pre-tax discount rate that reflects current market
rates and the risk specific to the asset. For an asset
that does not generate largely independent cash
inflows, the recoverable amount is determined
for the CGU to which the asset belongs. Fair value
less cost to sell is the best estimate of the amount
obtainable from the sale of an asset in an arm's
length transaction between knowledgeable, willing
parties, less the cost of disposal. Impairment losses,
if any, are recognised in the Standalone Statement
of Profit and Loss and included in depreciation
and amortisation expense. Impairment losses on
assets are reversed in the Standalone Statement
of Profit and Loss only to the extent that the asset's
carrying amount does not exceed the carrying
amount that would have been determined if no
impairment loss had previously been recognised.
1.6. Leases
Company as a lessee
The Company assesses whether a contract is
or contains a lease, at inception of a contract in
accordance with Ind AS 116. The assessment
involves the exercise of judgement about whether
(i) the contract involves the use of an identified
asset, (ii) the Company has substantially all the
economic benefits from the use of the asset
through the period of the lease, and (iii) the
Company has the right to direct the use of the
asset
The Company's lease asset classes primarily
comprise of lease for stores, warehouse, office
premises.
The Company recognises a right-of-use asset
("ROU") and a corresponding lease liability at
the lease commencement date. The ROU asset
is initially recognised 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. They are subsequently measured at cost
less accumulated depreciation and impairment
losses. The ROU asset is depreciated using the
straight line method from the commencement
date to the earlier of, the end of the useful life
of the ROU asset or the end of the lease term or
useful life of the underlying asset if the Company
expects to exercise a purchase option in the lease.
The estimated useful lives of ROU assets are
determined on the same basis as those of property
and equipment. In addition, the right-of-use asset
is periodically reduced by impairment losses, if
any, and adjusted for certain re-measurements
of the lease liability. The lease liability is initially
measured at the present value of the lease
payments that are not paid at the commencement
date, generally discounted using an incremental
borrowing rate specific to the Company, term
and currency of the contract. Lease payments
included in the measurement of the lease liability
include fixed payments, variable lease payments
that depend on an index or a rate known at the
commencement date; and extension option
payments or purchase options payment which
the Company is reasonably certain to exercise.
Variable lease payments that do not depend on an
index or rate are recognised as an expense in the
period in which the event or condition that triggers
those payments occurs and are included in the
line "other expenses" in the Standalone Statement
of Profit and Loss. After the commencement date,
the amount of lease liabilities is increased to reflect
the accretion of interest and reduced for the lease
payments made.
The Company reassesses the lease term upon a
significant event or change in circumstances within
its control. For measurement purposes, lease
payments are discounted using the Company's
incremental borrowing rate, as the rate implicit in
the lease is not readily determinable.
Short-term leases and leases of low-value
assets
The Company applies the short-term lease
recognition exemption to its short-term leases
(i.e., those leases that have a lease term of 12
months or less from the commencement date
and do not contain a purchase option). It also
applies the lease of low-value assets recognition
exemption to leases of office equipment that are
considered to be low value. Lease payments on
short-term leases and leases of low-value assets
are recognised as expense on a straight-line basis
over the lease term.
1.7. Fair value measurements
The Company measures financial instruments, at
fair value at each Reporting date.
Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. The fair value measurement
is based on the presumption that the transaction
to sell the asset or transfer the liability takes place
either:
(a) In the principal market for the asset or liability;
or
(b) In the absence of a principal market, in the
most advantageous market for the asset or
liability.
The principal or the most advantageous market
must be accessible by the Company. The fair value
of an asset or a liability is measured using the
assumptions that market participants would use
when pricing the asset or liability, assuming that
market participants act in their best economic
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 asset in
its highest and best use, or by selling it to another
market participant that would use the asset 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 the fair value, maximising the
use of relevant observable inputs and minimising
the use of unobservable inputs.
1.8. Financial instruments
A financial instrument is a contract that gives rise
to a financial asset of one entity and a financial
liability or equity instrument of another entity.
Financial assetsInitial recognition and measurement
Allfinancial assets are recognised initially at
fair value, plus in the case of financial assets
not recorded at fair value through profit or loss
(FVTPL), transaction costs that are attributable to
the acquisition of the financial asset. However,
trade receivables that do not contain a significant
financing component are measured at transaction
price. Where the fair value of a financial asset at
initial recognition is different from its transaction
price, the difference between the fair value and
the transaction price is recognised as a gain or loss
in the Standalone Statement of Profit and Loss at
initial recognition if the fair value is determined
through a quoted market price in an active
market for an identical asset (i.e. level 1 input)
or through a valuation technique that uses data
from observable markets (i.e. level 2 input). In case
the fair value is not determined using a level 1 or
level 2 input as mentioned above, the difference
between the fair value and transaction price is
deferred appropriately and recognised as a gain
or loss in the Standalone Statement of Profit and
Loss only to the extent that such gain or loss arises
due to a change in factor that market participants
take into account when pricing the financial asset.
Subsequent measurement
For subsequent measurement, the Company
classifies a financial asset in accordance with the
below criteria:
1) The Company's business model for managing
the financial asset and
2) The contractual cash flow characteristics of
the financial asset.
Based on the above criteria, the Company classifies
its financial assets into the following categories:
(a) Financial assets measured at amortised
cost: A financial asset is measured at the
amortised cost if both the following conditions
are met:
- The Company's business model objective
for managing the financial asset is to
hold financial assets in order to collect
contractual cash flows, and
- The contractualterms of the financial
asset give rise on specified dates to cash
flows that are solely payments of principal
and interest on the principal amount
outstanding.
This category applies to cash and bank
balances, loan and other financial assets
of the Company. Such financial assets are
subsequently measured at amortised cost
using the effective interest method. The
effect of the amortisation under effective
interest method is recognised as interest
income over the relevant period of the
financial asset under other income in the
Standalone Statement of Profit and loss.
The amortised cost of a financial asset is
also adjusted for loss allowance, if any.
(b) Financial assets measured at fair value
through other comprehensive income
(FVTOCI): A financial asset is measured at
FVTOCI if both of the following conditions are
met:
- The Company's business model objective
for managing the financial asset is
achieved both by collecting contractual
cash flows and selling the financial assets,
and
- The contractual terms of the financial
asset give rise on specified dates to cash
flows that are solely payments of principal
and interest on the principal amount
outstanding.
Such financialassets are subsequently
measured at fair value at each reporting
date. Fair value changes are recognised in
the Other Comprehensive Income (OCI).
However, the Company recognises interest
income and impairment losses and its
reversals in the Standalone Statement
of Profit and loss. On derecognition of
such financial assets, cumulative gain
or loss previously recognised in OCI is
reclassified from equity to Standalone
Statement of Profit and loss. Further, the
Company, through an irrevocable election
at initial recognition, has measured
certain investments in equity instruments
at FVTOCI. The Company has made such
election on an instrument by instrument
basis. These equity instruments are
neither held for trading nor are contingent
consideration recognised under a
business combination. Pursuant to such
irrevocable election, subsequent changes
in the fair value of such equity instruments
are recognised in OCI. However, the
Company recognises dividend income
from such instruments in the Standalone
Statement of Profit and Loss when the
right to receive payment is established, it
is probable that the economic benefits will
flow to the Company and the amount can
be measured reliably. On derecognition
of such financial assets, cumulative gain
or loss previously recognised in OCI is not
reclassified from the equity to Standalone
Statement of Profit and loss. However, the
Company may transfer such cumulative
gain or loss into retained earnings within
equity.
(c) Financial assets measured at fair value
through profit or loss (FVTPL): A financial
asset is measured at FVTPL unless it is
measured at amortised cost or at FVTOCI as
explained above. This is a residual category
applied to all other investments of the
Company excluding investments in subsidiary.
Such financialassets are subsequently
measured at fair value at each reporting
date. Fair value changes are recognised in the
Standalone Statement of Profit and loss.
Derecognition
A financial asset is derecognised when the
right to receive cash flows from the assets
has expired, or has been transferred, and the
Company has transferred substantially all of
the risks and rewards of ownership.
In cases where Company has neither
transferred nor retained substantially all of
the risks and rewards of the financial asset,
but retains control of the financial asset,
the Company continues to recognise such
financial asset to the extent of its continuing
involvement in the financial asset. In that case,
the Company also recognises an associated
liability. The financial asset and the associated
liability are measured on a basis that reflects
the rights and obligations that the Company
has retained.
On derecognition of a financial asset, (except
as mentioned for financial assets measured at
FVTOCI), the difference between the carrying
amount and the consideration received is
recognised in the Standalone Statement of
Profit and loss.
Impairment of financial assets
The Company applies expected credit losses
(ECL) model for measurement and recognition
of loss allowance on the following:
- Trade receivables
- Financial assets measured at amortised
cost (other than trade receivables)
- Financial assets measured at fair value
through other comprehensive income
(FVTOCI)-In case of debt instruments
In case of trade receivables, the Company
follows a simplified approach wherein an
amount equal to lifetime ECL is measured and
recognised as loss allowance. In case of other
assets, the Company determines if there has
been a significant increase in credit risk of
the financial asset since initial recognition.
If the credit risk of such assets has not
increased significantly, an amount equal to
12-month ECL is measured and recognised
as loss allowance. However, if credit risk has
increased significantly, an amount equal to
lifetime ECL is measured and recognised as
loss allowance. Subsequently, if the credit
quality of the financial asset improves such
that there is no longer a significant increase
in credit risk since initial recognition, the
Company reverts to recognizing impairment
loss allowance based on 12-month ECL. ECL
are measured in a manner that they reflect
unbiased and probability weighted amounts
determined by a range of outcomes, taking
into account the time value of money and
other reasonable information available as a
result of past events, current conditions and
forecasts of future economic conditions.
Financial LiabilitiesInitial recognition and measurement
The Company recognises a financial liability
in its Balance Sheet when it becomes party to
the contractual provisions of the instrument.
All financial liabilities are recognised initially
at fair value minus, in the case of financial
liabilities not recorded at fair value through
profit or loss (FVTPL), transaction costs
that are attributable to the acquisition of
the financial liability. Where the fair value
of a financial liability at initialrecognition
is different from its transaction price, the
difference between the fair value and the
transaction price is recognised as a gain or
loss in the Standalone Statement of Profit
and Loss at initial recognition if the fair value
is determined through a quoted market price
in an active market for an identical asset (i.e.
level 1 input) or through a valuation technique
that uses data from observable markets (i.e.
level 2 input). In case the fair value is not
determined using a level 1 or level 2 input as
mentioned above, the difference between the
fair value and transaction price is deferred
appropriately and recognised as a gain or
loss in the Standalone Statement of Profit and
Loss only to the extent that such gain or loss
arises due to a change in factor that market
participants take into account when pricing
the financial liability.
Subsequent measurement
All financial liabilities of the Company are
subsequently measured at amortised cost
using the effective interest method. The
cumulative amortisation using the effective
interest method of the difference between the
initial recognition amount and the maturity
amount is added to the initial recognition
value (net of principal repayments, if any)
of the financial liability over the relevant
period of the financial liability to arrive at the
amortised cost at each reporting date. The
corresponding effect of the amortisation
under effective interest method is recognised
as interest expense under finance cost in the
Standalone Statement of Profit and loss.
Derecognition
A financial liability is derecognised 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 between the carrying amount
of the financial liability derecognised and
the consideration paid is recognised in the
Standalone Statement of Profit and loss.
Offsetting of financial assets and
financial liabilities
Financialassets and financial liabilities are
offset and the net amount is reported in the
Balance Sheet wherever there is a currently
enforceable legal right to offset the recognised
amounts and there is an intention to settle on
a net basis or to realise the asset and settle
the liability simultaneously.
1.9. Inventories
Stock-in-trade: Valued at lower of cost and net
realisable value. Cost of inventories comprises all
costs of purchase price and other incidental costs
incurred in bringing the inventories to their present
location and condition. Cost is determined based
on first in first out method. Net realisable value is
the estimated selling price in the ordinary course
of business, less estimated costs of completion
and to make the sale.
Packing materials and consumables: Cost
represents purchase price and other direct costs
and is determined on a "first in, first out" basis.
1.10. Cash and cash equivalents
Cash and cash equivalent in the balance sheet
comprise cash at banks and on hand, cheques
on hand and short-term deposits with an original
maturity of three months or less, which are subject
to an insignificant risk of changes in value. For the
purpose of the statement of cash flows, cash and
cash equivalents consist of cash and short-term
deposits, as defined above.
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