2 Material Accounting Policies :
2.1 Statement of compliance
These financial statements are prepared in accordance with Indian Accounting Standards (Ind AS), the provisions of the Companies Act, 2013 (“the
Companies Act”), as applicable and guidelines issued by the Securities and Exchange Board of India (“SEBI”). The Ind AS are prescribed under
Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting
Standards) Amendment Rules, 2016.
The financial statements correspond to the classification provisions contained in Ind AS 1, “Presentation of Financial Statements”. For clarity,
various items are aggregated in the statements of profit and loss and balance sheet. These items are disaggregated separately in the notes to the
financial statements, where applicable.
Accounting policies have been applied consistently to all periods presented in these financial statements.
2.2 Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it
is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realised within twelve months after the reporting period, or
- 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:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
2.3 Basis of preparation and presentation
The financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at
the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value
of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those
characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in
these financial statements is determined on such a basis, except for leasing transactions that are within the scope of Ind AS 17 and measurements
that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to
the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as
follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly;
and
- Level 3 inputs are unobservable inputs for the asset or liability.
2.4 Use of estimates
The preparation of these financial statements in conformity with the recognition and measurement principles of Ind AS requires the management of
the Company to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures relating to contingent
liabilities as at the date of the financial statements and the reported amounts of income and expense for the periods presented.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which
the estimates are revised and future periods are affected.
Key source of estimation of uncertainty at the date of the financial statements, which may cause a material adjustment to the carrying amounts of
assets and liabilities within the next financial year, is in respect of valuation of deferred tax assets and provisions and contingent liabilities.
Valuation of deferred tax assets
In view of uncertainty of future taxable profits, the Company has not recognized deferred tax asset (net of deferred tax liabilities) at the year end.
2.5 Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably
measured, regardless of when the payment is being made. Revenue 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.
The specific recognition criteria described below must also be met before revenue is recognised:
a) Income is recognized on accrual basis except income related to non-performing assets, which is accounted on cash basis in accordance with
prudential norms of Reserve Bank of India.
b) The Company has adopted Implicit Rate of Return (IRR) method of accounting in respect of finance charges income for hire purchase/loan
transactions. As per this method, the IRR involved in each hire purchase/loan transaction is recognized and finance charges calculated by applying
the same on outstanding principal financed thereby establishing equitable distribution of income over the period of the agreement.
c) Interest on overdue installments is accounted for on receipt basis.
d) Interest income from a financial asset is recognised 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, by reference to the principal outstanding and at the effective interest
rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's
net carrying amount on initial recognition.
e) Dividend income is recognised at the time when right to receive the payment is established, which is generally when the shareholders approve the
dividend.
2.6 Foreign currencies
The functional currency of the Company is Indian rupee (Rs.).
Income and expenses in foreign currencies are recorded at exchange rates prevailing on the date of the transaction. Foreign currency denominated
monetary assets and liabilities are translated at the exchange rate prevailing on the balance sheet date and exchange gains and losses arising on
settlement and restatement are recognised in the statement of profit and loss.
2.7 Employee benefits
The Company provides post-employment benefits through various defined contribution and defined benefit plans.
2.7.1 Defined contribution plans
A defined contribution plan is a plan under which the Company pays fixed contributions into an independent fund administered by the government.
The Company has no legal or constructive obligations to pay further contributions after its payment of the fixed contribution, which are recognised
as an expense in the year in which the related employee services are received.
2.8 Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
2.8.1 Current tax
Current tax assets and liabilities for the current and prior years are measured at the amount expected to be recovered from or paid to the taxation
authorities
Current tax is the amount of tax payable on the taxable income for the period as determined in accordance with the applicable tax rates and the
provisions of the Income tax Act,1961.
2.8.2 Deferred tax
Deferred tax is recognised 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 recognised 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 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.
2.8.3 Current and deferred tax for the year
Current and deferred tax are recognised in 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.
2.09 Inventories
Inventories (Other than Quoted Shares & Securities) are valued at cost or net realisable value, which ever is lower. Cost is determined on First-In
First-Out (FIFO) basis and includes cost of purchase and other costs incurred in bringing inventories to their present location and condition. Net
realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary
to make the sale.
2.10 Property plant and equipment
The Company has elected to continue with the carrying value of all of its plant and equipment (including freehold land) as at the transition date, viz.,
1 April 2015 measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
Property plant and equipment and capital work in progress are stated at cost of acquisition or construction net of accumulated depreciation and
impairment loss (if any).
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 the
replaced part is derecognised. Repairs and maintenance are charged to the Statement of Profit and Loss during the financial period in which they are
incurred.
Particulars of PPE Useful life (in years
Vehicles (Two-wheelers) 10
Generators 15
Furniture & fixtures 10
Computers 3
Depreciation is computed on Written Down Value method ('WDV') based on estimated useful lives as determined by internal assessment of the
assets in terms of Schedule of II to the Companies Act, 2013.
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised.
2.11 Intangible assets
Development of property (website) and software costs are included in the balance sheet as intangible assets, when they are clearly linked to long
term economic benefits for the Company. These are measured initially at purchase cost and then amortised on a straight-line basis over their
estimated useful lives.
2.12 Impairment of tangible and intangible assets
Property, plant and equipment and intangible assets with finite life are evaluated for recoverability whenever there is any indication that their
carrying amounts may not be recoverable. If any such indication exists, the recoverable amount (i.e. higher of the fair value less cost to sell and the
value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from
other assets. In such cases, the recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is
reduced to its recoverable amount. An impairment loss is recognised in the statement of profit and loss.
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