3 Summary of Significant Accounting Policies
(i) Revenue Recognition
Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at an amount that reflects the
consideration to which the Company expects to be entitled in exchange for those goods or services.
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.
Other revenue recognition
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the interest rate applicable using Effective Interest
Rate Method. .' '
(ii) Property, Plant & Equipment
Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any.
The Company identifies and determines cost of each component/ part of the asset separately, if the component/ part have a cost which is significant to the
total cost of the asset and has useful life that is materially different from that of the remaining asset.
Property, plant and equipment are eliminated from financial statements, either on disposal or when retired from active use. Losses arising in case of
retirement of property, plant and equipment and gains or losses arising from disposal of property, plant and equipment are recognized in statement of
profit and loss in the year of occurrence.
Depreciation is provided on the Written Down Value Method (WDV). The useful life as specified in Schedule II to the Companies Act, 2013 has been
considered for depreciation computation. If the management's estimate of the useful life of a fixed asset at the time of acquisition of the fixed asset or of the
remaining useful life on a subsequent review is shorter/longer than that envisaged in the aforesaid schedule, depreciation is provided at higher/lower rate
based on the management's estimate of the useful life/remaining useful life. Depreciation is charged on prorata basis for assets purchased/ sold during the
year. Pursuant to this policy, fixed assets aredepreciated over the useful life as provided below: '
Computers : 3 Years
Office Equipment : 5 Years
Vehicles : 6 Years
Furniture & Fixtures : 10 Years
Electrical Fixtures : 10 Years
(iii) Intangible Assets
Intangible assets purchased are measured at cost as of the date of acquisition, as applicable, less accumulated amortization and accumulated impairment, if
any.
Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the assets will flow to the company and the cost
of the asset can be measured reliably. Internally generated intangibles, excluding capitalized development costs, are not capitalized and the related
expenditure is reflected in profit and loss in the period in which the expenditure is incurred.
The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting
period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to
modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates.
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible
asset may be impaired. Useful life of intangible asset is considered as 10 years.
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 recognized in the statement of profit and loss when the asset is derecognized.
(iv) Impairment of Non-Financial Assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual
impairment testing for an asset is required, the company estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's
or cash-generating unit's (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does
not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds
its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are
taken into account. If no such transactions can be identified, an appropriate valuation model is used.
Impairment losses of operations are recognized in the statement of profit and loss.
At each reporting date if there is an indication that previously recognized impairment losses no longer exist or have decreased, the Company estimates the
asset's or CGU's recoverable amount. A previously recognized impairment loss is reversed in the statement of profit and loss only to the extent of lower of
its recoverable amount or carrying amount net of depreciation considering no impairment loss recognized in prior years only if there has been a change in
the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognized.
(v) Borrowing Cost
The Company capitalizes borrowing costs that are directly attributable to the acquisition or construction of qualifying asset as a part of the cost of the asset.
The Company recognizes other borrowing costs as an expense in the period in which it incurs them. A qualifying asset is an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale.
To the extent the Company borrows generally and uses them for the purpose of obtaining a qualifying asset, amount of borrowing cost eligible for
capitalization is computed by applying a capitalization rate to the expenditure incurred. The capitalization rate is determined based on the weighted average
of borrowing costs, other than borrowings made specifically towards purchase of a qualifying asset.
(vi) Foreign Currency Translation
Transactions in foreign currencies are initially recorded by the company at their respective functional currency spot rates, at the date the transaction first
qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognized as income or expenses in the period in which they
arise.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial
transactions.
(vii) Employee Benefits
Short term employee benefits obligations are measured on an undiscounted basis and are expensed as the related services provided. A liability is recognized
for the amount expected to be paid under short term employee benefits if the company has a present legal or constructive obligation to pay this amount as a
result of past service provided by the employee and the obligation can be estimated reliably.
(a) Defined contribution plan
Retirement benefit in the form of provident fund is defined contribution scheme. The Company has no obligation, other than the contribution payable to
such schemes. The Company recognizes contribution payable to such schemes as an expense, when an employee renders the related service.
(b) Defined benefit plan
The Company's obligation on account of gratuity is determined based on actuarial valuations. An actuarial valuation involves making various assumptions
that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates.
Due to the complexities involved in the valuation and its long-term nature, these liabilities are highly sensitive to changes in these assumptions. All
assumptions are reviewed at each reporting date.
The Company recognizes the following changes in the net defined benefit obligation as an expense in the statement of profit and loss -Service costs
comprising current service costs and Net interest expense or income.
The Company operates a defined benefit gratuity plan, which requires contributions to be made to a separately administered fund. The cost of providing
benefits under the defined benefit plan is determined using the projected unit credit method. Liability for gratuity as at the year-end is provided on the basis
of actuarial valuation.
Re-measurement, comprising of actuarial gains and losses and the return on plan assets (excluding amounts included in net interest on the net defined
benefit liability), are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in
which they occur. Re-measurements are not reclassified to profit and loss in subsequent periods.
(viii) Income Taxes
a) Current Income Tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable
in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the
uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognized amounts, and it is intended to
realize the asset and settle the liability on a net basis or simultaneously.
b) Deferred Tax
Deferred tax is recognized in respect of temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes at the reporting date.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable
profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and
are recognized to the extent that it has become probable that future taxableprofits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled,
based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the
deferred taxes relate to the same taxable entity and the same taxation authority.
(ix) Leases
The Company, being a lessee, assesses whether a contract contains a lease, at inception of a contract. Company recognizes Right of Use Asset and lease
liability only when the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The right-of-use assets are initially recognized at present value of cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at
cost less accumulated depreciation and impairment losses.
Right-of-use assets, for which the entity is reasonably certain to exercise the right to purchase, are depreciated from the commencement date on a straight¬
line basis over the shorter of the lease term and useful life of the underlying asset. The lease liability is initially measured at amortised cost at the present
value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the
incremental borrowing rates.
For the short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the
lease.
|