E. Summary of material accounting policies
1. Cash and cash equivalents
Cash and cash equivalent comprises cash in hand, demand deposits and time deposits with original maturity
of less than three months held with bank.
2. Recognition of Revenue
Revenue is recognized based on rules applied through accrual accounting and the matching principle.
Accrual accounting states that revenue is recognized when it's realized and earned, independent of when
cash is received. Realized means, the revenue for goods or service has been received, and earned means the
good has been provided or a service has been delivered. Finally, the matching principle states that revenue
and associated costs, such as costs of goods or commission, should be accounted for in the same period.
Recognition of interest income
The Company recognizes interest income by applying the effective interest rate (EIR) to the gross carrying
amount of a financial asset and as per year-to-year financial contracts as agreed by the management.
3. Property, plant and equipment (PPE) and Intangible assets
Property, plant and equipment
PPE are stated at cost (including incidental expenses directly attributable to bringing the asset to its working
condition for its intended use) less accumulated depreciation and impairment losses, if any. Cost comprises
the purchase price and any attributable cost of bringing the asset to its working condition for its intended
use. Subsequent expenditure related to PPE is capitalized only when it is probable that future economic
benefits associated with these will flow to the Company and the cost of item can be measured reliably. Other
repairs and maintenance costs are expensed off as and when incurred.
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 de-recognition of the asset (calculated as the difference between the net disposal proceeds and the
carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognised.
PPEs not ready for the intended use on the date of the Balance Sheet are disclosed as "capital work-in-
progress".
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.
Intangible assets not ready for the intended use on the date of Balance Sheet are disclosed as "Intangible
assets under development".
Impairment of tangible, intangible and right to use assets:
The Company reviews the carrying amounts of its tangible and intangible assets at the end of each reporting
period, to determine whether there is any indication that carrying value of those assets may not be
recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss (if any).
An impairment loss is on such assessment will be recognised wherever the carrying value of an asset exceeds
its recoverable amount. The recoverable amount is the higher of fair value less costs to sell and value in use.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax
discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of
the asset is reduced to its recoverable amount.
When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised
estimate of its recoverable amount such that the increased carrying amount does not exceed the carrying
amount that would have been determined if no impairment loss had been recognized for the asset in prior
years. The reversal of an impairment loss is recognized in the Statement of profit and loss.
4. Depreciation and Amortization
Depreciation
Depreciation is provided over the useful life of the asset as per Schedule's of Companies Act 2013 and
depreciation rates have been worked out by applying written down value method.
Amortization
Intangible assets are amortized on a straight line basis over the estimated useful economic life. The Company
estimates the useful life of an intangible asset will not exceed four years from the date when the asset is
available for use. If the persuasive evidence exists to the affect that useful life of an intangible asset exceeds four
years, the Company amortizes the intangible asset over the best estimate of its useful life.
5. Leases
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. A
contract is, or contains, a lease, if the contract conveys the right to control the use of an assets for a period of
time in exchange for consideration.
Measurement of Lease Liability
At the time of initial recognition, the Company measures lease liability as present value of all lease payment
discounted using the Company's incremental cost of borrowing rate. Subsequently, the lease liability is
(i) Increased by interest on lease liability;
(H) Reduce by lease payment made; and
Measurement of Right of Use asset
At the time of initial recognition, the Company measures 'Right of Use assets' as present value of all lease
payment discounted using the Company's incremental cost of borrowing rate w.r.t said lease contract.
Subsequently, ’Right of Use assets' is measured using cost model i.e. at cost less any accumulated depreciation
and any accumulated impairment losses adjusted for any re-measurement of the lease liability specified in Ind
AS 116 'Leases'. Depreciation on 'Right of Use assets' is provided on straight line basis over the lease period.
The Company recognises the amount of the re-measurement of lease liability due to modification as an
adjustment to the right of use asset and statement of profit and loss depending upon the nature of
modification. Where the carrying amount of the right of use asset is reduced to zero and there is a further
reduction in the measurement of the lease liability, the Company recognises any remaining amount of the re¬
measurement in statement of profit and loss.
The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets
that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease
payments associated with these leases are recognised as an expense on a straight-line basis over the lease term.
|