1. Significant Accounting Policies:
2.1 Statement of compliance:
The financial statements of Deep Diamond India Limited (the “Company”) have been
prepared in accordance with the provisions of the Companies Act, 2013 and the Indian
Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards)
Rules, 2015 (as amended from time to time) issued by Ministry of Corporate Affairs in
exercise of the powers conferred by section 133 read with sub-section (1) of section 210A of
the Companies Act, 2013. In addition, the guidance notes/announcements issued by the
Institute of Chartered Accountants of India (ICAI) are also applied along with compliance
with other statutory promulgations require a different treatment.
2.2 Basis of Preparation of Financial Statements
These financial statements of the Company havebeen prepared in accordance with IndAS
prescribed under section 133 of the Companies Act, 2013 read together with the Companies
(Indian Accounting Standards) Rules, 2015, the companies (Indian Accounting Standards)
Amendment Rules, 2016 and the Companies (Indian Accounting Standards) Amendment
Rules, 2017.
The IndAS Financial Statements have been prepared on a going concern basis using
historical cost convention and on an accrual method of accounting, except for certain
financial assets and liabilities, which have been measured at fair value as described below:
2.3 Fair Value Measurement
The Company measures financial instruments, such as, derivatives at fair value at each
balance sheet 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 onthe presumption that the
transaction to sell the asset or transfer the liability takes place either:
1) In the principal market for the asset or liability, or
2) 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 economic best 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.
Fair value for measurement and /or disclosure purpose in these financial statements is
determined on such basis, except for share based payment transactions that are within the
scope of IndAS 102, leasing transactions that are within the scope of IndAS 17, and
measurements that have some similarities to fairvalue, such as net realisable value in IndAS
2 or value in use in IndAS 36.
The Company uses valuation techniques that are appropriate in the circumstances and for
which sufficient data are available to measure fair value, maximising the use of relevant
observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial
statements are categorised within the fair value hierarchy, described as follows, based on
the lowest level input that is significant to the fair value measurement as a whole:
Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or
liabilities
Level 2 — Valuation techniques for which the lowest level input that is significant to the fair
value measurement is directly or indirectly observable
Level 3 — Valuation techniques for which the lowest level input that is significant to the fair
value measurement is unobservable
Management determines the policies and procedures for both recurring fair value
measurement, such as derivative instruments and unquoted financial assets measured at fair
value, and for non-recurring measurement, such as assets held for distribution in
discontinued operations.
For the purpose of fair value disclosures, the Company has determined classes of assets and
liabilities on thebasis of the nature, characteristics and risks of the asset or liability and the
level of the fair value hierarchy asexplained above.
2.4. Use of estimates and judgments:
The preparation of financial statements inconformity with Ind AS requires that the
management of the Company estimates and assumptions that affect the reported amounts of
income and expenses of the period, the reported balances of assets and liabilities and the
disclosures relating to contingent liabilities as of the date of the financial statements. The
estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates include expected credit loss on loan books, fair value measurement etc.
Difference, if any, between the actual results and estimates is recognised in the period in
which the results are known.
Note 1 : Significant Accounting Policies
(i) Property, Plant and Equipment
The initial cost of property, plant and equipment comprises its purchase price, including
import duties and non-refundable purchase taxes, attributable borrowing cost and any
other directly attributable costs of bringing an asset to working condition and location for
its intended use. It also includes the present value of the expected cost for the
decommissioning and removing of an asset and restoring the site after its use, if the
recognition criteria for a provision are met.
Expenditure incurred after the property, plant and equipment have been put into operation,
such as repairs and maintenance, are normally charged to the statements of profit and loss
in the period in which the costs are incurred. Major inspection and overhaul expenditure is
capitalized 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. Likewise, when a
major inspection is performed, its cost is recognised in the carrying amount of the plant and
equipment as a replacement if the recognition criteria are satisfied. All other repair and
maintenance costs are recognised in the statement of profit and loss as incurred.
Gains and losses on disposal of an item of property, plant and equipment are determined by
comparing the proceeds from disposal with the carrying amount of property, plant and
equipment, and are recognized net within other income/other expenses in statement of
profit and loss.
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.
The residual values, useful lives and methods of depreciation of property, plant and
equipment are reviewed at each financial year end and adjusted prospectively, if
appropriate.
(ii) Revenue Recognition
Revenue is recognized 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. The Company's income from operation is accounted for on accrual basis.
Revenue from sales of Gold and Diamonds is recognized on delivery of the products, when
all significant contractual obligations have been satisfied, the property in the goods is
transferred for a price significant risks & rewards of ownership are transferred to the
customers and no effective ownership is retained. Interest is recognized using the time-
proportion method, based on rates implicit in the transaction. Dividend income is
recognised when the Company right to receive dividend is established by the reporting date
and no significant uncertainty as to collectability exists
(iii) Taxation
Current Tax
A provision for current income tax is made on the taxable income using the applicable tax
rates and tax laws.
Deferred Tax
Deferred tax arising on account of timing differences and which are capable of reversal in
one or more subsequent periods is recognized using the tax rates and tax laws that have
been enacted or substantively enacted. Deferred tax assets are not recognized unless
there is a virtual certainty with respect to the reversal of the same in future.
Deferred Tax on Comprehensive Income
Deferred tax arising on account of difference between fair value and cost of Financial
Assets. which are capable of reversal in one or more subsequent periods is recognized
using the tax rates and tax laws that have been enacted or substantively enacted.
Deferred tax assets are not recognized unless there is a virtual certainty with respect to
the reversal of the same in future.
(iv) Impairment of 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 units (CGU) fair value less costs of
disposal and its value in use. 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 Company's assets. When the carrying amount of an asset or CGU exceeds its
recoverable amount, the asset is considered as impaired and is written down to its
recoverable amount
Impairment losses are recognised in the statement of profit and loss.
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