2 Summary of Significant Accounting Policies
(a) Basis of preparation and Presentation
The Financial Statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian
Accounting Standards) Rules, 2015 as amended from time to time and notified under section 133 of the Companies Act, 2013 (the
Act) along with other relevant provisions of the Act, the guidelines issued by the RBI, wherever applicable and notification for
Implementation of Indian Accounting Standard vide circular RBI/2019-20/170 DOR(NBFC).CC.PD.No.109/22.10.106/2019-20 dated
March 13,2020 ("RBI Notification") issued by RBI as applicable to NBFC. The Company uses accrual basis of accounting except in case
of significant uncertainties. Any application guidance/clarifications/directions issued by RBI or other regulators are implemented as
and when they are issued/applicable.
The Balance Sheet and the Statement of Profit and Loss are prepared and presented in the format prescribed in the Division III to
Schedule III to the Companies Act, 2013 ("the Act”) applicable for Non-Banking Finance Companies ("NBFC”).
(b) Basis of Measurement
The Ind AS Financial Statements have been prepared as a going concern on historical cost basis using Indian Rupees as its functional
and reporting currency, which is depicted as "Rs" or "INR" . The Management has followed the going concern as it is satisfied that the
Company shall be able to continue its business for the foreseeable future and no material uncertainty exists that may cast significant
doubt on the going concern assumption. In making this assessment, the Management has considered a wide range of information
relating to present and future conditions, including future projections of profitability, cash flows and capital resources.
(c) Property, Plant & Equipment
Property, Plant & Equipment are carried at historical cost of acquisition less accumulated depreciation and impairment losses,
consistent with the criteria specified in Ind AS 16 "Property, Plant & Equipment".
(d) Depreciation
The Company has provided for depreciation using the written down value method over the estimated useful life of the assets as
prescribed under part C of Schedule II of the Companies Act, 2013 as per the useful life specified therein.
(e) Financial Instruments
Financial assets and liabilities are recognised when the company becomes a party to the contractual provisions of the instruments.
(f) Financial Assets
1) Initial recognition:
(a) those measured at amortised cost
(b) those to be measured subsequently at fair value through Statement of Profit & Loss.
The classification depends on the entity's business model for managing the financial assets and the contractual terms of cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income as the case
may be.
2) Measurement:
All financial assets are initially recognised at fair value. Transaction costs of acquisition of financial assets carried at fair value through
profit and loss are expensed in the Statement of Profit and Loss.
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of
principal and interest are measured subsequently at amortised cost. Interest income from these financial assets is included in Other
income using the effective interest rate method.
3) Impairment of Financial Assets
In accordance with Ind-AS 109, the company uses "Expected Credit Losses (ECL)" model, for evaluating impairment of Financial
Assets other than those measured at Fair Value Through Profit and Loss (FVTPL).
Expected credit losses are measured through as loss allowance at an amount equal to:
The 12-months expected credit losses (expected credit losses that result from those default events on the financial instruments that
are possible within 12 months after the reporting date); or
Full lifetime expected credit losses (expected losses that result from all possible default events over the life of the financial
instrument)
The credit loss is difference between all contractual cash flow that are due to an entity in accordance with the contract and all the
cash flows that the entity expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate. This is assessed
on an individual or collective basis after considering all reasonable factors including that which are forward-looking.
For trade receivable company applies 'Simplified approach' which requires expected lifetime losses to be recognised from initial
recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade
receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are
For other assets, the Company uses 12 months ECL to provide for impairment loss where there is no significant increase in credit risk.
If there is significant increase in credit risk full lifetime ECL is used.
Other Financial Assets mainly consist of Unsecured Loans, Loans to employees, Security Deposit, other deposit, interest accrued on
Fixed Deposits, other receivables and advances measured at amortized cost.
(g) Financial liabilities
1) Initial recognition and measurement
The Company classifies all financial liabilities as subsequently measured at amortised cost, except for financial liabilities at fair value
through profit or loss. Such liabilities, including derivatives that are liabilities, shall be subsequently measured at fair value.
2) Subsequent measurement
Financial liabilities are carried at amortised cost using the effective interest method. For trade and other payables maturing within
one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
3) Derecognition of Financial Instruments:
The company derecognises a financial asset when the contractual rights to the cash flows from the Financial Asset expire or it
transfers the Financial Asset and the transfer qualifies for derecognition under Ind AS 109. A Financial Liability (or part of Financial
Liability) is derecognised from the Company's Balance Sheet when the obligation specified in the contract is discharged or cancelled
or expires.
Offsetting of financial instruments
Financial assets and financial liabilities are offsetted and the net amount is reported in the balance sheet if there is a currently
enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and
settle the liabilities simultaneously.
(h) Fair Value Measurement of Financial Instruments
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:
• In the principal market for the asset or liability, or
• 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.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to
measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.All assets and
liabilities for which fair value is measured or disclosed in the financial statements are categorized 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.For
assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers
(i) Revenue Recognition
Interest income from a financial asset is recognized when it is probable that the economics benefits will flow to the company and the
amount of income can be measured reliably. Sale of shares and securities is accounted on execution of contract notes.
Dividend income on equity shares is recognized when the Company’s right to receive the payment is established, which is generally
when shareholders approve the dividend. Dividends on trading inventory are recognized as operating income, while dividends on
_investment are classified as "Other income"._
(j) Cash, cash equivalents and other bank deposits
Cash and cash equivalents include cash on hand and other short term, highly liquid investments with original maturities of three
months or less thar are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in
value.
Bank deposits with maturity exceeding three months are disclosed in "Bank balance other than above" i.e.other than cash and cash
equivalents.
(k) Inventories
Inventories comprise of Shares and are valued at fair value has per Ind AS 109 "Financial Instruments" . Cost for the purpose of
closing stock valuation has been taken as per the closing Market Value of the respective scrip.
(l) Employee Benefits
Employee benefits are provided in the books in the following manner:
Defined Contribution Plans : Company's contributions paid/ payable during the year to provident fund is recognised in the Statement
of Profit & Loss.
Defined Benefit Plans: The company's liabilities towards gratuity and leave encashment, a defined benefit obligation, has been made
on the basis of actual amount due as against the past practice of actuarial valuation due to insignificant number of employees.
(m) Direct Taxes
Current Tax
Income tax expense represents the sum of current tax and deferred tax and includes any adjustments related to past periods in
current and /or deferred tax adjustments that may become necessary due to certain developments or reviews during the relevant
year. Current income tax is based on the taxable income and calculated using the applicable tax rates.
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, in
accordance with the Income Tax Act, 1961 and the Income Computation and Disclosure Standards (ICDS) prescribed therein. The tax
rates and tax law used to compute the amounts are those that are enacted or substantively enacted, at the reporting date.
Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and
income tax provision.
Deferred Tax
Deferred income tax is provided, using the liability method, on all temporary difference at the balance sheet date between the tax
bases of asset and the carrying amount liabilities used in the computation of taxable profit and their carrying amounts in the financial
statements for financial reporting purposes.
Deferred tax liabilities are recognized for all taxable temporary differences and deferred tax assets are recognized for deductible
temporary differences to the extent that it is probable that taxable profits will be available against which the deductible temporary
differences can be utilized.
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, if any, are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable
profits will allow the deferred tax asset to be recovered.
Deferred tax asset 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 relating to items recognized outside the Statement of Profit and Loss is recognized either in OCI or in Other Equity.
Deferred tax asset and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current
tax liabilities.
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