1. Significant Accounting Policies
This note provides a list of the significant accounting policies adopted in the presentation of these
financial statements.
1.1 Basis of Preparation:
(i) Compliance with IND AS
These financial statements (‘financial statements') of the Company have been prepared in
accordance with the Indian Accounting Standards (hereinafter referred to as the ‘Ind AS') as
notified by Ministry of Corporate Affairs (‘MCA') under Section 133 of the Companies Act, 2013
(‘the Act') read with the Companies (Indian Accounting Standards) Rules, 2015, as amended and
other relevant provisions of the Act. The Company has uniformly applied the accounting policies
during the periods presented.
(ii) Historical cost convention
The financial statements have been prepared on a historical cost convention and accrual basis,
except certain financial assets and liabilities which are measured at fair values and plan assets
towards defined benefit plans, which are measured at fair value.
Current and non-current classification
All assets and liabilities have been classified as current or non-current as per the Company's
normal operating cycle and other criteria set out in the Schedule III (Division II) to the Act. Based
on the nature of services and the time between the acquisition of asset for processing and their
realization in cash and cash equivalents, the Company has ascertained its operating cycle as
twelve months for the purpose of current/non-current classification of assets and liabilities.
Deferred tax assets and liabilities are classified as non-current assets and non-current liabilities.
1.2 Use of judgements, estimates & assumptions
The preparation of financial statements in conformity with Ind AS requires management, where
necessary, to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised.
The estimates and judgments that have significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year, are included in the following notes:
(i) Measurement of defined benefit obligations: The accounting of employee benefit plans in the
nature of defined benefit requires the Company to use assumptions. These assumptions have
been explained under employee benefits note.
(ii) Lease obligations - The Company evaluates if an arrangement qualifies to be a lease as per the
requirements of Ind AS 116. Identification of a lease requires significant judgment. The Company
uses significant judgement in assessing the lease term (including anticipated renewals) and the
applicable discount rate.
1.3 Rounding off amounts
All the amounts disclosed in the financial statements and notes are presented in Rs. have been
rounded off to the nearest lakhs (Rs. 00,000) except when otherwise indicated.
1.4 Property, Plant and Equipment (PPE) Recognition & Initial measurement:
a) Property, plant and equipment are stated at their cost of acquisition. The cost comprises purchase
price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the
asset to its working condition for the intended use. Any trade discount and rebates are deducted
in arriving at the purchase price. Subsequent costs are included in the asset's carrying amount
or recognized as a separate asset, as appropriate, only when it is probable that future economic
benefits associated with the item will flow to the Company. All other repair and maintenance costs
are recognized in statement of profit or loss as incurred.
Subsequent measurement (depreciation and useful lives):
a) Property, plant and equipment are subsequently measured at cost less accumulated depreciation
and impairment losses. Depreciation on property, plant and equipment of following assets is
provided on a written down basis, computed on the basis of useful lives (as set-out below)
prescribed in Schedule II to the Act:
c) The residual values are not more than 5% of the original cost of the asset. The assets residual
values, useful lives and method of depreciation are reviewed at each financial year end and
adjusted prospectively, if appropriate
d) Where, during any financial year, any addition has been made to any asset, or where any
asset has been sold, discarded, demolished or destroyed, or significant components replaced;
depreciation on such assets is calculated on a pro rata basis as individual assets with specific
useful life from the month of such addition or, as the case may be, up to the date on which such
asset has been sold, discarded, demolished or destroyed or replaced.
De-recognition:
a) An item of property, plant and equipment and any significant part initially recognized is de¬
recognized 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 recognized in the
statement of profit and loss, when the asset is de-recognized.
1.5 Capital work-in progress
Capital work-in progress comprises cost of the property, plant and equipment (including related
expenses), that are not yet ready for their intended use at the reporting date.
1.6 Intangible assets
Recognition & Initial measurement:
a) Intangible assets are stated at their cost of acquisition. The cost comprises purchase price,
borrowing cost, if capitalization criteria are met and directly attributable cost of bringing the asset
to its working condition for the intended use.
1.7 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, demand deposits and short-term highly liquid
investments with original maturities of three months or less that are readily convertible into known
amount of cash and which are subject to an insignificant risk of changes in value.
1.8 Revenue from Contracts with Customers: Revenue from sale of services:
The Company recognizes revenue when the significant terms of the arrangement are enforceable,
services has been delivered & collectability of receivable is reasonably assured.
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company
and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration
received or receivable excluding taxes or duties collected on behalf of the government, recovery of
amount incurred on behalf of customer as pure agent services and reduced by any rebates and trade
discount allowed.
Interest Income:
Interest income from a financial asset is recognized when it is probable that the economic benefits will
flow to the company and the amount of income can be reliably measured. Interest income is accrued
on a timely basis, by reference to the amortized cost 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.
Dividend:
Dividend income is recognized when the right to receive the dividend is established.
1.9 Impairment of Non-financial assets
Assessment is done at each Balance Sheet date to evaluate whether there is any indication that a non¬
financial asset may be impaired. For the purpose of assessing impairment, the smallest identifiable
group of assets that generates cash inflows from continuing use that are largely independent of the
cash inflows from other assets or groups of assets, is considered as a cash generating unit. If any
such indication exists, an estimate of the recoverable amount of the asset/cash generating is made.
Asset whose carrying value exceeds their recoverable amount are written down to their recoverable
amount. Recoverable amount is higher of an asset's or cash generating unit's net selling price and its
value in use. Value in use is the present value of estimated future cash flows expected to arise from
the continuing use of an asset and from its disposal at the end of its useful life. A previously recognized
impairment loss is increased or reversed depending on changes in circumstances. However, the
carrying value after reversal is not increased beyond the carrying value that would have prevailed by
charging usual depreciation if there was no impairment.
1.10 Financial Instruments
Financial assets and financial liabilities are recognized when a Company becomes a party to the
contractual provisions of the instruments.
Initial Recognition and Measurement - Financial Assets and Financial Liabilities
All Financial assets and financial liabilities are initially measured at fair value. Transaction costs that
are directly attributable to the acquisition or issue of financial assets and financial liabilities (other
than financial assets and financial liabilities at fair value through profit or loss and ancillary costs
related to borrowings) are added to or deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition
of financial assets or financial liabilities at fair value through profit or loss are recognized immediately
in the Statement of Profit and Loss.
Classification and Subsequent Measurement: Financial Assets
The Company classifies financial assets as subsequently measured at amortized cost, fair value
through Other Comprehensive Income (“FVTOCI”) or fair value through profit or loss (“FVTPL”) on the
basis of following:
(a) the entity's business model for managing the financial assets and
(b) the contractual cash flow characteristics of the financial asset.
. . STICS LTD
• Amortised Cost:
A financial asset is classified and measured at amortized cost if both of the following conditions
are met:
(i) the financial asset is held within a business model whose objective is to hold financial assets in
order to collect contractual cash flows; and
(ii) the contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
• Fair Value Through Other Comprehensive Income (FVTOCI):
A financial asset is classified and measured at FVTOCI if both of the following conditions are met:
(i) the financial asset is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets; and
(ii) the contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
• Fair Value Through Profit or Loss (FVTPL) :
A financial asset is classified and measured at FVTPL unless it is measured at amortized cost or
at FVTOCI.
All recognized financial assets are subsequently measured in their entirety at either amortized
cost or fair value, depending on the classification of the financial assets.
Impairment of financial assets Trade Receivables:
In respect of trade receivables, the Company applies the simplified approach of Ind AS 109, which
requires measurement of loss allowance at an amount equal to lifetime expected credit losses. Lifetime
expected credit losses are the expected credit losses that result from all possible default events over
the expected life of a financial instrument.
Other financial assets:
In respect of its other financial assets, the Company assesses if the credit risk on those financial assets
has increased significantly since initial recognition. If the credit risk has not increased significantly
since initial recognition, the Company measures the loss allowance at an amount equal to 12-month
expected credit losses, else at an amount equal to the lifetime expected credit losses.
When making this assessment, the Company uses the change in the risk of a default occurring over
the expected life of the financial asset. To make that assessment, the Company compares the risk of a
default occurring on the financial asset as at the balance sheet date with the risk of a default occurring
on the financial asset as at the date of initial recognition and considers reasonable and supportable
information, that is available without undue cost or effort, that is indicative of significant increases in
credit risk since initial recognition. The Company assumes that the credit risk on a financial asset has
not increased significantly since initial recognition if the financial asset is determined to have low credit
risk at the balance sheet date.
^|C
Classification and Subsequent measurement: Financial Liabilities
The Company's financial liabilities include trade and other payables, loans and borrowings including
bank overdrafts, financial guarantee contracts and derivative financial instruments.
• Financial Liabilities at FVTPL:
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or are
designated upon initial recognition as FVTPL.
Gains or losses on financial liabilities held for trading are recognised in the Statement of Profit and
Loss.
• Other Financial Liabilities:
Other financial liabilities (including borrowings and trade and other payables) are subsequently
measured at amortized cost using the effective interest method.
De-recognition of Financial Assets and Financial Liabilities
The Company de-recognises a financial asset when the contractual rights to the cash flows from the
financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in
which substantially all of the risks and rewards of ownership of the financial asset are transferred or in
which the Company neither transfers nor retains substantially all of the risks and rewards of ownership
and does not retain control of the financial asset.
A financial liability is de-recognized when the obligation under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as the de-recognition of the original liability and the recognition of a new liability.
The difference in the respective carrying amounts is recognized in the statement of profit or loss.
Financial liabilities and equity instruments:
Classification as debt or equity:
Debt and equity instruments issued by the Company are classified as either financial liabilities or
as equity in accordance with the substance of the contractual arrangements and the definitions of a
financial liability and an equity instrument.
Equity instruments:
An equity instrument is any contract that evidences a residual interest in the assets of the company
after deducting all of its liabilities. Equity instruments issued by a Company are recognised at the
proceeds received.
1.11 Borrowing Cost
General and specific borrowing costs directly attributable to the acquisition, construction of qualifying
assets, which take a substantial period of time to get ready for their intended use, is initially carried
under expenditure incurred during the construction period and the borrowing cost till the assets are
substantially ready for their intended use is added to the cost of those assets.
All other borrowing costs are recognized in Statement of Profit and Loss in the period in which they are
incurred.
1.12 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision maker (CODM).
Operating segments are reported in a manner consistent with the internal reporting provided to the
chief decision maker. Based on the “management approach” as defined in Ind AS 108 - Operating
Segments, the Chief Operating Decision Maker (CODM) evaluates the Company's performance and
allocates resources based on an analysis of various performance indicators by business segments.
Accordingly, information has been presented along with Business Segments.
|