2. SIGNIFICANT ACCOUNTING POLICIES
The company has applied following accounting policies to all periods presented in the Ind AS
Financial Statement.
a) Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable, net of
discounts, volume rebates, outgoing sales taxes and other indirect taxes excluding excise
duty.
Dividend Income is recognized when the right to receive payment is established.
Interest Income is recognized on time basis using the effective interest method.
b) Property, Plant and Equipment
i. Property, Plant and Equipment
The Company has applied Ind AS 16 with prospective effect for all of its property, plant and
equipment as at the transition date, viz., April 1, 2016.
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.
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 recognized 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 recognized 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 recognized is
derecognized upon disposal or when no future economic benefits are expected from its use or
disposal. Any gain or loss arising on Derecognition 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 Derecognized.
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. Depreciation
Property, plant and equipment are stated at cost less accumulated depreciation and any
provision for impairment. Depreciation commences when the assets are ready for their
intended use.
Depreciation is calculated on the depreciable amount, which is the cost of an asset less its
residual value. Depreciation is provided at rates calculated to write off the cost, less
estimated residual value, of each asset on a written down value basis.
Depreciation methods, useful lives and residual values are reviewed at each financial year
end and changes in estimates, if any, are accounted for prospectively.
However, the value of fixed assets as on the balance sheet date is insignificant and fixed
assets are carried at its residual value and no depreciation is provided during the year.
c) Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a
financial liability or equity instrument of another entity.
Financial Assets
Initial recognition and measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets
not recorded at fair value through statement of profit and loss, transaction costs that are
attributable to the acquisition of the financial asset. Purchases or sales of financial assets
that require delivery of assets within a time frame established by regulation or convention in
the market place (regular way trades) are recognized on the trade date, i.e., the date that the
Company commits to purchase or sell the asset.
Subsequent Measurement
Subsequent measurement of financial assets is described below -
After initial measurement, such financial assets are subsequently measured at amortized
cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into
account any discount or premium on acquisition and fees or costs that are an integral part of
the EIR. The EIR amortization is included in finance income in the statement of profit and
loss. The losses arising from impairment are recognized in the statement of profit and loss.
This category generally applies to trade and other receivables.
However, reporting entity does not have such financial assets to be measured at amortized
cost using EIR method.
Financial Assets - Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is primarily derecognized (i.e. removed from the Company’s balance sheet)
when:
• The rights to receive cash flows from the asset have expired, or
• The Company has transferred its rights to receive cash flows from the asset or has assumed
an obligation to pay the received cash flows in full without material delay to a third party
under a ‘pass-through’ arrangement; and either
(a) the Company has transferred substantially all the risks and rewards of the asset, or
(b) the Company has neither transferred nor retained substantially all the risks and rewards
of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has
entered into a pass-through arrangement, it evaluates if and to what extent it has retained
the risks and rewards of ownership. When it has neither transferred nor retained
substantially all of the risks and rewards of the asset, nor transferred control of the asset, the
Company continues to recognize the transferred asset to the extent of the Company’s
continuing involvement. In that case, the Company also recognizes an associated liability.
The transferred asset and the associated liability are measured on a basis that reflects the
rights and obligations that the Company has retained
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for
measurement and recognition of impairment loss on the financial assets that are debt
instruments, and are measured at amortized cost e.g., loans, debt securities, deposits and
trade receivables or any contractual right to receive cash or another financial asset that
result from transactions that are within the scope of Ind AS 18.
The Company follows 'simplified approach' for recognition of impairment loss allowance on
trade receivables. The application of simplified approach does not require the Company to
track changes in credit risk. Rather, it recognizes impairment loss allowance based on
lifetime ECLs at each reporting date, right from its initial recognition.
Financial liabilities - Recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value
through statement of profit and loss, loans and borrowings, payables, or as derivatives
designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of loans and
borrowings and payables, net of directly attributable transaction costs.
The Company’s financial liabilities include trade and other payables, loans and borrowings.
The measurement of financial liabilities depends on their classification, as described below:
•Financial liabilities at fair value through statement of profit and loss
Financial liabilities at fair value through statement of profit and loss include financial
liabilities held for trading and financial liabilities designated upon initial recognition as at fair
value through statement of profit and loss. Financial liabilities are classified as held for
trading if they are incurred for the purpose of repurchasing in the near term.
•Loans and Borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortized cost using the effective interest rate (hereinafter referred as EIR) method. Gains
and losses are recognized in statement of profit and loss when the liabilities are derecognized
as well as through the EIR amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition
and fees or costs that are an integral part of the EIR. The EIR amortization is included as
finance costs in the statement of profit and loss.
Financial liabilities - Derecognition
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 derecognition 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 and loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset 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.
For more information on financial instruments Refer note no 18
d) Cash and Cash Equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and
short-term deposits with an original maturity of twelve months or less, which are subject to
an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash
and short-term deposits, as defined above.
e) Inventories
As per Ind AS 109, the Inventories of Securities is a Financial Instrument in case of reporting
entity thus, same is valued at Fair Value and difference in valuation is recognised in Profit
and Loss Account. In absence of Market rate for non traded shares, its value is taken at Rs. 1
as per past practice.
f) Taxation
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively enacted, at the reporting
date.
Current income tax relating to items recognized outside profit or loss is recognized outside
profit or loss (either in other comprehensive income or in equity). Current tax items are
recognized in correlation to the underlying transaction either in OCI or directly in equity.
Management periodically evaluates positions taken in the tax returns with respect to
situations in which applicable tax regulations are subject to interpretation and establishes
provisions where appropriate.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax
bases of assets and liabilities and their carrying amounts for financial reporting purposes at
the reporting date. Deferred tax liabilities are recognized for all taxable temporary differences,
except when it is probable that the temporary differences will not reverse in the foreseeable
future.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward
of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the
extent that it is probable that taxable profit will be available against which the deductible
temporary differences, and the carry forward of unused tax credits and unused tax losses 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 are re¬
assessed 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 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 relating to items recognized outside profit or loss is recognized outside profit or
loss (either in other comprehensive income or in equity). Deferred tax items are recognized in
correlation to the underlying transaction either in OCI or directly in equity.
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.
g) Employee Benefit Schemes
i. Short-term employee benefits
Employee benefits payable wholly within twelve months of receiving employee services are
classified as short-term employee benefits. These benefits include salaries and wages,
performance incentives and compensated absences which are expected to occur in next
twelve months. The undiscounted amount of short-term employee benefits to be paid in
exchange for employee services is recognized as an expense as the related service is rendered
by employees.
ii. Post-employment benefits
Defined benefit plans - Provident fund
Provisions of EPF are not applicable to the company as it does not fall under the implication
requirements of the act i.e. number of employees does not exceed the ceiling limit. Thus,
there is no contribution by the company towards post employment benefits.
h) Earnings Per Share
The Company presents basic and diluted earnings per share (“EPS”) data for its equity
shares. Basic EPS is calculated by dividing the profit and loss attributable to equity
shareholders of the Company by the weighted average number of equity shares outstanding
during the period. Diluted EPS is determined by adjusting the profit and loss attributable to
equity shareholders and the weighted average number of equity shares outstanding for the
effects of all dilutive potential equity shares.
i) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided
to the chief operating decision-maker. Revenue and expenses are identified to segments on
the basis of their relationship to the operating activities of the segment. Inter segment
revenue are accounted for based on the cost price. Revenue, expenses, assets and liabilities
which are not allocable to segments on a reasonable basis, are included under "Unallocated
revenue/ expenses/ assets/ liabilities".
Company is operating in a single segment.
j) Cash Flow Statement
Cash flows are reported using indirect method as set out in Ind AS -7 “Statement of Cash
Flows”, whereby profit / (loss) before tax is adjusted for the effects of transactions of non¬
cash nature and any deferrals or accruals of past or future cash receipts or payments. The
cash flows from operating, investing and financing activities of the Company are segregated
based on the available information.
k) Use of Estimates and Judgments
The preparation of the financial statements in conformity with Ind AS requires management
to make judgments, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income, expenses and disclosures of
contingent assets and liabilities at the date of these financial statements and the reported
amounts of revenues and expenses for the years presented. Actual results may differ from
these estimates under different assumptions and conditions.
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 and future
periods affected.
l) Previous Year’s Figures
Previous years’ figures have been recast so as to make them comparable with current year’s
figures.
m) Rounding Off
Figures are rounded off to the nearest lakhs.
See accompanying notes
forming parts of the financial
statements
In terms of our report
attached of the even date
For, S K Jha & Co. For and on behalf of Board of Directors
Chartered Accountants Gallops Enterprise Limited
FRN: 126173W
Nikhil Makhija Balram Padhiyar Pooja Patel
Partner Managing Director Director
M.No.: 176178 DIN: 01812132 DIN: 02233585
UDIN: 24176178BKDZGA5190
Pooja Rajpara Nitin Solanki
CS CFO
PAN: CEZPR1519G PAN: FTEPS9311E
Date: 10.05.2024 Date: 10.05.2024
Place: Ahmedabad Place: Ahmedabad
(ii) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of Re. 10/- per share. Each
holder of equity shares is entitled to 1 vote per equity shares.
In the event of liquidation of the company, the holders of equity shares will be entitled to receive
remaining assets of the company, after distribution of preferential amounts to preferential
creditors. The distribution will be in proportion to the number of equity shares held by the
shareholders.
18. Financial Instruments
Financial risk management objective and policies
This section gives an overview of the significance of financial instruments for the Company
and provides additional information on the balance sheet. Details of significant accounting
policies, including the criteria for recognition, the basis of measurement and the basis on
which income and expenses are recognized, in respect of each class of financial assets and
financial liabilities are disclosed in Note 2 (c) of accounting policies.
Fair Value Hierarchy
The table shown below analyses financial instruments carried at fair value, by valuation
method. The different levels have been defined below:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)
Level 3: Inputs for the asset or liability that are not based on observable market data
(unobservable inputs)
The fair value of the financial assets and liabilities are included at the amount that would be
received to sell an asset and paid to transfer a liability in an orderly transaction between
market participants. The following methods and assumptions were used to estimate the fair
values:
• Cash and Cash Equivalents, Other Current Assets and Trade Payables:- Approximate
their carrying amounts largely due to the short-term maturities of these instruments.
• Loans Current & Non-Current and Other Current Liabilities: All the amounts
given/taken as loans do not carry any interest obligation and it is not practicable to
estimate the timing of repayment of this loan. Thus, it is considered as
repayable/receivable on demand and the face value (i.e. amount payable on demand) of
such asset is considered its fair value.
19. Critical Estimates and Judgements in applying Accounting Policies:
The management believes that the estimates used in preparation of the financial statements
are prudent and reasonable. Information about estimates and judgments made in applying
accounting policies that have the most significant effect on the amounts recognized in the
financial statements are as follows:
i) Property, plant and equipment and useful life of property, plant and equipment and
intangible assets
The carrying value of property, plant and equipment is arrived at by depreciating the
assets over the useful life of assets. The estimate of useful life is reviewed at the end of
each financial year and changes are accounted for prospectively.
However, the value of fixed assets as on the balance sheet date is insignificant and fixed
assets are carried at its residual value.
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