A. Basis of Preparation: -
a. Functional and presentation currency
These financial statements are presented in Indian Rupees, which is the company's functional currency. All
amounts have been rounded to nearest lakh, unless otherwise stated.
b. Basis of measurement
These financial statements have been prepared in accordance with the generally accepted accounting
principles in India under the historical cost convention on accrual basis pursuant to section 133 of the
Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.
All assets and liabilities have been classified as current or non-current as per the Company’s operating cycle
and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of services and
the time between the acquisition of assets for processing and their realization in cash and cash equivalents,
the Company has ascertained its operating cycle as 12 months for the purpose of current and non current
classification of assets and liabilities.
c. Use of estimates
The preparation of financial statements requires the management to make estimates and assumptions
considered in the reported amounts of assets and liabilities including the disclosure of contingent liabilities
as of the date of the financial statements and the reported income and expenses during the reporting period
like provision for employee benefits, useful lives of property, plant and equipment and tax expenses etc. The
management believe that the estimates used in preparation of the financial statements are prudent and
reasonable. Future results could differ due to these estimates between the actual results and the estimates
are recognized in the periods in which the results are known/ materialize.
B. Significant Accounting Policies: -
a. Revenue recognition
Sale of Goods: Revenue is recognized only when risks and rewards incidental to ownership are
transferred to the customer, it can be reliably measured, it is reasonable to expect ultimate collection and it
is probable that the economic benefits will flow to the company.
Sale of Services: Revenue is recognized using the "Completed Service Contract Method" i.e. when the
contractual obligations are completed or substantially completed and no significant uncertainty exists
regarding measurement or collectability
b. Property, Plant and Equipment (PPE)
Property, Plant & Equipment stated at cost net of recoverable taxes, trade discounts and rebates and include
amounts added on revaluation (if any), less accumulated depreciation and impairment loss, if any. The cost of
Property, Plant & Equipment comprises its purchase price, borrowing cost and any cost directly attributable to
bringing the asset to its working condition for its intended use.
Subsequent expenditures related to an item of Property, Plant & Equipment are added to its book value only if
they increase the future benefits from the existing asset beyond previously assessed standard of performance.
All other expenses on existing Property, Plant & Equipment, including day-to-day repair and maintenance
expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during
which such expenses are incurred.
Gains or losses arising from derecognition of Property, Plant & Equipment are measured as the difference
between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
c. Depreciation and amortization
Depreciation on Property, Plant & Equipment is provided to the extent of depreciable amount on the Straight¬
Line Method (SLM). Depreciation is provided based on useful life of the assets as prescribed in Schedule II to the
Companies Act, 2013.
In respect of additions or extensions forming an integral part of existing assets and insurance spares,
including incremental cost arising on account of translation of foreign currency liabilities for acquisition of
Property, Plant & Equipment, depreciation is provided as aforesaid over the residual life of the respective assets.
Amortization on Intangible assets (i.e., Computer Software)- useful life taken as five years and accordingly
SLM Method of depreciation is being charged.
d. Impairment of Assets
At each balance sheet date, the management reviews the carrying amounts of its assets included in each cash
generating unit to determine whether there is any indication that those assets were impaired. If any such
indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment.
Recoverable amount is the higher of an asset’s net selling price and value in use.
In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and
from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current
market assessments of time value of money and the risks specific to the asset.
Impairment loss and reversal of impairment loss is recognized as expense and income respectively in the
statement of Profit & Loss. No impairment expense and income is recognized during the year.
e. Investment
The Investment in Quoted shares is valued at cost. The cost of investments include purchase price and directly
attributable acquisition expenses.
f. Inventories
Considering the nature of the Company’s operations, inventories primarily comprise of unsold/ untransferred
Extended Producer Responsibility (EPR) credits procured/held for onward facilitation to Brand
Owners/Producers. Though the Company is engaged in service facilitation, these credits represent stock-in¬
trade until their transfer and are therefore recognized as inventories in the financial statements.
Inventories have been valued at lower of cost and Net Realizable value, and are valued net of reversible duties and
taxes in accordance with Accounting Standard 2.
g. Foreign currency transactions
Initial recognition
Foreign currency transactions are recorded in the reporting currency by applying to the foreign currency amount
the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
Conversion
Foreign currency monetary items are reported using the closing rate. Non - monetary items which are carried in
terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of
the transaction; and non monetary items which are carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed when the values were determined.
Exchange differences
Exchange differences arising on the settlement of monetary items or on restatement of monetary items at rates
different from those at which they were initially recorded during the period, are recognized as income or as
expenses in the period in which they arise.
h. Tax expenses
Tax expense comprises of current tax and deferred tax. Current tax is measured at the amount expected to be
paid to the tax authorities, using the applicable tax rates. Deferred income tax reflect the current period timing
differences between taxable income and accounting income for the period and reversal of timing differences
of earlier years/period. Deferred tax assets are recognized only to the extent that there is a reasonable certainty
that sufficient future income will be available except that deferred tax assets, in case there are unabsorbed
depreciation or losses, are recognized if there is virtual certainty that sufficient future taxable income will be
available to realize the same.
i. Employee Benefits
Short- term employee benefits
Short- term employee benefits such as salary, bonus, etc. payable within 12 months are accounted on accrual
basis.
Defined contribution plans
Eligible employees receive benefits from a provident fund (EPF) and Employer's State Insurance (ESI), which are
defined contribution plans. Both the employees and the Company make monthly contributions as per conditions
and regulations prescribed under EPF & MP Act, 1952 and ESI Act, 1948 respectively.
Defined benefit plans
The Company provides for gratuity under the defined benefit retirement plans covering eligible employees. The
Gratuity provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of
employment, of an amount base on the respective employee's salary and the tenure of employment with the
company. Liabilities with regard to defined benefit plans are determined by actuarial valuation, performed by an
independent actuary, at each Balance Sheet date using the projected unit credit method. The Company
recognized the net obligation of the gratuity plan and leave encashment benefits in the Balance Sheet as an
asset or liability, respectively in accordance with Accounting Standard (AS) 15, “Employee Benefits". Actuarial
gains and losses arising from experience adjustments and changes in actuarial assumption are recognized in the
Statement of Profit and Loss in the period in which they arise.
j. Earnings per share
Basic earnings per share is calculated by dividing the net profit(loss) for the year attributable to equity
shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit/(loss) for the year attributable to equity
shareholders and the weighted average number of shares outstanding during the year are adjusted for
the effects of all dilutive potential equity shares.
k. Cash and Bank Balance
The Schedule III requires that if compliance with the requirements of the Act including applicable Accounting
Standards require any change in the treatment or disclosure including addition, amendment, substitution or
deletion in the head/sub-head or any changes inter se, in the Financial Statements or statements forming part
thereof, the same shall be made and the requirements of Schedule III shall stand modified accordingly.
A line items to be presented on the face of the Balance Sheet under Current assets is “Cash and cash
equivalents”. The break-up of these items required to be presented by the Schedule III comprises of items such
as Balances with banks held as margin money or security against borrowings, guarantees, etc. and bank
deposits with more than 12 months maturity. According to AS-3 Cash Flow Statements, Cash is defined to
include cash on hand and demand deposits with banks. Cash Equivalents are defined as short term, highly
liquid investments that are readily convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value. The Standard further explains that an investment normally qualifies as a
cash equivalent only when it has a short maturity of three months or less from the date of acquisition. Hence,
normally, deposits with original maturity of three months or less only should be classified as cash equivalents.
Further, bank balances held as margin money or security against borrowings are neither in the nature of
demand deposits, nor readily available for use by the company, and accordingly, do not meet the aforesaid
definition of cash equivalents.
Thus, this is an apparent conflict between the requirements of the Schedule III and the Accounting Standards
with respect to which items should form part of Cash and cash equivalents. As laid down in the General
Instructions, Para 1 of Schedule III, requirements of the Accounting Standards would prevail over the Schedule
III and the company makes necessary modifications in the Financial Statements, which may include addition,
amendment, substitution or deletion in the head/sub-head or any other changes inter se.
Accordingly, the conflict should be resolved by changing the caption “Cash and cash equivalents” to “Cash and
bank balances,” which may have two sub-headings, viz., "Cash and cash equivalents” and “Other bank
balances.” The former should include only the items that constitute Cash and cash equivalents defined in
accordance with AS 3 (and not the Schedule III), while the remaining line-items may be included under the latter
heading.
The company has accordingly modified the presentation of Cash and Cash equivalents in accordance with
Guidance Note on Division I - Non Ind AS Schedule III to the Companies Act, 2013 issued by the Institute of
Chartered Accountants of India.
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