3 Material Accounting Policies
3.1 Presentation and disclosure of standalone financial statement
All assets and liabilities have been classified as current or non-current in accordance with the Company’s normal operating cycle and
the criteria set out in Division II of Schedule III to the Companies Act, 2013, applicable to companies preparing financial statements
under the Companies (Indian Accounting Standards) Rules, 2015.
For the purpose of classification, the Company considers its normal operating cycle as 12 months, being the time between the rendering
of services and their realisation in cash and cash equivalents. Accordingly, assets and liabilities expected to be realised orsettled within
12 months from the reporting date are classified as current, and all other assets and liabilities are classified as non-current.
3.2 Revenue recognition
Revenue is recognised in accordance with Ind AS 115 Revenue from Contracts with Customers. It is measured at the transaction price,
representing the consideration the Company expects to be entitled to in exchange for providing promised services, net of Goods and
Services Tax (GST), rebates, discounts, and other similar allowances.
Revenue is recognised when, or as, the Company satisfies a performance obligation by transferring control of the promised service
to the customer. Control is considered transferred over time if the customer simultaneously receives and consumes the benefits as
the Company performs the service. Otherwise, revenue is recognised at a point in time, typically on completion of the service, in
accordance with the terms of the contract
3.2.1 Time Charter earnings
Revenue from time charter of vessels is recognised in accordance with Ind AS 115 Revenue from Contracts with Customers. It is
measured at the transaction price, representing the consideration the Company expects to be entitled to in exchange for providing the
services, net of Goods and Services Tax (GST), rebates, and other similar allowances.
Under bme charter arrangements, the performance obligation is satisfied over time, as the customer simultaneously receives and
consumes the benefits of the services provided. Accordingly, revenue is recognised on a straight-line basis over the charter period, or
as per the terms of the contract, reflecting the pattern in which the services are transferred to the customer.
3.2.2 Dividend and interest income
Dividend income from investments is recognized when the Company’s right to receive payment has been established (provided that it
is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
Interest income from a financial asset is recognized when it is probable that the economic benefit will flow to the Company and the
amount of income can be measured reliably. Interest income is accrued on time basis, by reference to the principal outstanding and at
the effective interest rate applicable.
3.3 Borrowing cost
Borrowing costs that are directly attributable to the acquisition, construction, or production of a qualifying asset are capitalised as part
of the cost of that asset until it is ready for its intended use or sale. A qualifying asset is one that necessarily requires a substantial
period of time to become ready for its intended use or sale, in accordance with Ind AS 23 Borrowing Costs.
Capitalisation of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying asset for its intended
use or sale are complete.
All other borrowing costs are recognised as an expense in the period in which they are incurred.
3.4 Taxation
3.4.1 Current tax
Provision of current income-tax is made on the basis of the assessable income under the income tax Act, 1961. Income from shipping
activities is assessed on the basis of deemed tonnage income of the Company.
Minimum Alternative Tax (MAT) Credit is recognised as an asset only when and to the extent there is convincing evidence that the
Company will pay normal income tax during the specified period.
3.4.2 Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements
and their corresponding tax bases, in accordance with Ind AS 12 Income Taxes.
Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible
temporary differences to the extent that it is probable that future taxable profits will be available against which such deductible temporary
differences can be utilised.
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 profits will be available to realise all or part of the asset
Deferred tax assets and liabilities are measured using the tax rates and laws that have been enacted or substantively enacted by the
end of the reporting period and are expected to apply when the asset is realised or the liability is settled.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to set off current tax assets against current tax
liabilities, and if they relate to income taxes levied by the same taxation authority on the same taxable entity, or on different taxable
entities that intend to settle current tax assets and liabilities on a net basis.
3.4.3 Current and deferred tax for the year
During the year, the Company has not recognised any deferred tax asset in the absence of reasonable certainty of profits in the future.
3.5 Property, plant and equipment
Properties, plant and equipment are stated at their cost of acquisition.Cost includes purchase price, inward freight, taxes and expenses
incidental to acquisition and installation, up to the point the asset is ready for its intended use.
When an asset is scrapped or otherwise disposed, the cost and related depreciation are removed from the books and the resultant
profit or loss (including capital profit), if any, is reflected in the statement of profit and loss.
The estimated useful life and residual value is reviewed at the end of each reporting period, with the effect of any changes in estimate
being accounted for on a prospective basis.
The economic useful life of vessels is 27 years.
3.6 Depreciation of Property, plant and equipment
3.6.1 On fleet
Depreciation has been arrived at on straight line method at the rate arrived at so as to provide 95% of the total cost of each vessel
over its balance economic useful life. For this purpose the economic useful life of vessels is estimated as 27 years. Any additions or
extensions to existing vessels which forms an integral part of the vessels is depreciated by 95% over the remaining useful life of the
vessels.
3.6.2 On Motor Vehicles
Depreciation is arrived at on straight line method at 25% p.a. of the cost, based on the estimated useful life of 4 (four) years for the motor
vehicles.
3.6.3 On Other Assets
Depreciation on other assets is charged in the accounts on the Straight Line method at the rates prescribed under Schedule II of the
Companies Act, 2013.
3.7 Inventories
(a) The Stock of stores and spares on board the ships is valued at cost or net realisable value whichever is lower. (FIFO Basis)
(b) The Stock of fuel and lubes owned by the Company is valued at cost or net realisable value whichever is lower. (FIFO Basis)
The Cost comprises of cost of purchases, duties and taxes (other than those subsequently recoverable) and other costs incurred
in bringing them to their present location and condition. Cost of inventories is arrived at after providing for cost of obsolescence.
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