MATERIAL ACCOUNTING POLICIES
1. Corporate information
GTV Engineering Ltd. is a Limited company incorporated on 4th December1990. The company is
engaged in Hi-tech steel fabrication having its manufacturing unit at Plot No.216-218, Industrial
Area, Mandideep, Dist. Raisen and a Flour Mill at Plot No.K-20-22, Industrial Area, Malanpur,
Dist. Bhind.
2. Statement of compliance
The standalone Ind AS financial statements of the Company have been prepared in accordance
with the Indian Accounting Standards (Ind AS) specified under Section 133 of the Companies
Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015 (as amended
from time to time) and presentation requirements of Division II of Schedule III to the Companies
Act, 2013 (IND AS compliant Schedule III), to the extent applicable.
3. Application of New Accounting Pronouncements The Company has applied the following Ind
AS pronouncements pursuant to issuance of the Companies (Indian Accounting Standards)
Amendment Rules, 2023 with effect from 1st April, 2023. The effect is described below :
a. Ind AS 1 - Presentation of Financial Statements - The amendment requires disclosure of
material accounting policies instead of significant accounting policies. In the Financial
Statements the disclosure of accounting policies has been accordingly modified. The
impact of such modifications to the accounting policies is insignificant.
b. Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors - The
amendment has defined accounting estimate as well as laid down the treatment of
accounting estimate to achieve the objective set out by accounting policy. There is no
impact of the amendment on the Financial Statements.
c. Ind AS 12 - Income taxes - the definition of deferred tax asset and deferred tax liability
is amended to apply initial recognition exception on assets and liabilities that does not
give rise to equal taxable and deductible temporary differences. There is no impact of the
amendment on the Financial Statement
4 Current / Non-Current Classification Any asset or liability is classified as current if it satisfies
any of the following conditions :
I. the asset/liability is expected to be realized/ settled in the Company’s normal
operating cycle;
II. the asset is intended for sale or consumption;
III. the asset/liability is held primarily for the purpose of trading
IV. the asset/liability is expected to be realized/ settled within twelve months after the
reporting period;
V. the asset is cash or cash equivalent unless it is restricted from being exchanged or
used to settle a liability for at least twelve months after the reporting date;
VI. in the case of a liability, the Company does not have an unconditional right to defer
settlement of the liability for at least twelve months after the reporting date.
All other assets and liabilities are classified as noncurrent. For the purpose of current/non-current
classification of assets and liabilities, the Company has ascertained its normal operating cycle as
twelve months. This is based on the nature of services and the time between the acquisition of
assets or inventories for processing and their realisation in cash and cash equivalents.
5 Basis of preparation
a These Financial statements have been prepared on historical cost basis except for certain financial
instruments and defined benefit plans which are measured at fair value or amortised cost at the end of
each reporting period. Historical cost is generally based on the fair value of the consideration given in
exchange for goods and services. 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. All
assets and liabilities have been classified as current and non-current as per the Group’s normal
operating cycle. Based on the nature of services rendered to customers and time elapsed between
deployment of resources and the realization in cash and cash equivalents of the consideration for such
services rendered, the Group has considered an operating cycle of 12months.
The statement of cash flows have been prepared under indirect method, where by profit or loss is
adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future
operating cash receipts or payments and items of income or expense associated with investing or
financing cash flows. The cash flows from operating, investing and financing activities are segregated.
Non-monetary assets and liabilities that are measured in terms of historical cost in foreign currencies
are not retranslated.
Historical cost is generally based on the fair value of the consideration given in exchange for
goods and services. The standalone Ind AS financial statements of the Company are presented in
Indian Rupee.
b. Property, plant and equipment Measurement at recognition :
An item of property, plant and equipment (PPE) that qualifies as an asset is measured on initial
recognition at cost. Following initial recognition, items of PPE are carried at their cost less
accumulated depreciation and accumulated impairment losses, if any. Item of PPE which reflects
significant cost and has different useful life from the remaining part of PPE is recognized as a
separate component.
The cost of an item of PPE comprises of its purchase price net of discounts, if any including
import duties and other non-refundable taxes or levies and directly attributable cost of bringing
the asset to its working condition for its intended use and the initial estimate of decommissioning,
restoration and similar liabilities, if any. Cost includes cost of replacing a part of a plant and
equipment if the recognition criteria are met. Expenses like plans, designs, and drawings of
buildings or plant and machinery, borrowing cost on qualifying assets, directly attributable to
new manufacturing facility during its construction period are capitalized under the relevant head
of PPE if the recognition criteria are met.
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 and the cost of the item can be measured reliably. The carrying amount of
any component accounted for as a separate asset is derecognized when replaced.
Items such as spare parts, stand-by equipment and servicing equipment that meet the definition of
PPE are capitalized at cost and depreciated over their useful life. Costs in nature of repairs and
maintenance are recognized in the Statement of Profit and Loss as and when incurred.
The Company had elected to consider the carrying value of all its PPE appearing in the Financial
Statements and used the same as deemed cost in the opening Ind AS Balance Sheet prepared on
1st April, 2015.
Capital work in progress and Capital advances :
Cost of assets not ready for intended use, as on the Balance Sheet date, is shown as capital work
in progress. Advances given towards acquisition of fixed assets outstanding at each Balance
Sheet date are disclosed as Other Non-Current Assets
Depreciation :
Depreciation on each part of an item / component of PPE is provided on pro-rata basis using the
Straight-Line Method based on the expected useful life of the asset and is charged to the
Statement of Profit and Loss as per the requirement of Schedule II of the Companies Act, 2013.
The estimated useful life has been assessed based on technical evaluation, taking into account the
nature of the asset and the estimated usage basis management’s best judgement of economic
benefits from those classes of assets.
below : Years Factory Buildings 30
Buildings (other than factory buildings) 60
Plant and Equipment (including continuous process plants)* 10-20
Scientific research equipment* 8
Furniture and Fixtures 8
Office Equipment 5
Vehicles* 5
Information Technology Hardware* 4
Freehold land is not depreciated. Leasehold improvements are amortised over the period of the
lease. *The useful life assessed by the Management is different than those indicated in Schedule
II of the Companies Act, 2013. The useful lives, residual values of each part of an item of PPE
and the depreciation methods are reviewed at the end of each financial year. If any of these
expectations differ from previous estimates, such change is accounted for as a change in an
accounting estimate.
De recognition :
The carrying amount of an item of PPE is derecognized on disposal or when no future economic
benefits are expected from its use or disposal. The gain or loss arising from the derecognition of
an item of PPE is measured as the difference between the net disposal proceeds and the carrying
amount of the item and is recognized in the Statement of Profit and Loss when the item is
derecognized.
c Use of Estimates
The preparation of the financial statements in conformity with the recognition and measurement
principles of Ind AS requires the Management to make estimates and assumptions considered in
the reported amounts of assets and liabilities (including contingent liabilities) and the reported
income and expenses during the year. The Management believes that the estimates used in
preparation of the financial statements are prudent and reasonable. Future results could differ
due to these estimates and the differences between the actual results and the estimates are
recognised in the periods in which the results are known / materialise.
d Revenue Recognition
Revenue from contracts with customers is recognised on transfer of control of promised goods or
services to a customer at an amount that reflects the consideration to which the Company is
expected to be entitled to in exchange for those goods or services. It is measured at transaction
price (net of variable consideration on account of various discounts and schemes offered by the
Company as part of the contract) allocated to that performance obligation. This variable
consideration is estimated based on the expected value of outflow. Revenue (net of variable
consideration) is recognised only to the extent that it is highly probable that the amount will not
be subject to significant reversal when uncertainty relating to its recognition is resolved.
e. Sales of Product
i. Revenue from sale of products is recognised at the point in time when control of the
asset is transferred to the customer. Amounts disclosed as revenue are net of returns
and allowances, trade discounts and rebates. The Company collects Goods & Service
Tax (GST) on behalf of the government and therefore, these are not economic
benefits flowing to the Company. Hence, these are excluded from the revenue.
ii. Variable consideration includes trade discounts, volume rebates and incentives, etc.
The Company estimates the variable consideration with respect to above based on an
analysis of accumulated historical experience. The Company adjusts estimate of
revenue at the earlier of when the most likely amount of consideration we expect to
receive changes or when the consideration becomes fixed.
iii. No significant uncertainty exists regarding the amount of the consideration that will
be derived from the sale of goods.
f Export Incentives
The revenue in respect of duty drawback and similar other export benefits is recognized on post
export basis at the rate at which the entitlements accrue and is included in the ‘sale of products’
g Interest Income
Interest income is recognized on a time proportion basis taking into account the amount
outstanding and the rate applicable
h Government Grants/Subsidies
The Company recognises grant as income when there is a reasonable assurance that the Company
will comply with all necessary conditions attached to them and the grant will be received in
accordance with Ind AS 20, Accounting for Government Grants and Disclosure of Government
Assistance. The Company is entitled to certain non-refundable subsidies from government in
respect of manufacturing units located in specified regions which are measured at amounts
receivable from the government.
The Company has received refundable government loans at below-market rate of interest which
are accounted in accordance with the recognition and measurement principles of Ind AS 109,
Financial Instruments. The benefit of below-market rate of interest is measured as the difference
between the initial carrying value of loan determined in accordance with Ind AS 109 and the
proceeds received.
Income from such benefits is recognised on a systematic basis over the period in which the
related costs that are intended to be compensated by such grants are recognised.
Presentation :
Income from the above grants and subsidies are presented under Revenue from Operations.
i Borrowing costs
Borrowing costs include interest and amortisation of ancillary costs incurred in relation to
borrowings. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the
period from commencement of activities relating to construction/development of the qualifying
asset upto the date of capitalisation of such asset are added to the cost of the assets. Qualifying
asset is one that necessarily takes substantial period of time to get ready for its intended use.
Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the
borrowing costs.
All other borrowing costs are recognised in statement of profit and loss in the period in which
they are incurred
j Income taxes
Tax expense is the aggregate amount included in the determination of profit or loss for the period
in respect of current tax and deferred tax.
Current tax expense for the year is ascertained on the basis of assessable profits computed in
accordance with the provisions of the Income Tax Act, 1961. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively enacted, at the reporting date.
Deferred tax is recognised using the liability method on temporary differences between the
carrying amounts of assets and liabilities in the standalone Ind AS financial statements and the
corresponding tax bases used in the computation of taxable profit. Deferred tax assets are
generally recognised for all deductible temporary differences, the carry forward of unused tax
credits and unused tax losses to the extent that it is probable that taxable profits will be available
against which those deductible temporary differences can be utilised. Such deferred tax assets
and liabilities are not recognised if the temporary difference arises from the initial recognition
(other than in a business combination) of assets and liabilities in a transaction that affects neither
the taxable profit nor the accounting profit
Current and deferred tax are recognised in statement of profit and loss, except when they relate to
items that are recognised in other comprehensive income or directly in equity, in which case, the
current and deferred tax are also recognised in other comprehensive income or directly in equity
respectively. Management periodically evaluates positions taken in the tax returns with respect to
situations in which applicable tax regulations are subject to interpretation and considers whether
it is probable that a taxation authority will accept an uncertain tax treatment. The Company shall
reflect the effect
h Employee Benefits
The Company has schemes of employees benefits such as Provident fund, ESIC and
Compensated absences, which are dealt with as under:
Defined Contribution- Provident fund is the defined contribution scheme. The contribution to
this scheme is charged to statement of profit and loss of the year in which contribution to such
scheme become due and when services are rendered by the employees. The Company has no
obligation other than the contribution payable to the provident fund. If the contribution payable to
the scheme for services received before the balance sheet date exceeds the contribution already
paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution
already paid. If the contribution already paid exceeds the contribution due for services received
before the balance sheet date, then excess is recognized as an asset to the extent that the pre¬
payment will lead to, for example, a reduction in future payment or a cash refund.
Short-term employee benefits- The undiscounted amount of short-term employee benefits
expected to be paid in exchange for the services rendered by employees are recognised on an
undiscounted accrual basis during the year when the employees render the services. These
benefits include performance incentive and compensated absences which are expected to occur
within twelve months after the end of the period in which the employee renders the related
services
• Long-term employee benefits- Compensated absences which are not expected to occur
within twelve months after the end of the period in which the employee renders the
related service are recognised as a liability at the present value of the defined benefit
obligation as at the Balance Sheet date.
• Employee Provident Fund -The eligible employees of the Company are entitled to
receive post-employment benefits in respect of provident fund, in which both the
employees and the Company makes monthly contributions at a specified percentage of
the employees’ eligible salary.
• Leave Encashment -The Company provides for encashment of leave or leave with pay
subject to certain rules. The employees are entitled to accumulate leave subject to certain
limits for future encashment/availment. The Company makes provision for compensated
absences
i Inventories
Raw materials, work-in-progress, finished goods, packing materials, stores, spares, components,
consumables and stock-in-trade are carried at the lower of cost and net realisable value. However,
materials and other items held for use in production of inventories are not written down below
cost if the finished goods in which they will be incorporated are expected to be sold at or above
cost. Net realisable value is the estimated selling price in the ordinary course of business less
estimated cost of completion and estimated costs necessary to make the sale.
Cost of inventory is determined on weighted average basis. Cost of inventory comprises all costs
of purchase, non-refundable duties and taxes, cost of conversion including an appropriate share
of fixed and variable production overheads and all other costs incurred in bringing the inventory
to their present location and condition.
The Company considers factors like estimated shelf life, product discontinuances and ageing of
inventory in determining the provision for slow moving, obsolete and other non-saleable
inventory and adjusts the inventory provisions to reflect the recoverable value of inventory.
j Foreign Currency Transactions
Foreign currency transactions are recorded on initial recognition at the rate prevailing on the date
of transaction. Where export bills are negotiated with the bank, the export sales are recorded at
the rate on the date of negotiation as the said rate approximates the actual rate at the date of the
transaction.
Foreign currency monetary items are reported using the closing rate. Exchange differences
arising on the settlement of monetary items or on reporting the same at the closing rate as at the
balance sheet date are recognized as income or expense in the period in which they arise.
Forward exchange contracts other than those entered in to hedge foreign currency risk of firm
commitments or highly probable forecast transactions are translated at period end exchange rates
and the resultant gains and losses as well as the gains and losses on cancellation of such contracts
are recognised in the statement of Profit & Loss.
Any income or expenses on account of exchange difference either on settlement or on
translation is recognised in the Profit and Loss account except in case of long term liabilities,
where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying
cost of such assets.
The company used forward foreign exchange contract to hedge its exposure against movement in
foreign exchange rates.
k Earnings per share
Basic earnings per share is calculated by dividing the net profit attributable to the equity
shareholders of the Company with the weighted average number of equity shares outstanding
during the financial year, adjusted for treasury shares.
l Exceptional items :
An ordinary item of income or expense which by its size, nature, occurrence or incidence
requires a disclosure in order to improve understanding of the performance of the Company is
treated as an exceptional item in the Statement of Profit and Loss account.
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