A. Significant Accounting policies
A.1. Statement of compliance with Ind AS
These financial statements are prepared in accordance with Indian Accounting Standards (Ind AS)
to comply with the Section 133 of the Companies Act, 2013 ("the 2013 Act") read with Rule 3 of
the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting
Standards) Amendment Rules, 2016, and the relevant provisions and amendments, as applicable.
A.2. Basis of measurement
The Company maintains accounts on accrual basis following the historical cost convention,
except for certain financial assets and liabilities that are measured at fair value in accordance with
Ind AS.
The Company regularly reviews significant unobservable inputs and valuation adjustments. If third
party information is used to measure fair values then the finance team assesses the evidence
obtained from the third parties to support the conclusion that such valuations meet the
requirements of Ind AS, including the level in the fair value hierarchy in which such valuations
should be classified.
Fair value measurements under Ind AS are categorised as below based on the degree to which the
inputs to the fair value measurements are observable and the significance of the inputs to the fair
value measurement in its entirety:
Ý Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities
that the company can access at measurement date;
Ý Level 2 inputs are inputs, other than quoted prices included in level 1, that are observable for the
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
Ý Level 3: inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
When measuring the fair value of an asset or a liability, the Company uses observable market data
as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into
different levels of the fair value hierarchy, then the fair value measurement is categorised in its
entirety in the same level of the fair value hierarchy as the lowest level input that is significant to
the entire measurement.
A.3. Presentation of Financial Statements
The Balance Sheet and the Statement of Profit and Loss are prepared and presented in the format
prescribed in the Schedule III to the Companies Act, 2013 ("the Act"). The statement of cash flows
has been prepared and presented as per the requirements of Ind AS 7 "Statement of Cash flows".
The disclosure requirements with respect to items in the Balance Sheet and Statement of Profit
and Loss, as prescribed in the Schedule III to the Act, are presented by way of notes forming part
of the financial statements along with the other notes required to be disclosed under the notified
Indian Accounting Standards and the SEBI (Listing Obligations and Disclosure Requirements).
B. Use of Estimates and Judgements
The preparation of financial statements in conformity with Ind AS requires that the management
of the company makes estimates and assumptions that affect the reported amounts of income
and expenses of the period, the reported balances of assets and liabilities and the disclosures
relating to contingent liabilities as of the date of the financial statements. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised
prospectively.
Judgements:
Information about judgements made in applying accounting policies that have the most significant
effects on the amounts recognised in the financial statements is included in the following notes:
Note 23: the company's future plan for operations for assessment of going concern
Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties at the reporting date that have a
significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities
within the next financial year is included in the following notes:
Ý Note 1C(D) and 4: recognition of deferred tax assets: availability of future taxable profit against
which deductible temporary differences and tax losses carried forward can be utilised;
Ý Note 1C(D): Impairment of financial assets and financial liabilities
Ý Note 1C(D): Measurement of fair value of financial assets classified at fair value
C. Property, Plant and Equipment (PPE)
i. Recognition and Measurement
PPE is recognized 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. PPE is stated at original
cost net of tax/duty credits availed, if any, less accumulated depreciation, and cumulative
impairment, if any. Cost includes professional fees related to the acquisition of PPE and for
qualifying assets, borrowing costs capitalized in accordance with the company's accounting policy.
ii. Depreciation/Amortization
Depreciation is recognized using straight line method so as to write off the cost of the assets
(other than freehold land and properties under construction) less their residual values over their
useful lives specified in Schedule II to the Companies Act, 2013, or in the case of assets where the
useful life was determined by technical evaluation, over the useful life so determined.
Depreciation method is reviewed at each financial year end to reflect the expected pattern of
consumption of the future economic benefits embodied in the asset. The estimated useful life and
residual values are also reviewed at each financial year end and the effect of any change in the
estimates of useful life/residual value is accounted on prospective basis.
Where cost of a part of the asset ("asset component") is significant to total cost of the asset and
useful life of that part is different from the useful life of the remaining asset, useful life of that
significant part is determined separately and such asset component is depreciated over its
separate useful life.
Depreciation charge for impaired assets is adjusted in future periods in such a manner that the
revised carrying amount of the asset is allocated over its remaining useful life.
Freehold land is not depreciated.
D. Financial instruments
Financial assets and/or financial liabilities are recognized when the company becomes party to a
contract embodying the related financial instruments. All financial assets, financial liabilities and
financial guarantee contracts are initially measured at transaction values and where such values
are different from the fair value, at fair value. Transaction costs that are 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) are added to or deducted from as the case
may be, the fair value of such assets or liabilities, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at fair value through profit
or loss are recognised immediately in profit or loss. In case of interest free or concession loans
given to subsidiary companies, the excess of the actual amount of the loan over initial measure at
fair value is accounted as an equity investment.
Financial assets
Initial recognition
On initial recognition, a financial asset is classified as measured at:
- amortised cost;
- Fair value through other comprehensive income (FVOCI) - debt investment;
- Fair value through profit and loss (FVTPL).
A financial asset is measured at amortised cost if it meets both of the following conditions and is
not designated as at FVTPL:
- it is held within a business model whose objective is to hold assets to collect contractual cash flows;
and
- its contractual terms give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not
designated as at FVTPL:
- it is held within a business model whose objective is achieved by both collecting contractual cash
flows and selling financial assets; and
- its contractual terms give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
All financial assets not classified as measured at amortized cost or FVOCI as described above are
measured at FVTPL.
Subsequent measurement
- Financial assets at FVTPL
These assets are subsequently measured at fair value. Net gains including any interest or dividend
income, are recognized in profit or loss.
- Financial assets at amortized cost
These assets are subsequently measured at amortized cost using the effective interest method.
The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and
losses and impairment are recognized in profit or loss. Any gain or loss on de-recognition is
recognized in profit or loss.
- Financial assets that are measured at FVTOCI,
These assets are subsequently measured at fair value. Income by way of interest, dividend and
exchange difference (on debt instrument) is recognized in profit or loss and changes in fair value
(other than on account of such income) are recognized in Other Comprehensive Income and
accumulated in other equity. On disposal of debt instruments measured at FVTOCI, the cumulative
gain or loss previously accumulated in other equity is reclassified to profit or loss. In case of equity
instruments measured at FVTOCI, such cumulative gain or loss is not reclassified to profit or loss
on disposal of investments.
Derecognition
A financial asset is primarily derecognized when:
1. the contractual right to receive cash flows from the asset has expired, or
2. the company has transferred its rights to receive contractual 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 (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.
On derecognition of a financial asset in its entirety, the difference between the carrying amount
measured at the date of derecognition and the consideration received is recognised in profit or
loss.
Impairment of financial assets
The Company recognizes loss allowances on:
• Financial assets measured at amortized cost;
• Debt investments measured at FVOCI; and
• Trade receivables
The company recognizes impairment loss on trade receivables using expected credit loss (ECL)
model, which involves use of a provision matrix constructed on the basis of historical credit loss
experience as permitted under Ind AS 109 .
For recognition of impairment loss on other financial assets and risk exposure, the Company
determines that whether there has been a significant increase in the credit risk since initial
recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for
impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a
subsequent period, credit quality of the instrument improves such that there is no longer a
significant increase in credit risk since initial recognition, then the entity reverts to recognising
impairment loss allowance based on 12-month ECL.
Financial Liabilities
i) Classification, Subsequent Measurement and Gains and Losses
Financial liabilities, including derivatives and embedded derivatives, which are designated for
measurement at FVTPL are subsequently measured at fair value. Financial guarantee contracts are
subsequently measured at the amount of impairment loss allowance or the amount recognised at
inception net of cumulative amortisation, whichever is higher. All other financial liabilities
including loans and borrowings are measured at amortised cost using Effective Interest Rate (EIR)
method
Derecognition
The Company derecognizes a financial liability when its contractual obligations are discharged or
cancelled, or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows
under the modified terms are substantially different. In this case, a new financial liability based on
the modified terms is recognised at fair value. The difference between the carrying amount of the
financial liability extinguished and the new financial liability with modified terms is recognised in
the profit or loss.
E. Offsetting financial instruments
The financial assets and financial liabilities are offset and presented on net basis in the Balance
Sheet when there is a current legally enforceable right to set-off the recognised amounts and it is
intended to either settle on net basis or to realise the asset and settle the liability simultaneously.
F. Revenue recognition
Sale of Goods
Revenue from contracts with customers is recognised when control of the goods or services are
transferred to the customer at an amount that reflects the consideration to which the Company
expects to be entitled in exchange for those goods or services. For sale of goods, revenue is
recognised when control of the goods has transferred at a point in time i.e. when the goods have
been delivered to the specific location (delivery). Following delivery, the customer has full
discretion over the responsibility, manner of distribution, price to sell the goods and bears the
risks of obsolescence and loss in relation to the goods. A receivable is recognised by the Company
when the goods are delivered to the customer as this represents the point in time at which the
right to consideration becomes unconditional, as only the passage of time is required before
payment is due.
The Company considers the effects of variable consideration, the existence of significant financing
components, noncash consideration, and consideration payable to the customer (if any).
Other Income
(1) Interest income is accrued on a time basis by reference to the principal outstanding and the
effective interest rate.
(2) Dividend income is accounted in the period in which the right to receive the same is
established.
G. Taxation
Income tax comprises current and deferred tax. It is recognised in profit or loss except to the
extent that it relates to a business combination or to an item recognised directly in equity or in
other comprehensive income.
Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for
the year and any adjustment to the tax payable or receivable in respect of previous years. The
amount of current tax reflects the best estimate of the tax amount expected to be paid or
received after considering the uncertainty, if any, related to income taxes. It is measured using tax
rates (and tax laws) enacted or substantively enacted by the reporting date. Current tax assets
and current tax liabilities are offset only if there is a legally enforceable right to set off the
recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or
simultaneously.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and
liabilities in the company's financial statements and the corresponding tax bases used in
computation of taxable profit.
Deferred tax liabilities are generally recognised for all taxable temporary differences including the
temporary differences associated with investments in subsidiaries and associates, and interests in
joint ventures, except where the company is able to control the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the foreseeable
future.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible
temporary differences to the extent that it is probable that future taxable profits will be available
against which they can be used. Future taxable profits are determined based on the reversal of
relevant taxable temporary differences. If the amount of taxable temporary differences is
insufficient to recognise a deferred tax asset in full, then future taxable profits, adjusted for
reversals of existing temporary differences, are considered, based on the business plans for the
company. Deferred tax assets are reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be realised; such reductions are
reversed when the probability of future taxable profits improves.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset
is realised or the liability is settled, based on the laws that have been enacted or substantively
enacted by the reporting date.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would
follow from the manner in which the company expects, at the end of reporting period, to recover
or settle the carrying amount of its assets and liabilities.
Transaction or event which is recognised outside profit or loss, either in other comprehensive
income or in equity, is recorded along with the tax as applicable.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current
tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the
same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and
assets on a net basis or their tax assets and liabilities will be realised simultaneously.
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