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 recognised 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
capitalised in accordance with the company's accounting policy.
ii. Depreciation/Amortisation
Depreciation is recognised 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 recognised 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 amortised 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 recognised in profit or loss and changes in fair value
(other than on account of such income) are recognised 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 derecognised 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 recognises loss allowances on:
• Financial assets measured at amortised cost;
• Debt investments measured at FVOCI; and
• Trade receivables
The company recognises 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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