Note -1 Company Information and Significant accounting policies CORPORATE INFORMATION
IB Infotech Enterprises Limited (hereinafter referred to as “the Company” is a public limited company domiciled in India and incorporated under the provisions of the Companies Act,1956. The registered office of the Company is situated at 428, Kailash Plaza, Vallabh Baug lane, Ghatkopar ( E), Mumbai - 400 075, India.
The Company's shares are listed on Bombay Stock Exchange (BSE) in India.
SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These accounting policies have been consistently applied to all the years presented by the Company unless otherwise stated.
1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements are prepared as per the provisions of the Companies Act, 2013 and the applicable Indian Accounting Standard (Ind AS). The financial statements have been prepared on historical cost / accrual basis.
2. USE OF ESTIMATES
The preparation of financial statements requires estimates and assumptions that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Differences between the actual results and the estimates are recognised in the period in which the same are known / materialized.
3. CURRENT VERSUS NON CURRENT CLASSIFICATIONS
The Company presents assets and liabilities in the balance sheet based on current / non current classifications. An asset is treated as current when it is:
• Expected to be realized or intended to be sold or consumed in normal operating cycle.
• Held primarily for the purpose of trading.
• Expected to be realized within twelve months after the reporting date, or
• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.
All other assets are classified as non current.
A liability is current when:
• It is expected to be settled in normal operating cycle.
• It is due to be settled within twelve months after the reporting date, or
• There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting date.
All other liabilities are classified as non current.
Deferred tax assets and liabilities are classified as non current assets and liabilities.
Based on the nature of products and services offered by the Company, operating cycles determined is 12 months for the purpose of current and non current classification of assets and liabilities.
Note -1 Company Information and Significant accounting policies
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents.
4. INVENTORIES
Stock-in-trade is valued at lower of cost and net realizable value. Cost is computed based on First in First out (FIFO) basis in respect of procured materials. Cost also includes all charges incurred for bringing the inventories to their present location and condition.
5. CASH FLOW STATEMENTS
Cash Flows are reported using the indirect method, whereby net profit before tax is adjusted for the effect of transactions of non cash nature, any deferral or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flow from operating, investing and financing activities is segregated. For the purpose of Statements of Cash Flows, cash and cash equivalent consist of cash, demand deposits with bank, highly liquid investments and bank balances net of outstanding bank overdrafts.
6. REVENUE RECOGNITION
(a) Revenue from the sale of goods is recognised when the significant risks and rewards in respect of ownership of products are transferred by the Company.
(b) Revenue from product sales is stated net of returns, Goods and Service Tax and applicable trade discounts and allowances.
(c) Revenue is recognized when it is earned and no significant uncertainty exists as to its realization or collection. The Company recognizes revenue when the significant terms of the arrangement are enforceable, services have been delivered and the collectability is reasonably assured.
(d) Interest income from financial assets is recognised when it is probable that economic benefits will flow to the company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipt through the expected life of the financial assets to the asset's net carrying amount on the initial recognition.
7. PROPERTY, PLANT AND EQUIPMENT
Property, Plant and Equipment are recorded at cost less depreciation and impairment. The Company capitalizes all costs relating to Property, Plant and Equipment acquisition and installation of the same and necessary incidental costs.
8. DEPRECIATION / AMORTISATION
(a) Depreciation on additions to Assets is calculated Pro-rata from the date of such additions and similarly on deletion from assets is calculated pro rata up to the date of deletion.
(b) Depreciation on assets except to the extent stated in (a) above, has been provided at the rates and in the manner prescribed in schedule II to the Companies Act, 2013 on Straight Line Method.
9. FOREIGN CURRENCY TRANSACTIONS / TRANSLATION
(a) Foreign currency transactions are recorded at the exchange rate in force at the time transactions are effected. Exchange differences arising on settlement of all transactions are recognized in the profit and loss account.
(b) Monetary items denominated in foreign currency are restated using the exchange rate prevailing at the date of the Balance Sheet and resulting net exchange difference is recognized in the Profit and Loss Account.
(c) 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.
(d) 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
10. EARNING PER SHARE
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
• The after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and
• Weighted average number of equity shares that would have been outstanding assuming the conversion of all the dilutive potential equity
11. CASH AND CASH EQUIVALENTS
Cash compromise cash on the hand and demand deposit with banks. Cash equivalents are short term balances (with an original maturity of 3 months or less from the date of acquisition), and highly liquid time deposits that are readily convertible into known amounts of cash and which are subject to the significant risk of changes in the value
12. EMPLOYEE BENEFITS Short-term employee benefits
(a) Short-term employee benefits such as Salaries, Wages, Bonus, Social security contributions and other non-monetary benefits are provided on an accrual basis.
(b) The employees of the Company are not entitled to carry forward unutilized leaves.
Post-employment benefits
The Company is paying gratuity on monthly basis along with the Salary.
13. BORROWING COSTS
Borrowing costs attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.
14. TAXES ON INCOME
Income Taxes are accounted for in accordance with Indian Accounting Standard 12 (Ind AS 12) “Income Taxes”. Tax expense comprises both current tax and deferred tax. Current tax is measured at the amount expected to be paid or recovered from the tax authorities using the applicable tax rates.
Deferred Income taxes are recognized for the future tax consequences attributable to temporary differences between financial statement carrying amounts of existing assets and liabilities and their tax bases in the financial statements. The effect on deferred tax assets and liabilities of a change in the tax rates is recognized using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which temporary differences can be utilized. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the same taxable entity and the same taxation authority.
15. IMPAIRMENT OF ASSETS
An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to profit and loss account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of the recoverable amount.
16. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the Notes to Accounts. Contingent Assets are neither recognised nor disclosed in the financial statements.
17. LEASE
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assess whether:
• The contract involves the use of an identified asset - this may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;
• The Company has the right to obtain substantially all of the economic benefits from the use of the asset throughout the period of use; and
• The Company has the right to direct the use of the asset. The Company has the right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Company has the right to direct the use of the asset either the Company has the right to operate the asset; or the Company designed the asset in a way that predetermines how and for what purpose it will be used. At inception or on reassessment of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.
Where the Company is the lessee
The Company recognises a right-of-use asset and a lease liability at the lease commencement date except for short-term leases which are less than 12 months and leases of low value assets. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability plus any initial direct costs incurred less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The estimated useful lives of right-of-use assets are determined on the same basis as those of property. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, adjusted for certain remeasurements of the lease liability.
Lease liabilities
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate.Lease payments included in the measurement of the lease liability comprise of fixed payments, including in-substance fixed payments. The lease liabilities are measured at amortised cost using the effective interest method.In addition, the carrying amount of lease liabilities is re-measured if there is a modification arising due to change in the lease term, change in the lease payments or a change in the assessment of an option to purchase the underlying asset. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Company presents right-of-use assets that do not meet the definition of investment property, and lease liabilities, separately in the Balance Sheet Short-term leases and leases of low value assets. The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straightline basis over the lease term.
Where the Company is the lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset is classified as an operating lease. Assets subject to operating leases are included in the property, plant and equipment. Rental income on an operating lease is recognised in the Standalone Statement of Profit and Loss on a straight-line basis over the lease term. Costs, including depreciation, are recognised as an expense in the Statement of Profit and Loss.
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