I BASIS OF PREPARATION OF FINANCIAL STATEMENTS
A. Accounting Conventions:
The financial statements of the Company have been prepared in accordance with Indian Accounting
Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and with
Companies (Indian Accounting Standards) (Amendment) Rules, 2017 and comply in all material aspects
with the relevant provisions of the Companies Act’2013 to the extent applicable to it.
The Financial Statements have been prepared on a historical cost basis except the following assets and
liabilities which have been measured at fair values:
• Certain Financial Assets and Liabilities that are measured at Fair Value
The accounting policies are applied consistently to all the periods reported in the financial statements
unless otherwise stated.
B. Use of Estimates:
The preparation of financial statements requires management to make estimates and assumptions that
are believed to be reasonable under the circumstances and such estimates and assumptions may affect
the reported amount of assets and liabilities, classification of assets and liabilities into non-current and
current and disclosures relating to contingent liabilities as at the date of financial statements and the
reported amounts of income and expenses during the reporting period. Although the financial
statements have been prepared based on the management’s best knowledge of current events and
procedures/actions, the actual results may differ on the final outcome of the matter/transaction to
which the estimates relate.
C. Property, Plant and Equipment (PPE):
The company did not hold any Property, Plant and Equipment (PPE) at any time during the year.
The cost of an item of property, plant and equipment is recognized as an asset if, and only if:
(a) It is probable that future economic benefits associated with the item will flow to the entity; and
(b) The cost of the item can be measured reliably.
Property, plant and equipment held for use in the supply of goods or services, or for administrative
purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated
impairment losses.
The Company capitalized its Property, Plant and Equipment at a value net of GST/ Other Tax Credits
received/receivable during the year in respect of eligible item of Property, Plant and Equipment.
Subsequent costs are included in the carrying amount of respective Property, Plant and Equipment or
recognized as separate assets as appropriate, only if such costs increase the future benefits from the
existing items beyond their previously assessed standard of performance and cost of such items can be
measured reliably.
Depreciation & Amortization:
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful
lives as prescribed under Part C of Schedule II to the Companies Act 2013, using the straight-line
method. The estimated useful lives, residual values and depreciation method are reviewed at the end of
each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Depreciation for assets purchased/sold during a period is proportionately charged for the period of use.
Derecognition of Property, Plant and Equipment:
An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the
disposal or retirement of an item of property, plant and equipment is determined as the difference
between the sales proceeds and the carrying amount of the asset and are recognised net within “other
income / other expenses” in the Statement of profit and loss.
D. Inventories:
Inventories are measured at the lower of cost and net realisable value. The cost of inventories includes
expenditure incurred in acquiring the inventories, production or conversion costs and other costs
incurred in bringing them to their present location and condition.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated
costs of completion and selling expenses.
The company is in business of trading of Goods so it does not hold any inventory, the inventory
reflecting in the financial statement are either goods in transit or the risk and reward of ownership of
the goods are not transferred to the buyer of the goods.
E. Revenue Recognition:
Revenue is measured at the fair value of the consideration received or receivable from the
customers/parties net of returns, rebates, taxes and discount to the customers and amounts collected
on behalf of third parties. The Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Company and the revenue can be measured reliably, regardless of when the
payment is being made.
Sale of Goods:
The revenue from the sale of goods is recognized at transaction price when the company had
transferred the property in Goods to the buyer for a price and all significant risks and rewards of
ownership had been transferred to the buyer and no significant uncertainty existed as to the amount of
consideration that would be derived from such sale. The recognition event is usually the dispatch of
goods to the buyer such that the Company retains no effective control over the goods dispatched.
Interest Income:
Income from investments and deposits, where appropriate, is taken into revenue in full on declaration
or accrual on time basis and tax deducted at source thereon is treated as advance tax. The interest
income from a financial asset is recognized when it is probable that the economic benefits will flow to
the company and the amount interest income can be measured reliably.
F. Employee Benefits:
1. Short Term Obligations:
Liabilities for salaries, including other monetary and non-monetary benefits that are expected to be
settled wholly within 12 months after the end of the period in which the employees render the related
service are recognised in respect of employees’ services up to the end of the reporting period and are
measured at the amounts expected to be paid when the liabilities are settled.
2. Post-Employment and Other Long-Term Employee Benefits:
Post-Employment and Other Long-Term Employee Benefits schemes are not applicable to the company.
G. Borrowing Costs:
There is no present balance outstanding of borrowings hence no borrowing costs incurred during the
year.
Borrowing costs include
(i) Interest expense calculated using the effective interest rate method,
(ii) Finance charges in respect of finance leases, and
(iii) Exchange differences arising from foreign currency borrowings to the extent that they are regarded
as an adjustment to interest costs.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time to get ready for their intended use or
sale, are added to the cost of those assets, until such time as the assets are substantially ready for their
intended use or sale.
Interest income earned on the temporary investment of specific borrowings pending their expenditure
on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in the statement of profit and loss in the period in which they
are incurred.
H. Operating Segment:
Since the Company engages in trading operations, which by their very nature are all subject to the same
risks and rewards, these activities have been combined into a single segment, the results of which are
shown in the financial statements.
So, the disclosure requirements pursuant to Ind AS-108- “Operating Segments” are not applicable.
I. Taxes On Income:
1. Current Tax:
The provision for current tax is made as per the provisions of the Income Tax Act, 1961.
Taxes on income have been determined based on the tax rates and tax laws that have been enacted or
substantively enacted by the balance sheet date. The current tax liabilities and assets are measured at
the amounts expected to be paid or to be recovered from the taxation authorities as at the balance
sheet date.
The current tax liabilities and assets are offset where the entity has a legally enforceable right to offset
and intends either to settle on a net basis or to realise the assets and settle the liabilities
simultaneously.
The current income tax relating to items recognized outside profit or loss is recognized either in the
Other Comprehensive Income or in Other Equity Directly.
2. Deferred Tax:
Deferred tax is provided on temporary differences between the tax bases of assets and liabilities as per
the provisions of the Income Tax Act, 1961 and their carrying amounts for financial reporting purposes
as at the balance sheet date.
Deferred tax liabilities are recognized for all taxable temporary timing differences. Deferred tax assets
are recognized for all deductible taxable temporary timing differences, the carry forward of unused tax
losses and unused tax credits to the extent to which future taxable profits are expected to be available
against which the deductible temporary differences and the carry forward of unused tax losses and
unused tax credits can be utilized/set-off.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is
settled or the asset is realised based on the tax rates and tax laws that have been enacted or
substantially enacted by the end of the reporting period.
A deferred tax asset is not recognised for the carry forward of unused tax losses to the extent that it is
not probable that future taxable profit will be available against which the unused tax losses will be
utilised. In previous years the Company has closed its manufacturing operations and sold/disposed off
land, plant & machinery and other fixed assets in earlier years and since then not resumed the
manufacturing activities and there is no sound business plan made by the management to revive its
business operations. Hence, in view of the management of the company there is no convincing other
evidence that sufficient taxable profit will be available against which the unused tax losses or unused
tax credits can be utilised by the entity.
J. Impairment of Non-Financial Assets:
The Company assesses, at each reporting date, whether there is an indication that an asset may be
impaired. If any indication exists, or when annual impairment testing for an asset is required, the
company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an
asset’s or cash-generating unit’s (CGU) fair value less costs of disposal and its value in use. Recoverable
amount is determined for an individual asset, unless the asset does not generate cash inflows that are
largely independent of those from other assets or groups of assets.
Impairment loss is recognized when the carrying amount of an asset exceeds recoverable amount
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