B.2 Summary of significant Accounting Policies
a Property, plant and equipment
All items of property, plant and equipment are stated at cost (i.e. cost of acquisition or construction) less
accumulated depreciation/accumulated impairment. Such cost includes purchase price, including import
duties and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to
its working condition for its intended use.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are
included in profit or loss within other gains/(losses).
Depreciation and Amortisation:
Depreciation on Property, Plant and Equipment is provided using the Straight Line Method based on
the estimated useful lives of the assets and is charged to the Statement of Profit and Loss as per the
requirement of Schedule II of the Companies Act, 2013.
Impairment
At Balance Sheet date, an assessment is done to determine whether there is any indication of impairment
in the carrying amount of the Company’s assets. If any such indication exists, the asset’s recoverable
amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds
its recoverable amount.
An assessment is also done at each Balance Sheet date whether there is any indication that an impairment
loss recognised for an asset in prior accounting periods may no longer exist or may have decreased. If
any such indication exists the asset’s recoverable amount is estimated. The carrying amount of the fixed
asset is increased to the revised estimate of its recoverable amount but so that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment loss
been recognised for the asset in prior years. A reversal of impairment loss is recognised in the Statement
of Profit and Loss for the year.
After recognition of impairment loss or reversal of impairment loss as applicable, the depreciation charge
for the fixed asset is adjusted in future periods to allocate the asset’s revised carrying amount, less its
residual value (if any), on Written Down Value basis over its remaining useful life.
b Revenue Recognition
I. The revenue is recognized as per contract note of sale of Arbitrage, in case of sale of services on
completion of Job and in case of trading, on raising of invoice and transfer of material to the party.
II. Other income is recognized on accrual basis
III. Dividend is recognized when the right to receive payment is established by the Balance sheet date.
c Investments and other financial assets
(i) Classification
The company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive income, or
through Profit or loss), and
- those measured at amortised cost.
The classification depends on the company’s business model for managing the financial assets and
the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other
comprehensive income. For investments in debt instruments, this will depend on the business model
in which the investment is held. For investments in equity instruments, this will depend on whether
the company has made an irrevocable election at the time of initial recognition to account for the
equity investment at fair value through other comprehensive income.
(ii) Measurement
At initial recognition, the company measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss, transaction costs that are directly attributable
to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value
through profit or loss are expensed in Profit or Loss A/c.
Changes in the fair value of financial assets at fair value through profit or loss are recognised in other
gain/ (losses) in the statement of profit and loss. Impairment losses (and reversal of impairment
losses) on equity investments measured at FVOCI are not reported separately from other changes in
fair value.
Equity Instruments
The company subsequently measures all equity investments at fair value. Where the company’s
management has elected to present fair value gains and losses on equity investments in other
comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit
or loss. Dividends from such investments are recognised in profit or loss as other income when the
company’s right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognised in other
gain/(losses) in the statement of profit and loss.
(iii) Impairment of financial assets
The company assesses on a forward looking basis the expected credit losses associated with its
assets carried at amortised cost and FVOCI debt instruments. The impairment methodology applied
depends on whether there has been a significant increase in credit risk.
(iv) Derecognition of financial assets
A financial asset is derecognised only when:
‘- The company has transferred the rights to receive cash flows from the financial asset or
‘- retains the contractual rights to receive the cash flows of the financial asset, but assumes a
contractual obligation to pay the cash flows to one or more recipients.
Where the company has transferred an asset, the company evaluates whether it has transferred
substantially all risks and rewards of ownership of the financial asset. In such cases, the financial
asset is derecognised. Where the company has not transferred substantially all risks and rewards of
ownership of the financial asset, the financial asset is not derecognised.
(v) Income recognition
Dividend
Dividends are recognised in profit or loss only when the right to receive payment is established, it is
probable that the economic benefits associated with the dividend will flow to the company, and the
amount of the dividend can be measured reliably.
d Transactions in Foreign Currency
Foreign currency transactions are translated into the functional currency using the exchange rates at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation of monetary assets and liabilities denominated in foreign currencies
at year end exchange rates are generally recognised in profit or loss.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement
of profit and loss, within finance costs. All other foreign exchange gains and losses are presented in the
statement of profit and loss on a net basis within other gains/(losses).
e Trade receivables
Judgements are required in assessing the recoverability of overdue trade receivables and determining
whether a provision against those receivables is required. Factors considered include the credit rating of
the counterparty, the amount and timing of anticipated future payments and any possible actions that can
be taken to mitigate the risk of non-payment.
f Employee Benefits
(a) Short-term obligations
Liabilities for wages and salaries, including 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. The liabilities are
presented as current employee benefit obligations in the balance sheet.
(b) Post-employment obligations
i. Defined benefit plans
• Gratuity scheme
Gratuity is accounted on estimate basis and charged to Profit and Loss account on accrual
basis. However as per Ind AS-19 Gratuity has been provided on actuarial valuation, which
is not followed in accordance with Ind AS-19 “Employee Benefit”
g Income tax
The income tax expense or credit for the period is the tax payable on the current period’s taxable income
based on the applicable income tax rate for each jurisdiction (in accordance with the Income Tax Act,
1961) adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and
to unused tax losses.
The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised
using the tax rates that have been enacted or substantively enacted by the Balance Sheet date.
Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and
unabsorbed depreciation (as per taxation laws) only if it is probable that future taxable amounts will be
available to utilise those temporary differences and losses.
Deferred income tax is provided on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in
other comprehensive income or directly in equity, respectively.
The Company has thus disclosed the Income Tax Assets/ Liabilities on a net basis as the same is settled
within the same tax jurisdiction, which is in line with Ind AS 12.
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