NOTE: 1 SIGNIFICANT ACCOUNTING POLICIES
1.1 CORPORATE IINFORMATION
MODERN MALLEABLES LIMITED is a public company limited by shares and incorporated on 16/10/1982 under
the provisions of Indian Companies Act. The equity shares of the Company are listed on the CSE,BSE Limited.
The registered office of the Company is located at 53B,Mirza Ghalib Street, Kolkata-700016 IN.
2 BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES :
2.1.1 Compliance with Ind AS
These standalone financial statements comply in all material respects with the Indian Accounting Standards
(Ind AS) notified under Section 133 of the Companies Act, 2013 (the ‘Act’) [Companies (Indian Accounting
Standards) Rules, 2015] and other relevant provisions of the Act. These standards and policies have been
consistently applied to all the years presented. The standalone financial statements are presented in Indian
Rupee (Rs), which is the Company’s functional and presentation currency.
2.1.2 Historical cost convention
These standalone financial statements have been prepared on a historical cost basis.
2.2 Current versus Non-current Classification
The Company presents assets and liabilities in the Balance Sheet based on current/non-current classification.
An asset is classified as current when it is:
a. expected to be realised or intended to be sold or consumed in the normal operating cycle.
b. held primarily for the purpose of trading.
c. expected to be realised within twelve months after the reporting period, or
d. cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting period.
All other assets are classified as non-current.
A liability is classified as current when:
a. it is expected to be settled in the normal operating cycle,
b. it is held primarily for the purpose of trading,
c. it is due to be settled within twelve months after the reporting period, or
d. there is no unconditional right to defer settlement of the liability for at least twelve months after the
reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash
and cash equivalents. The Company has identified twelve months as its operating cycle.
2.3 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue from sale of
products are recognised on despatch of goods to customers and are net of GST. Revenues from services
are recognised when such services are rendered as per contract terms.
All other income are accounted for on accrual basis.
2.4 Impairment of non-financial assets
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying
amount of the assets may not be recoverable. An impairment loss is recognised for the amount by which the
asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s
fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current market assessment
of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal,
recent market transactions are taken into account. For the purpose of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups of assets (cash-generating units).
2.5 Inventories
Inventories are valued at lower of cost or market price / fair value. Cost is determined on first-in- first-out
(FIFO) basis.
Cost of finished goods and work-in-progress include all costs of purchases, conversion costs and other
costs incurred in bringing the inventories to their present location and condition. The net realisable value is
the estimated selling price in the ordinary course of business less the estimated costs of completion and
estimated costs necessary.
2.6 Investment and other financial assets
2.6.1 Classification
The Company classifies its financial assets in the following measurement categories:
a) those to be measured subsequently at fair value and
b) those measured at amortised cost.
The classification depends on the Company’s business model for managing the financial assets and
the contractual terms of cash flows.
2.6.2Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of
financial asset not at fair value through profit or loss, transaction costs that are directly attributable to
the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are
expensed in the statement of profit and loss.
2.6.3Impairment of financial assets
The Company assesses on a forward looking basis, the expected credit losses associated with its
assets carried at amortized cost. The impairment methodology applied depends on whether there has
been a significant increase in credit risk.
2.6.4Derecognition of financial assets
A financial asset is derecognised only when
• The rights to receive cash flows from the asset have expired.
• 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. The financial asset is
derecognised if the Company has not retained control of the financial asset. Where the Company
retains control of the financial asset, the asset is continued to be recognised to the extent of continuing
involvement in the financial asset.
2.6.5Income Recognition
a. Interest Income
Interest Income from debt instruments is recognised using the effective interest rate method. The
effective interest rate is the rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to the gross carrying amount of a financial asset. When
calculating the effective interest rate, the Company estimates the expected cash flows by
considering all the contractual terms of the financial instrument but does not consider the expected
credit losses. Interest income is included in finance income in the statement of profit and loss.
b. Dividends
Dividends are recognised in the statement of profit and 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 which is generally when
shareholders approve the dividend.
2.6.6Fair value of Financial Instruments
In determining the fair value of financial instruments, the Company uses a variety of methods and
assumptions that are based on market conditions and risks existing at each reporting date. All
methods of assessing fair values result in general approximation of fair values and such value
may never actually be realised.
2.7 Trade Receivables
Trade receivables are amounts receivable from customers for goods sold in the ordinary course of business.
Trade receivable are initially recognised at fair value and subsequently measured at amortised cost using
the effective interest method, less provision for impairment.
2.8 Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on
hand, deposits held at call with financial institutions, other short-term highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
2.9 Trade Payables
Trade payables represent liabilities for goods and services provided to the Company prior to the end of
financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment
is not due within 12 months after the reporting period. They are recognised initially at their fair value and
subsequently measured at amortised cost using the effective interest method.
2.10 Borrowings
Borrowings are initially recognized at fair value, net of transaction costs incurred. Any difference between
the proceeds (net of transaction costs) and the redemption amount is recognised in the statement of profit
and loss over the period of the borrowings using the effective interest method.
Borrowings are classified as current and non-current liabilities based on repayment schedule agreed with
banks.
2.11 Employee benefits
2.11.1 Short term employee benefits
(i) Short-term employee benefits are recognised as an expense at the undiscounted amount in the
Statement of Profit and Loss for the year in which the related service is rendered.
(ii) Post employment and other long-term employee benefits are recognised as an expense in the
Statement of Profit and Loss for the year in which the employee has rendered services. The
expense is recognised at the present value of the amount payable determined using actuarial
valuations. Actuarial gains and losses in respect of post employment and other long-term employee
benefits are recognised in the Statement of Profit and Loss.
2.11.2 Long term employee benefits
(i) Contribution towards Provident Funds are recognised as expense in the Statement of Profit &
Loss in the period in which the related employee services are rendered. The Provident Fund
contributions are made to Government administered Provident Fund towards which the Company
has no further obligations beyond its monthly contribution.
(ii) Provision for gratuity is provided on the basis of Payment of Gratuity Act,1972 during the current
financial year.
2.12 Income Tax
(i) Current tax is the amount of tax payable on the taxable income for the year determined in accordance
with the provisions of the Income Tax Act,1961.
(ii) Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the
difference between taxable income and accounting income that originate in one period and are capable
of reversal in one or more subsequent periods, measured using the tax rates and tax laws that have
been enacted by the balance sheet date. Deferred tax assets are recognised and carried forward only
to the extent that there is virtual certainty that sufficient future taxable income will be available against
which such deferred tax assets can be realised. In a situation where the Company has unabsorbed
depreciation or carry forward tax losses, deferred tax assets are recognised only if there is virtual
certainty supported by convincing evidence that they can be realised against future taxable profits.
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