2. SIGNIFICANT ACCOUNTING POLICIES
A. REVENUES
Revenues from sale of securities
Revenue from the sale of securities in the course of ordinary activities is measured at the value of the
consideration received or receivable. Revenue is recognized when the significant risks and rewards of
ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs
and possible return of goods can be estimated reliably, there is no continuing effective control over, or
managerial involvement with, the goods, and the amount of revenue can be measured reliably. The timing of
transfers of risks and rewards normally happen upon issue of contract by the intermediary.
Capital Gains
Income/(Loss) from the sale of securities held as Investments is measured at the value of the consideration
received or receivable and reported as Profit/(Loss) on sale of Investments in Securities.
Interest Income
Interest income from a financial asset is recognised when it is probable that the 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 rate applicable, which is the rate that exactly
discounts estimated future cash flows through the expected life of the financial asset to that asset’s net carrying
amount on the initial recognition.
Dividend Income
Dividend income is recognized when the right to receive is established, which is generally when shareholders
approve the dividend.
Rental Income
Rental income from Investment Property and Property, Plant & Equipment is recognised as part of Other
Income in profit or loss on a straight-line basis over the term of the lease except where the rentals are
structured to increase in line with expected general inflation. Lease incentives granted are recognised as an
integral part of the total rental income, over the term of the lease. Rental income from sub-leasing is also
recognised in a similar manner and included under other income.
B. PROPERTY, PLANT AND EQUIPMENT (PPE)
Recognition and measurement:
The Property, Plant and Equipment (PPE) are recorded at cost net of depreciation.
C. INTANGIBLE ASSETS
The Intangibles has been impaired fully.
D. INVENTORIES
The Company does not have any Inventory.
E. FINANCIAL INSTRUMENTS
Initial Recognition:
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair
value through statement of profit and loss, transaction costs that are attributable to the acquisition of the
financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame
established by regulation or convention in the market place (regular way trades) are recognized on the trade
date, i.e., the date that the Company commits to purchase or sell the asset.
Subsequent Recognition:
Non-derivative financial instruments
(i) Financial assets carried at amortized cost: A financial asset is subsequently measured at amortized cost
if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows
and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
(ii) Financial assets at fair value through other comprehensive income: A financial asset is subsequently
measured at fair value through other comprehensive income if it is held within a business model whose
objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual
terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
(iii) Financial assets at fair value through profit or loss: A financial asset which is not classified in any of the
above categories is subsequently fair valued through profit or loss.
(iv) Financial liabilities: Financial liabilities are subsequently carried at amortized cost using the effective
interest method, except for contingent consideration recognized in a business combination which is
subsequently measured at fair value through profit and loss. For trade and other payables maturing within one
year from the Balance Sheet date, the carrying amounts approximate to its fair value due to the short maturity of
these instruments.
(v) Investment in Subsidiaries/Joint ventures / Associates: Investment in subsidiaries / Joint Ventures /
Associates are carried at cost in the separate financial statements. Any gain or losses on disposal of these
investments are recognized in the statement of profit & loss.
De-recognition of Financial Assets:
A financial asset is primarily derecognized when:
• The rights to receive cash flows from the asset have expired, or
• The Company has transferred its rights to receive 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 either (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.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass¬
through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership.
When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor
transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the
Company’s continuing involvement. In that case, the Company also recognizes an associated liability. The
transferred asset and the associated liability are measured on a basis that reflects the rights and obligations
that the Company has retained.
Classification as debt or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of
the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
Equity Instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after
deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
F. FINANCIAL LIABILITIES
Financial liabilities are initially recognized at the fair value of the consideration received less directly attributable
transaction cost.
Subsequent to initial measurement, financial liabilities are measured at amortized cost. The difference in the
initial carrying amount of the financial liabilities and their redemption value is recognized in the statement of
profit & loss over the contractual term using the effective interest rate method. This category includes the
following class of liabilities; trade and other payables, borrowing; and other financial liabilities.
Financial liabilities are further classified as current and non-current depending whether they are payable within
12 months from the balance sheet date or beyond.
Financial liabilities are derecognized when the company is discharged from its obligation; they expire, are
cancelled or replaced by a new liability with substantial modified terms.
Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new liability. The difference in the respective
carrying amounts is recognized in the statement of profit or loss.
G. TRADE RECEIVABLES
There are no trade receivables.
H. LOANS AND ADVANCES
Loans and advances are non-derivative financial assets with fixed and determinable payments. This category
includes the loans, cash and bank balances, other financial assets and other current assets.
Subsequent to initial measurement, loans and receivables are carried at amortized cost based on effective
interest rate method less appropriate allowance for doubtful receivables. Loans and advances are further
classified as current and non-current depending whether they will realize within 12 months from the balance
sheet date or beyond.
I. EARNING PER SHARE
Basic Earnings Per Share is computed by dividing the net profit attributable to the equity shareholders of the
company to the weighted average number of Shares outstanding during the period & Diluted earnings per share
is computed by dividing the net profit attributable to the equity shareholders of the company after adjusting the
effect of all dilutive potential equity shares that were outstanding during the period to the weighted average
number of shares outstanding during the period including the weighted average number of equity shares that
could have issued upon conversion of all dilutive potential
J. TAXATION
Current Tax
Current tax is tax expected, tax payable on the taxable income for the year, using the tax rate enacted at the
reporting date, and any adjustment to the tax payable in respect of the earlier periods.
Current tax assets and liabilities are offset where the company has legal enforceable right to offset and intends
either to settle on net basis, or to realize the assets and settle the liability simultaneously.
Deferred Tax Assets and Liabilities
Deferred tax is recognized for all taxable temporary differences and is calculated based on the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is measured at the tax rates that are expected to be applied when the asset is realized or the
liability is settled, based on the laws that have been enacted or substantively enacted at the reporting date.
Deferred tax assets are recognized only to the extent that it is probable that future taxable profits will be
available against which the assets can be utilized. 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 realized.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset and when the
deferred tax balances relate to taxes levied by the same tax authority on the same taxable entity, or on different
tax entities, but the Group intends to settle current tax liabilities and assets on a net basis or their tax assets
and liabilities will be realized simultaneously.
Current and Deferred Tax for the Year
Current and deferred tax are recognized in the statement of profit & loss, except when they relates to items that
are recognized in other comprehensive income or directly in equity, in which case, the current tax and deferred
tax is recognized directly in other comprehensive income or equity respectively.
K. EMPLOYEE BENEFITS
The company provides for the various benefits plans to the employees. These are categorized into Defined
Benefits Plans and Defined Contributions Plans. Defined contribution plans includes the amount paid by the
company towards the liability for Provident fund to the Employees Provident Fund Organization and Employee
State Insurance fund in respect of ESI and defined benefits plans includes the retirement benefits, such as
gratuity and paid absences (leave benefits) both accumulated and non-accumulated.
a. In respect Defined Contribution Plans, contribution made to the specified fund based on the services
rendered by the employees are charged to Statement of Profit & Loss in the year in which services are
rendered by the employee.
b. Liability in respect of Defined Long Term benefit plan is determined at the present value of the amounts
payable determined using actuarial valuation techniques performed by an independent actuarial at each
balance sheet date using the projected unit credit methods. Re-measurement, comprising actuarial gain and
losses, the effects of assets ceiling (if applicable) and the return on plan assets (excluding interest), is reflected
immediately in the statement of Financial Position with a charge or credit recognized in other comprehensive
income in the period in which they occur. Past Service cost is recognized in the statement of profit & loss in the
period of plan amendment.
c. Liabilities for accumulating paid absences is determined at the present value of the amounts payable
determined using the actuarial valuation techniques performed by an independent actuarial at each balance
sheet date using the projected unit credit method. Actuarial gain or losses in respect of accumulating paid
absences are charged to statement of profit & loss account.
d. Liabilities for short term employee benefits are measured at undiscounted amount of the benefits expected to
be paid and charged to Statement of Profit & Loss in the year in which the related service is rendered.
L. IMPAIRMENT
Financial assets
The company recognizes the impairment on financial assets based on the expected credit loss model for the
financial assets which are not fair value through profit and loss account. Loss allowance on trade receivables,
with no significant financing component is measured at an amount equal to lifetime expected credit loss. For all
financial assets expected credit losses are measured at an amount equal to 12-month ECL unless there has
been significant increase in credit risk from initial recognition in which case these are measured at lifetime
expected credit loss. The amount of expected credit losses or reversal that is required to adjust the loss
allowance at the reporting date to the amount that is required to be recognized is recognized as an impairment
gain or loss in the profit and loss for the period.
Intangible assets, investment property and property, plant and equipment
Intangible assets, investment property and property plant & equipment are evaluated for recoverability wherever
events or changes in circumstances indicate that their carrying amount may not be recoverable.
For impairment testing, assets that do not generate independent cash flows are grouped together into cash
generating units (CGUs).
For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell
and the value in use) is determined on an individual asset basis unless the asset does not generate cash flows
that are largely independent of those from other assets. In such cases, the recoverable amount is determined
for the CGU to which the asset belongs.
If such asset is considered to be impaired, the impairment to be recognized in the statement of profit and loss is
measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount
of the asset. An impairment loss is reversed in the statement of profit & loss if there have been changes in the
estimates used to determine the recoverable amount. The carrying amount is increased to its revised
recoverable amount, provided that this amount does not exceeds the carrying amount that would have been
determined (net of any accumulated amortization or depreciation) had no impairment loss has been recognized
for the asset in prior years.
|