1. Corporate Information
NAKSH PRECIOUS METALS LIMITED (Formerly known as VAKSONS AUTOMOBILES
LIMITED] was incorporated in India under the Companies Act. The Company got
Certificate of Incorporation on 20 February 2003 and is engaged primarily in the
business of Bullion and Jewelry. The Company is listed on Bombay Stock Exchange
in India.
2. Basis of Preparation
The financial statements of the company have been prepared in accordance with
the Indian Accounting Standards (Ind - AS] as per Companies (Indian Accounting
Standards] Rules, 2015 as amended from time to time and notified under section
133 of the Companies Act, 2013. The financial statements have been prepared on a
going concern basis. The Company uses accrual basis of accounting except in case of
significant uncertainties.
2.1
a. IND AS - 1 Presentation of Financial Statement: -
The Company presents its Balance Sheet in order of liquidity.
The Company generally reports financial assets and financial liabilities on a
gross basis in the Balance Sheet. They are offset and reported net only when
Ind AS specifically permits the same or it has an unconditional legally
enforceable right to offset the recognized amounts without being contingent
on a future event. Similarly, the Company offsets incomes and expenses and
reports the same on a net basis when permitted by Ind AS specifically unless
they are material in nature.
Critical accounting estimates and judgments
The preparation of the Company's financial statements requires
management to make use of estimates and judgments. In view of the
inherent uncertainties and a level of subjectivity involved in measurement of
items, it is possible that the outcomes in the subsequent financial years could
differ from those on which the Management's estimates are based.
b. IND AS - 10 Events After the Reporting Period: -
Effects of, events occurred after Reporting Period and having material effect
on financial statements are reflected in the accounts at appropriate places.
c. IND AS - 8 Accounting Policies, Changes in Accounting Estimates &
Errors:
Material items of prior period, non-recurring and extra ordinary items are
shown separately, If any.
d. IND AS - 109 Financial Instruments: -
A) Financial Assets
I. Initial recognition and measurement
All financial assets are recognised initially at fair value when the
parties become party to the contractual provisions of the financial
asset. In case of financial assets which are not recorded at fair
value through profit or loss, transaction costs that are directly
attributable to the acquisition or issue of the financial assets, are
adjusted to the fair value on initial recognition.
II. Subsequent Measurement
The Company classifies its financial assets into various
measurement categories. The classification depends on the
contractual terms of the financial assets' cash flows and the
Company's business model for managing financial assets.
a) Financial Assets measured at amortised cost
A financial asset is measured at amortised 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.
b) Financial Assets measured at fair value through other
comprehensive income (FVOCI)
A financial asset is measured at FVOCI if it is held within a
business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets and
contractual terms of financial asset give rise on specified dates
to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
c) Financial Assets measured at fair value through profit or
loss (FVTPL)
A financial asset which is not classified in any of the above
categories are measured at FVTPL.
B) Financial liabilities
a. Initial recognition and measurement
All financial liabilities are recognized initially at fair value and, in
the case of borrowings and payables, net of directly attributable
transaction costs. The company's financial liabilities include trade
and other payables, loans and borrowings including bank
overdrafts
b. Subsequent Measurement
Financial Liabilities are subsequently carried at amortized cost
using the effective interest method.
C) Derecognition of Financial assets and Financial liabilities
a) Financial Assets
The Company derecognizes a financial asset when the contractual
cash flows from the asset expire or it transfers its rights to receive
contractual cash flows from the financial asset in a transaction in
which substantially all the risks and rewards of ownership are
transferred. Any interest in transferred financial assets that is created
or retained by the Company is recognized as a separate asset or
liability.
b) Financial Liability
A financial liability is derecognised when the obligation under the
liability is discharged, cancelled or expires. Where 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
de-recognition of the original liability and the recognition of a new
liability. The difference between the carrying value of the original
financial liability and the consideration paid is recognised in profit or
loss.
D) Offsetting
Financial assets and financial liabilities are generally reported gross
in the balance sheet. Financial assets and liabilities are offset and the net
amount is presented in the balance sheet when the Company has a legal
right to offset the amounts and intends to settle on a net basis or to
realise the asset and settle the liability simultaneously in all the
following circumstances:
a] The Normal Course of business
b] The Event of Default
c] The Event of insolvency or bankruptcy of the company and/or its
counterparties
E) Impairment of Financial assets
In accordance with Ind AS 109, the Company uses 'Expected Credit Loss'
model (ECL], for evaluating impairment of financial assets other than
those measured at Fair value through profit and loss.
1) Overview of the Expected Credit Loss (ECL)
Expected Credit Loss, at each reporting date, is measured through a loss
allowance for a financial asset:
- At an amount equal to the lifetime expected credit losses if the
credit risk on that financial instrument has increased significantly
since initial recognition.
- At an amount equal to 12 month expected credit losses if the
credit risk on that financial instrument has not increased
significantly since initial recognition.
Lifetime expected credit losses means expected credit losses that result
from all possible default events over the expected life of a financial asset.
12-month expected credit losses means the portion of Lifetime ECL that
represent the ECLs that result from default events on financial assets that
are possible within the 12 months after the reporting date.
The Company performs an assessment, at the end of each reporting
period, of whether a financial assets credit risk has increased significantly
since initial recognition. When making the assessment, the change in the
risk of a default occurring over the expected life of the financial
instrument is used instead of the change in the amount of expected credit
losses
Based on the above process, the company categorizes its loans into three
stages as described below:
For Non - Impaired financial assets
• Stage 1 is comprised of all non-impaired financial assets which
have not experienced a significant increase in credit risk (SICR)
since initial recognition. A 12- Month ECL provision is made for
stage 1 financial assets. In assessing whether credit risk has
increased significantly, the company compares the risk of a default
occurring on the financial asset as at the reporting date with the
risk of a default occurring on the financial asset as at the date of
initial recognition.
• Stage 2 is comprised of all non-impaired financial assets which
have experienced a significant increase in credit risk since initial
recognition. The company recognises lifetime ECL for stage 2
financial assets. In subsequent reporting periods, if the credit risk
of the financial instrument improves such that there is no longer a
significant increase in credit risk since initial recognition, then
entities shall revert to recognizing 12 months ECL Provision.
For impaired financial assets:
Financial assets are classified as stage 3 when there is objective
evidence of impairment as a result of one or more loss events that
have occurred after initial recognition with a negative impact on the
estimated future cash flow of a loan or a portfolio of loans. The
company recognizes lifetime ECL for impaired financial assets.
2) Estimation of Expected Credit Loss
The mechanics of the ECL calculations are outlined below and the key
elements are, as follows:
Probability of Default (PD) -
The Probability of default is an estimate of the likelihood of default over a
given time horizon.
The Company uses historical information where available to determine
PD. Considering the different products and schemes, the Company has
bifurcated its loan portfolio into various pools. For certain pools where
historical information is available, the PD is calculated considering fresh
slippage of past years. For those pools where historical information is not
available, the PD/default rates as stated by external reporting agencies is
considered.
Exposure at Default (EAD) -
The Exposure at default is an estimate of the exposure at a future default
date, considering expected changes in the exposure after the reporting
date, including repayments of principal and interest, whether scheduled
by contract or otherwise, expected drawdowns on committed facilities,
and accrued interest from missed payments.
Loss Given Default (LGD) -
The Loss given default is an estimate of the loss arising in the case where
a default occurs at a given time. It is based on the difference between the
contractual cash flows due and those that the lender would expect to
receive, including from the realization of any collateral.
e. IND AS - 16 Property, Plant and Equipment: -
Property, plant and equipment are carried at historical cost of acquisition
less accumulated depreciation and impairment losses, consistent with the
criteria specified in Ind AS 16 'Property, Plant and Equipment'.
Depreciation on property, plant and equipment
a] Depreciation is provided on a pro-rata basis for all tangible assets on
straight line method over the useful life of assets, except buildings which is
determined on written down value method.
b] Useful lives of assets are determined by the Management by an internal
technical assessment except where such assessment suggests a life
significantly different from those prescribed by Schedule II - Part C of the
Companies Act, 2013 where the useful life is as assessed and certified by a
technical expert.
c] Depreciation on leasehold improvements is provided on straight line
method over the primary period of lease of premises or 5 years whichever
is less.
d] Depreciation on addition to assets and assets sold during the year is being
provided for on a pro rata basis with reference to the month in which such
asset is added or sold as the case may be.
e] Assets having unit value up to Rs. 5,000 is depreciated fully in the financial
year of purchase of asset.
f] An item of property, plant and equipment and any significant part initially
recognised is derecognised upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on
derecognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset] is included under
other income in the Statement of Profit and Loss when the asset is
derecognised.
g) The residual values, useful lives and methods of depreciation of property,
plant and equipment are reviewed at each financial year end and adjusted
prospectively, if appropriate.
f. IND AS - 24 Related Party Disclosure: -
The disclosures of transaction with the related parties as defined in the
related parties as defined in the Accounting Standard are given in notes to
account.
g. IND AS - 33 Earnings Per Share: -
Basic earnings per share are calculated by dividing the net profit or loss
attributable to equity shareholders (after deducting preference dividends
and attributable taxes) by the weighted average number of equity shares
outstanding during the period.
Partly paid equity shares are treated as a fraction of equity share to the
extent that they are entitled to participate in dividends relative to a fully paid
equity share during the reporting period.
The Weighted average number of equity shares outstanding during the
period is adjusted for the events such as bonus issue, right issue that have
changed the number of equity shares.
h. IND AS - 12 Income Taxes: -
Current Tax: -
Current tax assets and liabilities are measured at the amount expected to be
recovered from or paid to the taxation authorities, in accordance with the
Income Tax Act, 1961 and the Income Computation and Disclosure Standards
(ICDS) prescribed therein. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted, at the reporting
date.
Current tax relating to items recognised outside profit or loss is recognised
in correlation to the underlying transaction either in OCI or directly in other
equity. Management periodically evaluates positions taken in the tax returns
with respect to situations in which applicable tax regulations are subject to
interpretation and establishes provisions where appropriate.
Deferred Taxes: -
Deferred tax is provided using the Balance Sheet approach on temporary
differences between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences
and deferred tax assets are recognized for deductible temporary differences
to the extent that it is probable that taxable profits will be available against
which the deductible temporary differences can be utilized
The carrying amount of deferred tax assets is reviewed at each reporting
date and reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the deferred tax asset to
be utilised. Unrecognized deferred tax assets, if any, are reassessed at each
reporting date and are recognized to the extent that it has become probable
that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply in the year when the asset is realised or the liability is
settled, based on tax rates (and tax laws] that have been enacted or
substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised
either in OCI or in other equity.
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 taxes relate to the same taxable entity and the
same taxation authority.
|