2. Material Accounting Policies
2.1. Statement of Compliance
These financial statements are prepared in accordance with Indian Accounting Standards (“Ind AS”)
prescribed under section 133 of the Companies Act, 2013 read with Companies (Indian Accounting
Standards) Rules, 2015 and relevant amendment rules issued thereafter. The accounting policies are applied
consistently to all the periods presented in the financial statements. The Ind AS are prescribed under Section
133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules,2015 and relevant
amendment rules issued thereafter.
2.2. Basis of preparation of Financial Statements
The financial statements have been prepared on a historical cost convention and accrual basis, except certain
financial assets and liabilities measured at fair value and plan assets towards defined benefit plans, which are
measured at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date, regardless of whether
that price is directly observable or estimated using another valuation technique
The financial statements have been prepared on going concern basis in accordance with accounting principles
generally accepted in India. Further, the financial statements have been prepared on historical cost basis.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and
services.
The Financial Statements are presented in Indian Rupees which is the Company’s Functional and
Presentation currency, and all values are rounded to the nearest Lakhs (Up to Two Decimals), except where
otherwise indicated
2.3. Property Plant and Equipment:
Property, plant and equipment are stated at cost of acquisition less accumulated depreciation and accumulated
impairment loss if any., Freehold land is carried at historical cost. Historical cost of items of Property, Plant
and Equipment includes expenditure that is directly attributable to the acquisition and installation, borrowing
costs during the construction period and excludes any duties or taxes recoverable. Subsequent cost is included
in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the Company and the cost of such item can be
measured reliably.
If significant parts of an item of Property, Plant and Equipment have different useful lives then they are
accounted for as separate components of Property, Plant and Equipment. The carrying amount of any
component accounted for as a separate asset is de-recognised when replaced or disposed. All other repairs and
maintenance expenses are charged to Statement of Profit and Loss during the reporting period in which they
are incurred.
An item of Property Plant and Equipment is derecognized on disposal or when no future economic benefits
are expected from its use or disposal. Gains or losses arising on retirement or disposal of items of Property,
Plant and Equipment are measured as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognised in the Statement of Profit and Loss when the asset is de-recognized.
Advances paid towards the acquisition of Property, Plant and Equipment outstanding at each reporting date
are classified as Capital Advances under Other Non-Current Assets.
The carrying amount of an item of property, plant and equipment is derecognised
(a) On disposal; or
(b) When no future economic benefits are expected from its use or disposal.
The gain or loss arising from the de recognition of an item of property, plant and equipment is included in the
statement of profit and loss when the item is derecognised. The gain or loss arising from the de recognition of
an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if
any, and the carrying amount of the item.
Estimated useful lives of the assets, based on technical assessment, which are different in certain cases from
those prescribed in Schedule II to the Act, are as follows:
2.4. Depreciation and Amortization.
The company depreciates property, plant and equipment over their estimated useful lives using the straight¬
line value method as prescribed under Part C of Schedule II of the Companies Act, 2013. Depreciation on
additions / deletions has been provided on a pro-rata basis. Each part of an item of property, plant and
equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. The
useful life of the assets is estimated based on historical experience, technical estimates and industry
information. These estimates include an assumption regarding periodic maintenances and appropriate level
of annual capital expenditures to maintain the assets. The assets less than ' 10,000/- are charged off to Profit
and loss account.
Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial
year. Subsequent expenditures relating to property, plant and equipment is capitalized only when it is
probable that future economic benefits associated with these will flow to the company and the cost of the item
can be measured reliably. Repairs and maintenance costs are recognized in net profit in the Statement of Profit
and Loss when incurred. The cost and related accumulated depreciation are eliminated from the financial
statements upon sale or retirement of the asset and the resultant gains or losses are recognized in the Statement
of Profit and Loss. Assets to be disposed of are reported at the lower of the carrying value or the fair value less
cost to sell.
Items of property, plant and equipment retired from active use and held for disposal is stated at the lower of
their carrying amount and net realisable value. Any write-down is recognised in the statement of profit and
loss. While the cost of the fixed asset not ready for its intended use on the balance sheet date are disclosed
under capital work-in-progress, advances paid towards the acquisition of fixed assets which are outstanding
at each balance sheet date are disclosed under 'loans and advances' and grouped as 'non-current'.
The residual value of an asset is not more than 5% of the original cost of that asset. The estimated useful life
and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in
estimate being accounted for on a prospective basis.
Impairment Loss: At each balance sheet date, the Company assesses whether there is any indication that any
property, plant and equipment with finite lives may be impaired. If any such impairment exists the
recoverable amount of an asset is estimated to determine the extent of impairment, if any. Where it is not
possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
2.5. Intangible Assets:
Intangible assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment
losses, if any. Gains or losses arising from the retirement or disposal of an intangible asset are determined as
the difference between the net disposal proceeds and the carrying amount of the asset and recognised as
income or expense in the Statement of Profit and Loss.
Impairment Loss: At each balance sheet date, the Company assesses whether there is any indication that any
intangible assets with finite lives may be impaired. If any such impairment exists the recoverable amount of
an asset is estimated to determine the extent of impairment, if any. Where it is not possible to estimate the
recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash¬
generating unit to which the asset belongs.
2.6. Financial Instruments:
A financial instrument is any contract that gives rise to a financial asset in one entity and a financial liability or
equity instrument in another entity.
A. FINANCIALASSETS
(i) Financial Assets - Initial recognition
In the case of financial assets, not recorded at fair value through profit or loss (FVTPL), financial assets are
recognised initially at fair value plus transaction costs that are directly 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 marketplace (regular way trades) are recognised on the trade
date, i.e., the date that the Company commits to purchase or sell the asset.
(ii) Financial Assets - Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in following categories:
a) Financial Assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a
business model with an objective to hold these assets 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. Interest income from these financial assets is
included in finance income using the effective interest rate ("EIR") method. Impairment gains or losses
arising on these assets are recognised in the Statement ofProfit and Loss.
b) Financial Assets measured at fair value
Financial assets are measured at fair value through other comprehensive income (FVOCI) if these financial
assets are held within a business model with an objective to hold these assets in order to collect contractual
cash flows or to sell these 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.
Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or
losses, interest revenue and foreign exchange gains and losses which are recognised in the Statement of Profit
and Loss. Financial assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value
through profit or loss.
(iii) Impairment of Financial Assets
In accordance with Ind-AS 109, the Company applies the expected credit loss ("ECL") model for
measurement and recognition of impairment loss on financial assets and credit risk exposures.
The Company follows ‘simplified approach’ for recognition of impairment loss allowance on Trade
Receivables. Simplified approach does not require the Company to track changes in credit risk.
Rather, it recognises impairment loss allowance based on lifetime ECL at each reporting date, right from its
initial recognition. For recognition of impairment loss on other financial assets and risk exposure, the
Company determines whether there has been a significant increase in the credit risk since initial recognition.
If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However,
if credit risk has increased significantly, lifetime ECL is used.
If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant
increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss
allowance based on 12-month ECL.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the
contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the
original EIR. Lifetime ECL are the expected credit losses resulting from all possible default events over the
expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from
default events that are possible within 12 months after the reporting date. ECL impairment loss allowance (or
reversal) recognised during the period is recorded as expense/ income in the Statement of Profit and Loss.
(iv) De-recognition of Financial Assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the
financial asset expire, or it transfers the financial asset and substantially all risks and rewards of ownership of
the asset to another entity.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues
to control the transferred asset, the Company recognizes its retained interest in the assets and an associated
liability for amounts it may have to pay.
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the
Company continues to recognise the financial asset and also recognises a collateralised borrowing for the
proceeds received.
B. FINANCIAL LIABILITIES
(i) Financial Liabilities - Initial Recognition
Financial liabilities are classified, at initial recognition, as financial liabilities at FVTPL, loans and
borrowings and payables as appropriate. All financial liabilities are recognised initially at fair value and, in
the case of loans and borrowings and payables, net of directly attributable transaction costs.
(ii) Financial Liabilities - Subsequent measurement
a) Financial liabilities at FVTPL
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated
upon initial recognition as FVTPL. Financial liabilities are classified as held for trading if they are incurred
for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are recognised
in the Statement of Profit and Loss. Financial guarantee contracts issued by the Company are those contracts
that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails
to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts
are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to
the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss
allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less
cumulative amortisation. Amortisation is recognised as finance income in the Statement of Profit and Loss.
b) Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost
using the EIR method. Any difference between the proceeds (net of transaction costs) and the settlement or
redemption of borrowings is recognised over the term of the borrowings in the Statement of Profit and Loss.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs
that are an integral part of the EIR. The EIR amortisation is included as finance costs in the Statement of Profit
and Loss. Where the terms of a financial liability are re-negotiated and the Company issues equity
instruments to a creditor to extinguish all or part of the liability (debt for equity swap), a gain or loss is
recognised in the Statement of Profit and Loss; measured as a difference between the carrying amount of the
financial liability and the fair value of equity instrument issued.
(iii) De-recognition of Financial Liabilities
Financial liabilities are de-recognised when the obligation specified in the contract is discharged, cancelled or
expired. 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 de-recognition of the original liability and recognition of a new liability. The
difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
(iv) Offsetting financial instruments
Financial assets and financial liabilities are offset, and the net amount is reported in the balance sheet if there
is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net
basis, to realise the assets and settle the liabilities simultaneously. The legally enforceable right must not be
contingent on future events and must be enforceable in the normal course of business.
2.7. Cash And Cash Equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term,
highly liquid investments maturing within 90 days from the date of acquisition. Cash and cash equivalents are
readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value.
The Company’s Cash Credit and Overdraft forms part of short-term borrowings, and fixed deposits are shown
as Other Financial Assets - Non-Current and not forming part of Cash and Cash Equivalents.
2.8. Inventory
The Company Inventory consists of Raw Material, Work in Progress and Finished goods where are valued at
Cost or Net Realisable value whichever is lower. Net Realizable Value represents the estimated selling price
in the ordinary course of business less estimated costs of completion and estimated costs necessary to make
the sale. Cost of inventories comprises of cost of purchase, cost of conversion and other costs including
manufacturing overheads incurred in bringing them to their respective present location and condition
2.9. Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value measurement is based on the
presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use
when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant
that would use the asset in its highest and best use. The Company uses valuation techniques that are
appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising
the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorised within the fair value hierarchy, described as follows, based on the lowest level input that is
significant to the fair value measurement as a whole: -
Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable.
Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable. For assets and liabilities that are recognised in the financial statements on a
recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by
re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as
a whole) at the end of each reporting period. The Company’s Valuation team determines the policies and
procedures for both recurring fair value measurement, such as derivative instruments and unquoted financial
assets measured at fair value, and for non-recurring measurement.
2.10 Revenue Recognition:
Revenue is measured at the transaction price that the Company receives or expects to receive as consideration
for goods supplied and services rendered; net of returns and estimates of variable consideration such as
discounts to customers. Revenue from sale of goods excludes goods and services tax which are payable in
respect of sale of goods.
Revenue from the sale of goods and services is recognized when the company performs its obligations to its
customers and the amount of revenue can be measured reliably and recovery of the consideration is probable.
The timing of such recognition in case of sale of goods is when the control over the same is transferred to the
customers which is mainly upon delivery.
The Company recognizes revenue from contracts with customers based on a five-step model, such as to,
identifying the contracts with a customer, identifying the performance obligations in the contract, determine
the transaction price, allocate the transaction price to the performance obligations in the contract and
recognize revenue when (or as) the entity satisfies a performance obligation at a point in time or over time.
The Company satisfies a performance obligation and recognizes revenue over time, if one of the following
criteria is met:
• The customer simultaneously receives and consumes the benefits provided by the Company performance as
the Company performs; or
• The Company’s performance creates or enhances an asset that the customer controls as the asset is created or
enhanced; or
• The Company’s performance does not create an asset with an alternative use to the Company and the entity
has an enforceable right to payment for performance completed to date.
For performance obligations where one of the above conditions are not met, revenue is recognized at the point
in time at which the performance obligation is satisfied. Revenue is recognized upon transfer of control of
promised products or services to customers in an amount that reflects the consideration we expect to receive
in exchange for those products or services.
Revenue is recognized on satisfaction of performance obligation upon transfer of control of promised
products or services to customers in an amount that reflects the consideration the Company expects to receive
in exchange for those products or services.
Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the
revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or
receivable excluding taxes or duties collected on behalf of the government and reduced by any rebates and
trade discount allowed. Contract assets include costs incurred to fulfil a contract with a customer. Where the
amount of consideration received from a customer exceeds the amount of revenue recognized, this gives rise
to a contract liability.
a. Sales Income - Income from sale is booked based on agreements / arrangements with the concerned parties
or as and when revenue can be reliably measured. Revenue from the sale of goods is measured at transaction
price received or receivable, net of returns and allowances, trade discounts and volume rebates.
b. 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
Revenue is recognized on a time proportion basis with reference to the principal outstanding and at the
effective interest rate applicable.
2.11. Employee Benefits
(i) 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 recognized
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.
(ii) Defined contribution plan
The Company's contribution to Provident Fund is determined based on a fixed percentage of the eligible
employees' salary and charged to the Statement of Profit and Loss on accrual basis. The Company has
categorised its Provident Fund contributions as a defined contribution plan since it has no further obligations
beyond these contributions.
(iii) Defined benefit plan
The Company’s liability towards gratuity, being a defined benefit plan is accounted for on the basis of an
independent actuarial valuation based on Projected Unit Credit Method. The liability or asset recognised in
the balance sheet is the present value of the defined benefit obligation at the end of the reporting period less
the fair value of plan assets. Gratuity liability is funded by payments to the trust established for the purpose.
The present value of the defined benefit obligation is determined by discounting the estimated future cash
outflows by reference to market yields at the end of the reporting period on the government bonds that have
terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the
discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. Service cost
and the net interest cost is included in employee benefit expense in the Statement of Profit and Loss. Actuarial
gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are
recognised immediately in ‘other comprehensive income’ as income or expense.
Changes in the present value of the defined benefit obligation resulting from plan amendments or
curtailments are recognised immediately in the Statement of Profit and Loss as past service cost.
2.12. Borrowing Cost
General and specific borrowing costs directly attributable to the acquisition/ construction of qualifying
assets, which are assets that necessarily take a substantial period of time to get ready for their intended
use, are added to the cost of those assets, until such time the assets are substantially ready for their intended
use. All other borrowing costs are recognised as an expense in Statement of Profit and Loss in the period in
which they are incurred. Investment income earned on the temporary investment of specific borrowings
pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for
capitalisation. Other borrowing costs are expensed in the period in which they are incurred.
2.13. Lease
Where Company is a Lessee
Assets acquired under leases where a significant portion of the risks and rewards of ownership are retained by
the lessor are classified as operating leases. In respect of operating lease, rentals and all other expenses are
treated as revenue expenditure.
Operating lease payments are recognized as expenses in the statement of profit and loss on a straight-line
basis over the lease term.
For Finance lease, at the commencement date, Company recognizes a right-of-use asset measured at cost and
a lease liability measured at the present value of the lease payments that are not paid at that date. The lease
payments shall be discounted using the interest rate implicit in the lease, if that rate can be readily determined.
Where Company is a Lessor
Operating lease receipts are recognized as Incomes in the statement of profit and loss on straight-line basis
over the lease term. In respect of the property under lease the revenue is recognized in the statement of profit
and loss account over the lease terms.
2.14. Segment Reporting:
The Company is principally engaged in a single business segment viz. market of wedding cards and other
associated products. The Board of directors of the Company, which has been identified as being the chief
operating decision maker (CODM), evaluates the Company’s performance, allocate resources based on the
analysis of the various performance indicators of the Company as a single unit. Accordingly, there is no other
reportable segment in terms ofInd-AS 108 Operating Segments’.
2.14. Taxation
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 adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.
(i) Current income tax liabilities and/or assets comprise those obligations to, or claims from, fiscal
authorities relating to the current or prior reporting periods, that are unpaid at the reporting date.
(ii) Current tax is payable on taxable profit, which differs from profit or loss in the financial statements.
Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by
the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect
to the applicable tax regulations which may be subject to interpretation and creates provisions, where
appropriate, on the basis of amounts expected to be paid to the tax authorities.
(iii) Deferred income taxes are calculated using the liability method on temporary differences between
the carrying amounts of assets and liabilities and their tax bases. Deferred income tax is determined using tax
rates (and laws) that have been enacted orsubstantially enacted by the end of the reporting period and are
expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is
settled.
(iv) Deferred tax assets are recognised to the extent it is probable that the underlying tax loss or deductible
temporary difference will be utilised against future taxable income. This is assessed based on the Company’s
forecast of future operations results, adjusted for significant non-taxable income and expenses and specific
limits on the use of any unused tax loss or credit. Deferred tax is not provided on the initial recognition of
goodwill, or on the initial recognition of an asset or liability unless the related transaction is a business
combination or affects tax or accounting profit.
(v) Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense
in profit or loss, except where they relate to items that are recognised in other comprehensive income or
directly in equity, in which case the related deferred tax is also recognised in other comprehensive income or
equity, respectively.
(vi) Current tax assets and tax liabilities 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 asset and settle the liability simultaneously
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