1. Corporate Information
The Company was incorporated on 11.02.1991 and a Fresh Certificate of Registration was obtained from Reserve
Bank of India on 20.05.2004 as Non-Banking Finance Company (Not Accepting Public Deposits). It is at Registrar
of Companies, Ahmedabad. The registered address of the Company is 504A, 5th Floor, OZONE, Dr. Vikram Sarabhai
Marg, Vadi-Wadi, Vadodara-390003.
At present the company is engaged in Non-Banking Finance activity consisting of Investment in Shares and
Securities and other investment and financing activities.
2. Basis of Preparation
i. Statement of Compliance
The financial statements comply in all material aspects with Indian Accounting Standards (“Ind AS”) notified
under section 133 of the Companies Act, 2013 (“the Act”), to be read with Rule 3 of the Companies (Indian
Accounting Standards) Rules, 2015 as amended from time to time.
ii. Historical cost convention
The financial statements have been prepared on a historical cost basis, except the following:
• Certain financial assets and liabilities that are measured at fair value;
iii. Functional and presentation currency
These financial statements are presented in Indian Rupees, which is the Company’s functional currency, and
all values are rounded to the nearest lakhs, except otherwise indicated.
iv. Composition of Financial Statements
The financial statements are accordance with Ind AS presentation. The financial statements comprise:
- Balance Sheet
- Statement of Profit and Loss
- Statement of Changes in Equity
- Statement of Cash Flow
- Notes to Financial Statements
3. Material Accounting Policy Information and Other Explanatory Notes
3.1 Material Accounting Policies
A. Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset is treated as current when it is:
- Expected to be realized or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Cash or cash equivalent 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 current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the
reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Based on the nature of products and the time between acquisition of assets for processing and their realization
in cash and cash equivalents, the Company has identified twelve months as its operating cycle for the purpose
of current / noncurrent classification of assets and liabilities.
B. Property, Plant and Equipment:
Recognition and measurement:
Property, plant and equipment are stated at cost, which includes capitalized borrowing costs, less
accumulated depreciation, and impairment loss, if any. Cost includes purchase price, including non¬
refundable duties and taxes, expenditure that is directly attributable to bring the assets to the location and
condition necessary for its intended use and estimated costs of dismantling and removing the item and
restoring the site on which it is located, if any.
If significant parts of an item of property, plant and equipment have different useful lives, then they are
accounted for, as separate items (major components) of property, plant and equipment. Any gains or losses
on their disposal, determined by comparing sales proceeds with carrying amount, are recognized in the
Statement of Profit or Loss.
Subsequent Expenditure:
Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with
the expenditure will flow to the Company.
De-Recognition:
An item of property, plant and equipment is de-recognized upon disposal or when no future economic benefits
are expected to arise from its use. Any gain or loss arising from its de-recognition is measured as the difference
between the net disposal proceeds and the carrying amount of the asset and is recognized in Statement of
Profit and Loss when the asset is de-recognized.
Depreciation methods, estimated useful lives and residual value:
Depreciation on property, plant and equipment is provided based on straight line method and in the manner
prescribed in Schedule II to the Companies Act, 2013.
Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if
appropriate.
Capital Work-in-Progress:
Plant and properties in the course of construction for production, supply or administrative purposes are carried
at cost, less any recognized impairment loss. Cost includes professional fees and, for qualifying asset,
borrowing costs capitalized in accordance with the Company’s accounting policies. Such plant and Properties
are classified and capitalized to the appropriate categories of Property, Plant and Equipment when completed
and ready for intended use. Depreciation of these assets, on the same basis as other property assets,
commences when the asset are ready for their intended use.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet
date is classified as capital advances under “Other Non-Current Assets” and the cost of assets not put to use
before such date are disclosed under ‘Capital work-in-progress’.
C. Impairment of non-financial assets:
At the end of each reporting period, the Company reviews the carrying amounts of its tangible assets to
determine whether there is any indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the assets is estimated in order to determine the extent of the
impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the
Company estimates the recoverable amount of the cash generating unit (CGU) to which the asset belongs.
When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to
individual CGU, or otherwise they are allocated to the smallest group of CGU for which a reasonable and
consistent allocation basis can be identified.
The Company’s corporate assets do not generate independent cash inflows. To determine impairment of a
corporate asset, recoverable amount is determined for the CGUs to which the corporate asset belongs.
An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its estimated recoverable
amount. Impairment losses are recognized in the statement of profit and loss. Impairment loss recognized in
respect of a CGU is allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and
then to reduce the carrying amounts of the other assets of the CGU (or group of CGUs) on a pro rata basis.
Moreover, when an impairment loss subsequently reverses, the carrying amount of the asset is increased to
its revised recoverable amount, provided that this amount does not exceed the carrying amount that would
have been determined (net of any accumulated amortization or depreciation) had no impairment loss been
recognized for the asset in prior years. A reversal of an impairment loss is recognised in the statement of Profit
& Loss immediately.
D. Inventories:
The company is a Non-Banking Financial Company primarily engaged in investing & credit related activities to
which the “IND AS 2- Inventories” is not applicable. The same has been valued as per "IND AS 109 - Financial
instruments".
E. Financial Instruments:
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.
Financial Assets:
Initial recognition, classification and measurement:
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair
value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
However, trade receivables that do not contain a significant financing component are measured at transaction
price.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in three categories:
- Financials Assets at Amortised Cost:
A financial asset is subsequently 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.
- Financial assets at fair value through Other Comprehensive Income (FVOCI)
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.
- Financial assets at fair value through Profit or Loss (FVTPL)
Financial assets which are not classified in any of the above categories are subsequently fair valued through
profit or loss.
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 OCI, there is no subsequent
reclassification of fair value gains and losses to Statement of Profit and Loss. Dividends from such investments
are recognized in Statement of Profit and Loss as other income when the Company’s right to receive payment
is established.
Changes in the fair value of financial assets at fair value through profit and loss are recognized 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.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a company of similar financial
assets) is primarily derecognized (i.e. removed from the Company’s balance sheet) 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.
Impairment of financial assets:
In accordance with Ind AS 109, the company applies expected credit loss (ECL) model for measurement and
recognition of impairment loss on the following financial assets and credit risk exposure:
a) Financial assets that are measured at amortized cost e.g., loans, deposits, trade receivables and bank
balance
b) Trade receivables or any contractual right to receive cash or another financial asset.
ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance
sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the company
does not reduce impairment allowance from the gross carrying amount.
Financial Liabilities:
Initial recognition and Measurement:
The Company’s financial liabilities include trade and other payables, loans and borrowings. Financial liabilities
are classified, at initial recognition, as at fair value through profit and loss or as those measured at amortised
cost.
Subsequent measurement:
The measurement of financial liabilities depends on their classification, as described below:
- Financial liabilities at fair value through Profit and Loss
Financial liabilities at fair value through profit and loss include financial liabilities held for trading. The
Company has not designated any financial liabilities upon initial recognition at fair value through profit and
loss.
- Financial liabilities measured at Amortised Cost
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost
using the effective interest rate method except for those designated in an effective hedging relationship.
Loans and borrowings:
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost
using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as
well as through the EIR amortization process.
Amortized 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 amortization is included as finance costs in the statement of profit
and loss.
Derecognition:
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
Off-setting of 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 recognized amounts and there is an intention to settle on a
net basis, to realize the assets and settle the liabilities simultaneously.
F. Provision for standard / non - performing assets and doubtful debts
The company provide an allowance for loan receivable in the nature of advance based on the prudential norms
issued by the RBI relating to income recognition, asset classification and provisioning for non performing
assets.
G. Cash and cash equivalents:
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits
with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
H. Cash Flow
Cash flows are reported using the Indirect Method, whereby profit for the year is adjusted for the effects of
transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or
payments and item of income or expenses associated with investing or financing cash flows. The cash flows
from operating, investing and financing activities are segregated.
I. Cash dividend:
The Company recognizes a liability to make cash distributions to equity holders when the distribution is
authorized and the distribution is no longer at the discretion of the Company. As per the corporate laws in India,
a distribution is authorized when it is approved by the shareholders. A corresponding amount is recognized
directly in equity.
J. Foreign Currency Translation:
Initial Recognition:
Foreign currency transactions are recorded in the reporting currency by applying to the foreign currency
amount the exchange rate between the reporting currency and the foreign currency at the date of the
transaction.
Conversion:
Foreign currency monetary items, which are unsettled are reported using the closing rate. Differences arising
on settlement or conversion of monetary items are recognised in the statement of profit & loss. Non-monetary
items which are carried in terms of historical cost denominated in a foreign currency are reported using the
exchange rate at the date of the transaction and non-monetary items which are carried at fair value or other
similar valuation denominated in a foreign currency are reported using the exchange rates that existed when
the values were determined.
K. Revenue Recognition:
Revenue from contracts with customers is recognized when control of the goods or services are transferred to
the customer at an amount that reflects the consideration to which the Company expects to be entitled in
exchange for those goods or services. The Company assesses promises in the contract that are separate
performance obligations to which a portion of transaction price is allocated.
Trading in Shares and Securities
The Revenue from actual delivery based sales of shares and securities are recognized as actual sale of shares
and securities in the stock exchange. In case of intra day sale purchase of shares and securities, which are
settled otherwise than actual delivery or transfer, the net difference is only considered in statement of Profit
and Losses.
Income on Loan Transactions
Income on loan transactions is accounted for by using the internal rate of return method. Consequently, a
constant rate of return on net out standing amount is accrued over the period of the contract, except that no
income is recognized on non - performing assets as per prudential norms for income is recognized on non¬
performing assets as per the prudential norms for income recognized issued by the RBI for NBFCs. Interest
income on such assets is recognized on receipt basis. Upfront / Processing fees collected from the customer
for processing loans are primarily towards documentation charges. This is accounted as income when the
amount becomes due provided recovery thereof is certain.
Other Interest income:
Other Interest income is accounted on accrual basis.
Dividends:
Dividend income is recognized when the unconditional right to receive the income is established.
L. Other Income:
Other income is accounted for an accrual basis for except where the receipt of income is uncertain in which
case it is accounted for on receipt basis.
M. Employee benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short term
employee benefits. Benefits such as salaries, wages, bonus, allowances, etc are recognised as actual
amounts due in period in which the employee renders the related services.
Short-term Employee Benefits:
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 employee’s 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.
N. Borrowing costs:
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying
asset are capitalized during the period of time that is required to complete and prepare the asset for its
intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready
for their intended use or sale. All other borrowing costs are expensed 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 capitalization.
O. Income taxes:
The tax expense comprises of current income tax and deferred tax.
Current income tax:
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid
to the taxation authorities. Current Income tax is measured at the amount expected to be paid to the tax
authorities in accordance with the Income Tax Act, 1961 enacted in India. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively enacted, at the reporting date. 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 tax:
Deferred income tax assets and liabilities are recognized for all temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial statements. 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.
|