NOTE 1 Significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all
the years presented, unless otherwise stated.
Corporate Information
RACE ECO CHAIN LIMITED ('the Company'), was incorporated on November 22,1999 as a Company under the Companies Act, 1956 ('the Act'). The Company has
registered office at .Shop No. 37, Shanker Market, Connaught Place, Central Delhi, New Delhi, India. The Company is listed on the BSE Limited and National
Stock Exchange of India Limited (Recognised Stock Exchanges in India). The Company is primarily engaged in the business of Plastic Waste , Home furnishing,
Madeup, Bags & Garments and Briquettes.
1.1 Basis of preparation
(i) Compliance with Ind AS
These standalone financial statements ('financial statements') of the Company have been prepared in accordance with the Indian Accounting Standards
(hereinafter referred to as the 'Ind AS') as notified by Ministry of Corporate Affairs ('MCA') under section 133 of the Companies Act, 2013 ('Act') read with the
Companies (Indian Accounting Standards) Rules, 2015, as amended and other relevant provisions of the Act. The Company has uniformly applied the accounting
policies during the periods presented in these financial statements.
Amount in the Financial Statements are presented in Rs. Lakhs, unless otherwise Stated. Certain amounts that are required to be disclosed and do not appear
due to rounding-off are expressed as 0.00.
The financial statements have been prepared on historical cost basis, except for the certain financial assets and financial liabilities measured at fair value (refer
accounting policy regarding financial instruments).All assets and liablities have been classified as current and non current according to company's operating
cycle other critera.
(ii) Use of estimates and judgments
The preparation of financial statements in conformity with Ind AS requires management to make estimates, judgments, and assumptions that affect the
application of accounting policies and the reported amounts of assets and liabilities (including contingent liabilities) and disclosures as of the date of financial
statements and the reported amounts of revenue and expenses for the reporting period. Actual results could differ from these estimates. Accounting estimates
and underlying assumptions are reviewed on an ongoing basis and could change from period to period. Appropriate changes in estimates are recognized in the
period in which the Company becomes aware of the changes in circumstances surrounding the estimates. Any revisions to accounting estimates are recognized
prospectively in the period in which the estimate is revised and future periods.
(iii) Revenue Recognition
Revenue other than for those items to which Ind AS 109 Financial Instruments are applicable) is measured at fair value of the consideration received or
receivable. Revenue is recognised when (or as) the Company satisfies a performance obligation by transferring a promised service (i.e. an Asset) to a customer.
An asset is transfered when (or as) the customer obtains control of that asset. When (or as) a performance obligation is satisfied, the Company recognises as
revenue the amount of the servoce rendered (excluding estimates of variable consideration) that is allocated to that performance obligation.
The Company applies the five-step approach for recognition of revenue:
• Identification of contract(s) with customers;
• Identification of the separate performance obligations in the contract;
• Determination of transaction price;
• Allocation of transaction price to the separate performance obligations; and
• Recognition of revenue when (or as) each performance obligation is satisfied.
Fixed Price maintenance revenue is recognised retably on a staright line basis when serives are performed through or indefinite number of repititive acts overt
a specified period.
(iv) Interest income
Interest income is recognised on a time proportion basis taking into account the amount outstanding and the applicable interest rates. Interest income is
included under the head “Other Income" in the Statement of Profit and Loss.
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 from a financial asset is recognized using the effective interest rate (EIR), which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.
(v) Other Income
Other Income have been recogized on accrual basis in the Financial Statements, except when there is uncertainity of collection.
1.2 Income Tax
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 for each
jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. Current and deferred tax is
recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is
also recognized in other comprehensive income or directly in equity, respectively.
Current tax is measured at the amount of tax expected to be payable on the taxable income for the year as determined in accordance with the provisions ofthe
Income Tax Act, 1961. Current tax assets and current tax liabilities are off set when there is a legally enforceable right to set off the recognized amounts and
there is an intention to settle the asset and the liability on a net basis.
1.3 Deferred Tax
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying
amounts in the financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred tax is
determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the
related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred tax assets are recognized for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be
available to utilize those temporary differences and losses.
1.4 Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one enfity and a financial liability or equity instrument of another entity.
(i) Financial Assets
(a) Initial recognition and measurement:
All financial assets are recognized inifially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transacfion costs that
are attributable to the acquisifion of the financial asset.
(b) Subsequent Measurement:
Debt instruments at amortized cost
a) Financial Asset' is measured at the amortized cost if both the following condifions are met:
b) The asset is held within a business model whose objecfive is to hold assets for collecfing contractual cash flows, and
c) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount
outstanding.
(c) Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorizafion as at amortized cost or as FVTOCI, is
classified as at FVTPL.
(d) De-recognition
The company derecognizes a financial asset when the contractual right to the cash flow from the financial asset end or it transfers the financial asset and the
transfer qualifies for derecogifion under Ind AS 109.
(e) Impairment of Financial Assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognifion of impairment loss on the financial
assets that are debt instruments, and are measured at amortized cost e.g., loans, debt securifies, deposits, trade receivables and bank balance.
ii) Financial liabilities
(a) Initial recognition and measurement
All Financial liabilifies are recognized inifially at fair value and fees of recurring nature are directly recognized in profit or loss as finance cost. The company's
financial liabilifies include trade and other payables.
(b) Subsequent Measurement:
Financial Liabilifies are subsequently carried at amortized cost using the effecfive interest method. For trade and other payables maturing within one year from
the balance sheet date, the carrying amounts approximate fair value due to short maturity of these instruments.
(c) De-recognition
A financial liability is de-recognized when the obligafion under the liability is discharged or cancelled or expired or it transfers the financial liability and the
transfer qualifies for de-recognifion under Ind AS 109.
1.5 Tangible Property, Plant & Equipment (PPE):
Property, plant and equipment are stated at cost of acquisifion less accumulated depreciafion. Cost includes expenditure that is directly attributable to the
acquisifion and installafion of the assets.
(i) Recognition:
The cost of an item of property, plant and equipment is recognized as an asset if, and only if:
It is probable that future economic benefits associated with the item will flow to the enfity; and
The cost of the item can be measured reliably.
Subsequent costs are 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 the item can be measured reliably. The carrying amount of any component
accounted for as a separate asset is derecognized when replaced.
All other repairs and maintenance are charged to profit or loss during the reporfing period in which they are incurred.
(ii) Depreciation methods, estimated useful lives and residual value
Depreciation is calculated using the written down value method to allocate their cost, net of their residual values, over their estimated useful life prescribed
under Schedule II to the Companies Act, 2013. The Company provides pro-rata depreciation from the date of installation till date the assets are sold or
disposed. Leasehold improvements are amortised over the term of underlying lease.
The Residual value and useful life is reviewed annually and any deviation is accounted for as a change in estimate.
The estimated useful lives and residual values of the Property Plant and Equipment are reviewed at the end of each financial year.
Property Plant and Equipment, individually costing less than Rupees five thousand, are fully depreciated in the year of purchase.
Depreciation on the Property Plant and Equipment added/disposed off/discarded during the year is provided from/upto the date when added/disposed
off/discarded.
Gains or losses arising from the retirement or disposal of Property Plant and Equipment are determined as the difference between the net disposal proceeds
and the carrying amount of the asset and recognized as income or expense in the Statement of Profit and Loss.
1.6 Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration.
a. Measurement and recognition of leases as a Lessee:
The Company has adopted lnd AS 116 “Leases" using the cumulative catch-up approach. Company has recognized Right-of-use assets as at 1st September, 2024
for leases previously classified as operating leases and measured at an amount equal to lease liability (adjusted for related prepayments/ accruals).
Initial & Subsequent Measurement: The lease liability is initially measured at amortised cost at the present value of the future lease payments. The lease
payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of
domicile of the leases. Lease liabilities are subsequently measured with a corresponding adjustment to the related right-of-use asset if the Company changes its
assessment on exercise of an extension or a termination option.
The right-of-use assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior
to the commencement date of the lease plus any initial direct costs less any lease incentives. Subsequently, these are measured at cost less accumulated
depreciation and impairment losses, if any.
Amortisation and Impairment: The Company depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of
the end of the useful life of the right-of-use asset or the end of the lease term. The Company also assesses the right-of-use asset for impairment when such
indicators exist.
Lease Liability and Right-of-Use Asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
The Company has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use
asset and lease liability, the payments in relation to these are recognized as an expense in Statement of profit and loss on a systematic basis of lease payment
over the lease term.
b. Measurement and recognition of leases as a Lessor
As a lessor the Company identifies leases as operating and finance lease. A lease is classified as a finance lease if the Company transfers substantially all the risks
and rewards incidental to ownership of an underlying asset.
For Finance leases- amounts due from lessees are recorded as receivables at the Company's net investment in the leases. Finance lease income is allocated to
accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
For Operating leases - Rental income is recognised on a straight-line basis over the term of the relevant lease.
1.7 Intangible Assets
(i) Measurement at recognition:
Intangible assets are recognized where it is probable that the future economic benefit attributable to the assets will flow to the Company and its cost can be
reliably measured. Intangible assets are stated at cost of acquisition less accumulated amortization and impairment, if any.
Expenditure incurred on acquisition / development of intangible assets which are not put / ready to use at the reporting date is disclosed under intangible
assets under development. The Company amortizes intangible assets on a straight-line basis over the five years commencing from the month in which the asset
is first put to use. The Company provides pro-rata amortization from the day the asset is put to use.
(ii) Derecognition:
The carrying amount of an intangible asset is derecognized on disposal or when no future economic benefits are expected from its use or disposal. Gains and
losses on disposals are determined by comparing proceeds with carrying amount and are recognized in the statement of profit and loss when the asset is
derecognized.
1.8 Employee Benefits
(i) Short-term obligations
Short-term employee benefits comprise of employee costs such as salaries, bonus etc. are recognized as an expense at the undiscounted amount in the
Statement of Profit and Loss for the year in which the related services are rendered. The Company recognises the costs of bonus payments when it has a
present obligation to make such payments as a result of past events and a reliable estimate of the obligation can be made.
(ii) Post-employment obligations
Post-employment benefit plans are classified into defined benefit plans and defined contribution plans as under:-
(iii) Defined contribution plan:
Contribution made to the recognised provident fund, employees state insurance scheme etc. which are defined contribution plans, is charged to the Statement
of Profit and Loss in the period in which they occur.
(iv) Defined benefits plan:
The Company has unfunded gratuity as defined benefit plan where the amount that an employee will receive on seperation/retirement is defined by reference
to the employee's length of service and final salary. The liability recognised in the Balance Sheet in respect of gratuity is the present value of defined benefit
obligation at the Balance Sheet date together with the adjustments for unrecognised actuarial gain or losses and the past service costs. The defined benefit
obligation is calculated at or near the Balance Sheet date by an independent actuary using the projected unit credit method. Actuarial gains and losses comprise
experience adjustment and the effects of changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive
income.
1.9 Impairment of non-financial assets
At each reporting date, the Company assesses whether there is any indication based on internal / external factors, that an asset may be impaired. If any such
indication exists, the Company estimates the recoverable amount of the asset. The recoverable amount of asset is the higher of its fair value or value in use.
Value in use is based on the estimated future cashflows, discounted to their present value using a pre-tax discount rate that reflects the current market
assessment oftime value of money and the risks specific to it. If such recoverable amount of the asset or the recoverable amount ofthe cash generating unit to
which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated as an
impairment loss and is recognised in the statement of profit and loss. All assets are subsequently reassessed for indications that an impairment loss previously
recognised may no longer exist. An Impairment loss is reversed if there has been a change in estimates used to determine the recoverable amount. Such a
reversal is made only to the extent that the assets carrying amount would have been determined, net of depreciation or amortization, had no impairment loss
been recognised.
|