1.1 Corporate Information
R R Securities Limited is a public company domiciled in India with its Registered Office at 1
Rushil Bunglow, Sterling City, Bopal, Ahmedabad. The Company has been incorporated
under the provisions of Companies Act applicable in India. The Company is primarily
engaged in the business of Trading in Shares and Securities and Properties..
1.2 Statement of Compliance with Ind AS
These financial statements are prepared on going concern basis in accordance with Indian
Accounting Standards (Ind AS) under the historical cost convention on the accrual basis
except for financial instruments which are measured at fair values (Refer Note No.1.3(d)),
as per the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian
Accounting Standards) (Amendment) Rules, 2016 notified under section 133 of Companies
Act, 2013 (the 'Act') and other relevant provisions of the Act.
Accounting policies have been consistently applied except where a newly issued accounting
standards is initially adopted or a revision to an existing accounting standard requires a
change in the accounting policy hereto in use.
1.3 Basis of Preparation of Financial Statements
(a) Functional and Presentation Currency
These Financial Statements are presented in Indian Rupees (INR), which is also the functional
currency.
(b) Basis of Measurement
The Financial Statements have been prepared on the historical cost basis except certain
Financial Assets & Liabilities, which are measured at Fair Value.
(c) Use of Estimates and Judgements
The Preparation of Financial Statements in conformity with Ind AS requires management to
make judgments, estimates and assumption to be made that affect the application of
accounting policies and the reported amount of assets, liabilities, income, expenses and
disclosures of contingent liabilities at the date of these financial statements. Difference
between the actual results and estimates are recognized in the period in which the results
are known/ materialized. The management believes that the estimates used in the
preparation of the financial statements are prudent and reasonable
(d) Measurement of Fair Values
Fair value of the financial instruments is classified in various fair value hierarchies based on
the following three levels:
Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities.
Level 2: Inputs other than quoted price included within Level 1 that are observable for the
The fair value of financial instruments that are not traded in an active market is determined
using market approach and valuation techniques that maximize the use of observable
market data and rely as little as possible on entity-specific estimates. If significant inputs
required to fair value an instrument are observable, the instrument is included in Level 2.
Level 3: Inputs for the assets or liabilities that are not based on observable market data
(unobservable inputs). If one or more of the significant inputs is not based on observable
market data, the fair value is determined using generally accepted pricing models based on
a discounted cash flow analysis, with the most significant inputs being the discount rate
that reflects the credit risk of counter party.
The fair value of trade receivables, trade payables and other current financial assets and
liabilities is considered to be equal to the carrying amounts of these items due to their
short-term nature. Where such items are non-current in nature, the same has been
classified as Level 3 and fair value determined using discounted cash flow basis. Similarly,
unquoted equity instruments where most recent information to measure fair value is
insufficient, or if there is a wide range of possible fair value measurements, cost has been
considered as the best estimate of fair value.
There has been no change in the valuation methodology for Level 3 inputs during the year.
The Company has not classified any material financial instruments under Level 3 of the fair
value hierarchy. There were no transfers between Level 1 and Level 2 during the year. The
following table presents the fair value hierarchy of assets and liabilities measured at fair
value on a recurring basis.
1.4 Financial Instruments
i. Financial Assets:
i) Classification
The Company classifies its financial assets in the following measurement categories:
• Those measured at amortized cost and
• Those to be measured subsequently at fair value (either thorough other
comprehensive income or through profit or loss)
The classification depends on the Company's business model for managing the financial
assets and the contractual terms of the cash flows
A financial asset is measured at FVTPL at amortized cost if it meets both of the
following conditions and is not designated as at FVTPL:
- The asset is held within a business model whose objective is to hold assets to
collect contractual cash flows; and
- The contractual terms of a financial asset give rise on specified dates to cash
flows that are solely payments of principal and interest on the principal amount
outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions
and is not designated as at FVTPL:
- The asset 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 are not reclassified subsequent to their initial recognition except if
and in the period, the Company changes its business model for managing financial
assets.
ii) Initial Recognition and Measurement
All financial assets are recognised 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.
iv) Derecognition
The Company derecognizes a financial asset when the contractual rights to the cash
flows from the financial asset expire, or it transfers the rights to receive the
contractual cash flows in a transaction in which substantially all of the risks and
rewards of ownership of the financial asset are transferred or in which the
Company neither transfers nor retains
Substantially all of the risks and rewards of ownership and does not retain control
of the financial asset.
If the Company enters into transactions whereby it transfers assets recognized on
its balance sheet, but retains either all or substantially all of the risks and rewards
of the transferred assets, the transferred assets are not derecognized.
ii. Financial Liabilities:
i) Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortized cost or FVTPL. A financial
liability is classified as at FVTPL if it is classified as held- for- trading, or it is a
derivative or it is designated as such on initial recognition. Financial liabilities at
FVTPL are measured at fair value and net gains and losses, including any interest
expense, are recognized in profit or loss. Other financial liabilities are subsequently
measured at amortized cost using the effective interest method. Interest expense
and foreign exchange gains and losses are recognized in profit or loss. Any gain or
loss on derecognition is also recognized in profit or loss.
ii) Derecognition
The Company derecognizes a financial liability when its contractual obligations are
discharged or cancelled, or expire.
The Company also derecognizes a financial liability when its terms are modified and
the cash flows under the modified terms are substantially different. In this case, a
new financial liability based on the modified terms is recognized at fair value. The
difference between the carrying amount of the financial liability extinguished and
the new financial liability with modified terms is recognized in the profit or loss.
iii. Offsetting
Financial assets and financial liabilities are off set and the net amount presented in
the balance sheet when, and only when, the Company currently has a legally
enforceable right to set off the amounts and it intends either to settle them on a net
basis or to realize the asset and settle the liability simultaneously.
iv. Investment in Subsidiaries
Investment in subsidiaries, joint venture and associates are carried at cost less
accumulated impairment losses, if any. Cost includes the purchase cost and other costs
directly attributable to the cost of acquisition of investments. On disposal of
investments in subsidiaries, joint venture and associates, the difference between net
disposal proceeds and the carrying amounts are recognized in the statement of profit
and loss.
1.5 Property, Plant and Equipment
i. Recognition and Measurement
Items of property, plant and equipment are measured at cost, which includes
capitalized borrowing costs, less accumulated depreciation, and accumulated
impairment losses, if any, except freehold land, which is carried at historical cost.
Cost of an item of property, plant and equipment comprises its purchase price,
including import duties and non-refundable purchase taxes, after deducting trade
discounts and rebates, any directly attributable cost of bringing the item to its working
condition for its intended use and estimated costs of dismantling and removing the item
and restoring the site on which it is located.
The cost of a self-constructed item of property, plant and equipment comprises the cost
of materials and direct labor, any other costs directly attributable to bringing the item
to working condition for its Intended use, and estimated costs of dismantling and
removing the item and restoring the site on which it is located.
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.
Useful lives have been determined in accordance with Schedule II to the Companies Act,
2013. The residual values are not more than 5% of the original cost of the asset.
Capital Work-in-progress includes cost of assets at sites and constructions expenditure.
Any gain or loss on disposal of an item of property, plant and equipment is recognized
in profit or loss.
ii. 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.
iii. Depreciation/ Amortization
Depreciation is calculated on cost of items of property, plant and equipment (other than
freehold land and properties under construction) less their estimated residual values
over their estimated useful lives using the WDV and is generally recognized in the
statement of profit and loss. Amortization on leasehold land is provided over the period
of lease.
Depreciation method, useful lives and residual values are reviewed at each financial
year-end and adjusted if appropriate. Based on technical evaluation and consequent
advice, the management believes that its estimates of useful lives best represent the
period over which management expects to use these assets.
Depreciation on additions (disposals) is provided on a pro-rata basis i.e. from (up to) the
date on which asset is ready for use (disposed of).
iv. Derecognition
An item of Property, Plant and equipment is derecognized upon disposal or when no
future economic benefits are expected to arise from the continued use of assets.
1.6 Inventories
Inventories are measured at the lower of cost or net realizable value. The Land is valued at
the amortized cost. The cost of inventories includes expenditure incurred in acquiring the
inventories, production or conversion costs and other costs incurred in bringing them to
their present location and condition.
Net realizable value is the estimated selling price in the ordinary course of business, less the
estimated costs of completion and selling expenses.
The net realizable value of work-in-progress is determined with reference to the selling
prices of related finished products.
The comparison of cost and net realizable value is made on an item-by-item basis.
Excess/shortages if any, arising on physical verification are absorbed in the respective
consumption accounts.
1.7 Impairment
i. Impairment of Financial Assets
The Company recognizes loss allowances for financial assets measured at amortized
cost using expected credit loss model.
At each reporting date, the Company assesses whether financial assets carried at
amortized cost are credit- impaired. A financial asset is 'credit- impaired' when one or
more events that have a detrimental impact on the estimated future cash flows of the
financial asset have occurred.
For trade receivables, the Company always measures the loss allowance at an amount
equal to lifetime expected credit losses.
For all other financial assets, the Company measures loss allowances at an amount
equal to twelve months expected credit losses unless there has been a significant
increase in credit risk from initial recognition in which those are measured at lifetime
expected credit risk.
Lifetime expected credit losses are the expected credit losses that result from all
possible default events over the expected life of a financial asset. Twelve months
expected credit losses are the portion of lifetime expected credit losses that represent
the expected credit losses that result from default events on a financial instrument that
are possible within the twelve months after the reporting date (or a shorter period if
the expected life of the instrument is less than twelve months)
When determining whether the credit risk of a financial asset has increased significantly
since initial recognition and when estimating expected credit losses, the Company
considers reasonable and supportable information that is relevant and available without
undue cost or effort. This includes both quantitative and qualitative information and
analysis, based on the Company's historical experience and informed credit assessment
and including forward-looking information.
The Company assumes that the credit risk on a financial asset has increased significantly
if it is more than 360 days past due. The Company considers a financial asset to be in
default when the borrower is unlikely to pay its credit obligations to the Company in
full.
Measurement of expected credit losses
Expected credit losses are a probability-weighted estimate of credit losses. Credit losses
are measured as the present value of all cash shortfalls (i.e. the difference between the
cash flows due to the Company in accordance with the contract an4 the cash flows that
the Company expects to receive).
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Presentation of allowance for expected credit losses in the balance sheet
Loss allowances for financial assets measured at amortized cost are deducted from the
gross carrying amount of the assets.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to
the extent that there is no realistic prospect of recovery. This is generally the case when
the Company determines (on the basis of availability of the information) that the debtor
does not have assets or sources of income that could generate sufficient cash flows to
repay the amounts subject to the write- off. However, financial assets that are written
off could still be subject to enforcement activities in order to comply with the
Company's procedures for recovery of amounts due.
ii. Impairment of Non-Financial Assets
The Company's non-financial assets are reviewed at each reporting date to determine
whether there is any indication of impairment. If any such indication exists, then the
asset's recoverable amount is estimated.
An impairment loss is recognized if the carrying amount of an asset exceeds its
estimated recoverable amount. Impairment losses are recognized in the statement of
profit and loss.
In respect of assets for which impairment loss has been recognized in prior periods, the
Company reviews at each reporting date whether there is any indication that the loss
has decreased or no longer exists. An impairment loss is reversed if there has been a
change in the estimates used to determine the recoverable amount. Such a reversal is
made only to the extent that the asset's carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortization, if no
impairment loss had been recognized.
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