22. SIGNIFICANT ACCOUNTING POLICIES:
a) Company overview
Sanghvi Brands Limited (formerly known as Sanghvi Brands Private Limited) is a public company, domiciled in
India. It was incorporated on 16th February 2010 under the provisions of the Companies Act, 1956. The
Company is in the business of branding of national and international brands, dealing in goods and services of
such brands and providing spa services. The Company has its registered office at Shivajinagar, Pune.
The Company is listed with BSE Limited on SME platform from November 22, 2017.
b) Basis of preparation of financial statements
The financial statements are prepared in accordance with the Generally Accepted Accounting Principles (“GAAP”)
in India under the historical cost convention on an accrual basis, and are in conformity with mandatory
accounting standards, as prescribed under Section133 of the Companies Act, 2013(‘Act’) read with Rule 7 of the
Companies (Accounts) Rules, 2014, the provisions of the Act .
Accounting policies have been consistently applied except where a newly issued accounting standard is initially
adopted or to a revision an existing accounting standard requires a change in the accounting policy hitherto in
use.
All assets and liabilities have been classified as current or non-current as per the Company’s normal operating
cycle and other criteria set out in the Schedule II to the Companies Act, 2013. The Company has ascertained its
operating cycle as twelve months for the purpose of current and non-current classification of assets and
liabilities.
c) Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
Management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent liabilities at the date of the financial statements and the results of operations during the
reporting period end. Although these estimates are based upon Management’s best knowledge of current events
and actions, actual results could differ from these estimates.
d) Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and
the revenue can be reliably measured. Service income is recognized net of duties and taxes, as and when
services are rendered. Revenue in respect of technical fees is recognised as the related services are performed.
As per agreement entered by the Company with certain Franchisees, the Company is obliged to refund technical
fees received in case of termination of its licensing arrangement with the licensors of the brand within a
specified period which ranges from 1 to 2 years. As per management, refund of technical fees is not likely.
e) Property, Plant and Equipment
Property, Plant and Equipment are stated at cost, less accumulated depreciation until the date of the balance
sheet and impairment losses if any. Cost comprises the purchase price and any attributable cost of bringing the
asset to its working condition for its intended use. Such costs include taxes, duties, freight and incidental
expenses relating to the acquisition and installation of Property, Plant and Equipment. Cost also includes the
interest paid/ payable during the period of construction in respect of borrowed funds pertaining to construction/
acquisition of qualifying Property, Plant and Equipment.
f) Depreciation and Amortization
Depreciation on tangible assets is provided on the Straight-line Method (SLM) over the useful lives of assets as
prescribed in Schedule -II of the Companies Act 2013. Depreciation for assets purchased / sold during a period
is proportionately charged. Intangible assets are amortized on SLM basis over their estimated useful life.
g) Current Assets, loans & advances
Current Assets, loans and advances are approximately of the value stated, if realized in the ordinary course of
business.
h) Impairment
The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment
based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset
exceeds its recoverable amount. The recoverable amount is the greater of the asset’s net selling price and value
in use.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful
life.
i) Income Tax
Tax expense comprises of current and deferred. Current income tax is measured at the amount expected to be
paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflect the
impact of current year timing differences between taxable income and accounting income for the year and
reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the
balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such deferred tax assets can be realized.
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