Note 2: Material accounting policies
(a) Basis of preparation
(i) Compliance with Ind AS
The Company’s financial statements have been prepared in accordance with the provisions of the Companies Act, 2013
and comply in all material aspects with Indian Accounting Standards (Ind AS) as issued under the Companies (Indian
Accounting Standards) Rules, 2015 and amendments thereof issued by the Ministry of Corporate Affairs in exercise of
the powers conferred by section 133 read with rule 7 of the Companies (Accounts) Rules, 2014. In addition, the guidance
notes/announcements issued by the Institute of Chartered Accountants of India (ICAI) and the guidelines issued by the
Securities and Exchange Board of India are also applied.
The accounting policies as set out below have been applied consistently to all years presented in these financial statements.
Amounts in the financial statements are presented in Indian Rupees in lakhs rounded off to two decimal places as permitted
by Schedule III to the Companies Act, 2013 unless otherwise stated.
The Board of Directors have authorised these financial statements for issue on May 28, 2025.
(ii) Historical cost convention
The financial statements have been prepared on accrual and historical cost basis, except for the following:
• Defined benefit plans - plan assets measured at fair value.
(iii) Applicable Amendments from current financial year
New standards and amendments
Ministry of Corporate Affairs (“MCA”) notifies new standards or amendments to the existing standards under Companies
(Indian Accounting Standards) Rules as issued from time to time. MCA has notified below new standards / amendments
which were effective from 1 April, 2024.
Amendment to Ind AS 116 - Lease Liability in a sale and leaseback
The amendment requires an entity to recognise lease liability including variable lease payments which are not linked to
index or a rate in a way it does not result into gain on Right of use asset it retains.
Introduction of Ind AS 117
MCA notified Ind AS 117, a comprehensive standard that prescribe, recognition, measurement and disclosure requirements to
avoid diversities in practice for accounting insurance contracts and it applies to all companies i.e., to all “insurance contracts”
regardless of the issuer. However, Ind AS 117 is not applicable to the entities which are insurance companies registered
with IRDAI.
The Company has reviewed the new pronouncement and based on its evaluation has determined that these amendments
do not have an impact on the financial statements.
(b) Cashflow Statement:
Cash flows are reported using the indirect method, whereby profit before tax 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 are segregated into operating, investing and financing activities
based on the extent of information available.
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, balances with
banks, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three
months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes
in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
(c) Current Vs. 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:
a) Expected to be realized or intended to be sold or consumed in normal operating cycle
b) Held primarily for the purpose of trading
c) Expected to be realized within twelve months after the reporting period, or
d) Cash or cash equivalents 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:
a) Expected to be settled in normal operating cycle
b) Held primarily for the purpose of trading
c) Due to be settled within twelve months after the reporting period, or
d) There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
(d) Segment reporting
Ind AS 108 operating segment requires Management to determine the reportable segments for the purpose of disclosure in
financial statements based on the internal reporting reviewed by the CODM to assess performance and allocate resource.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker.
The board of directors of the Company are identified as the Chief operating decision maker.
Refer note 32 for segment information presented.
(e) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment
in which the entity operates ('the functional currency'). The financial statements are presented in Indian rupee (INR), which is
the Company's functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets
and liabilities denominated in foreign currencies at year end exchange rates are recognised in profit or loss.
All foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other income or
other expenses as the case may be.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date
when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of
the fair value gain or loss.
(f) Revenue recognition and Other Income
i) Sale of goods
The Company was engaged in manufacture and sale of a range of electronic items.
Sales are recognised when control of the products has transferred, being when the products are delivered to the customer, the
customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect
the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the
risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in
accordance with the sales contract, the acceptance provisions have lapsed, or the company has objective evidence that all
criteria for acceptance have been satisfied.
A receivable is recognised when the goods are delivered, as this is the point in time that the consideration is unconditional
because only the passage of time is required before the payment is due.
The Company has however, not had any sale transactions during the current and previous reporting period.
ii) Services rendered
The Company provides feasibility study services to certain Sharp Group companies in India. Revenue from such services is
recognised as and when services are rendered as per the terms of contract.
Revenue from services measured at fair value which is usually the transaction value net of goods and service tax. The company
has not rendered any such services to its group companies during the year.
iii) Other Income
Other items of income are accounted as and when the right to receive such income arises and it is probable that the economic
benefits will flow to the Company and the amount of income can be measured reliably.
(g) Income tax & Deferred 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 adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused
tax losses.
The current income tax charge is calculated based on the tax laws enacted or substantively enacted at the end of the reporting
period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax
regulation is subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax
treatment. The Company measures its tax balances based on either the most likely amount or the expected value, depending
on which method provides a better prediction of the resolution of the uncertainty.
Deferred income 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 income tax is also not accounted for if it arises from initial recognition
of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither
accounting profit nor taxable profit (tax loss). Deferred income 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.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized
deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that
future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities
and when the deferred tax balances relate to the same taxation authority. 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 realize the asset and settle
the liability simultaneously.
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.
Refer Note 7 of the financial statements.
(h) Impairment of assets
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. For the purposes
of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which
are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets
that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
The management periodically assesses using external or internal source, whether there is an indication that an asset may be
impaired.
(i) Inventories
Raw materials and stores, packing material, work in progress, traded and finished goods
Raw materials and components, stores and packing material, work in progress and finished goods are stated at the lower of cost
and net realizable value. Cost of raw materials comprises cost of purchases. Cost of work-in-progress and finished goods comprises
direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated
on the basis of normal operating capacity. Cost of inventories also include all other costs incurred in bringing the inventories to
their present location and condition. Costs are assigned to individual items of inventory on weighted average basis. Costs of
purchased inventory are determined after deducting rebates and discounts. Net realizable value is the estimated selling price in
the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
Allowance is made to the carrying amount of inventory based on Management’s assessment/technical evaluation and past
experience of the Company taking into account its age, usability, obsolescence, expected realizable value etc.
(j) Financial assets
(i) Classification
The Company classifies its financial assets at amortized cost.
The classification depends on the entity's business model for managing the financial assets and the contractual terms of the
cash flows.
(ii) Recognition
Financial assets are initially recognized when the Company becomes a party to the contractual provisions of the instrument.
(iii) Measurement
At initial recognition, the Company measures a financial asset at fair value. Subsequently these assets are measured at amortised
cost.
(iv) Impairment of financial assets
The Company assesses on a forward-looking basis the expected credit loss associated with its assets carried at amortized cost.
The impairment methodology applied depends on whether there has been a significant increase in credit risk. Refer Note 27 of
financial statements on how the Company determines whether there has been a significant increase in credit risk.
(v) Derecognition of financial assets
A financial asset is derecognized only when:
• The Company has transferred the rights to receive cash flows from the financial asset or
• retains the contractual rights to receive the cash flows of the financial asset but assumes a contractual obligation to pay
the cash flows to one or more recipients.
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards
of ownership of the financial asset. In such cases, the financial asset is derecognized. Where the entity has not transferred
substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognized.
Where the entity neither has transferred a financial asset nor retains substantially all risks and rewards of ownership of the
financial asset, the financial asset is derecognized if the Company has not retained control of the financial asset. Where the
Company retains control of the financial asset, the asset is continued to be recognized to the extent of continuing involvement
in the financial asset.
(k) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable
right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability
simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal
course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
(l) Property, plant and equipment
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less
depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
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 reporting period in which they are incurred.
Depreciation methods, estimated useful lives and residual value
Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated
useful lives:
An item of Property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected
from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is
derecognized.
The management has estimated, supported by independent assessment by professionals, the useful lives of certain Plant and
machinery, Factory buildings, Moulds, jigs and fixtures, Vehicles and Office equipment as per table above, which are lower than
those indicated in Schedule II.
The residual values are not more than 5% of the original cost of the asset. The assets' residual values and useful lives are
reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss
within other income or other expenses as the case may be.
(m) Intangible assets
Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the assets will flow
to the Company and the cost of the asset can be measured reliably. And Intangible assets are recorded at the consideration
paid for acquisition.
(i) Computer software
Computer softwares are shown at historical cost and are subsequently carried at cost less accumulated amortization and
impairment losses.
(ii) Amortization methods and periods
The Company amortizes computer software over a period of 6 years on Straight Line Basis.
(iii) Derecognition
An Intangible asset is derecognized on disposal or when no future economic benefits are expected from use or disposal.
Gains or losses arising from derecognition of an intangible asset is measured as the difference between the net disposal
proceeds and the carrying amount of the asset and is recognized in the statement of profit and loss.
(n) Borrowings
Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in
profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan
facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be
drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable
that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized
over the period of the facility to which it relates.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired.
The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and
the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss as other
income/expenses.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability
for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan arrangement
on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date,
the entity does not classify the liability as current, if the lender agreed, after the reporting period and before the approval of the
financial statements for issue, not to demand payment as a consequence of the breach.
Long-term debt is specified in Ind AS Schedule III as a borrowing having a period of more than twelve months at the time of
origination. The portion of non-current borrowings, which is due for payments within twelve months of the reporting date is
classified under “current borrowings” while the balance amount is classified under non-current borrowings.
(o) Borrowing costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying
asset are capitalised 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.
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.
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