NOTE 3: Significant Accounting
Policies:
Use of estimates and judgments:
i) The preparation of the financial statements, in
conformity with the generally accepted
accounting principal, require estimates and
assumptions to be made that affect the reported
amount of assets and liabilities as at the date of
the financial statements and the reported
amount of revenues and expenses during the
reported period. Difference between the actual
results and estimates are recognized in the period
in which results materialize.
ii) The estimates and judgments used in the
preparation of the financial statements are
continuously evaluated by the Company and are
based on historical experience and various other
assumptions and factors (including expectations
of future events) that the Company believes to be
reasonable under the existing circumstances.
Actual results could differ from those estimates.
Any revision to accounting estimates is
recognized prospectively in current and future
periods.
b) Revenue Recognition:
i) Sales:
Sales comprise sale of services. Revenue from sale
of services (freight & forwarding) is recognized on
accrual basis on completion of job.
ii) Dividend & Other Income:
Dividend income from investments is recognized
when the shareholder’s right to receive payment
has been established (provided that 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 when it is probable that the economic
benefits will flow to the Company and the
amount of income can be measured reliably.
Interest income is accrued on a time basis, by
reference to the principal outstanding and at the
effective interest rate applicable, 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.
c) Property, Plant and Equipment
Property, plant and equipment are stated at cost,
less accumulated depreciation and impairment, if
any. Costs directly attributable to acquisition are
capitalized until the property, plant and
equipment are ready for use, as intended by the
Management.
When significant parts of the plant and
equipment are required to be replaced at
intervals the company depreciates them
separately based on their specific useful lives.
Capital work in progress is carried at cost and
directly attributable expenditure during
construction period which is allocated to the
property, plant and equipment on the
completion of project.
Borrowing costs directly attributable to the
acquisition/construction of a qualifying asset are
capitalized as part of the cost of such asset till
such time the asset is ready for its intended use.
Other borrowing costs are recognised as an
expense in the period in which they are incurred.
Depreciation is provided on Straight line method
as per Companies Act 2013
Gains or Losses arising from de-recognition of
assets are measured as the difference between
the net disposal proceeds and the carrying
amount of the asset and are recognized in the
statement of Profit and loss when the asset is
derecognized.
The residual Values, useful lives and method of
depreciation of property, plant and equipment
are reviewed at each financial year end adjusted
prospectively, if appropriate.
d) Intangible Fixed Assets
Intangible assets are stated at cost less
accumulated amortization and impairment.
Intangible assets are amortized over their
respective individual estimated useful lives on a
straight-line basis, from the date that they are
available for use. The estimated useful life of an
identifiable intangible asset is based on a
number of factors, including the effects of
obsolescence, demand, competition, and other
economic factors (such as the stability of the
industry, and known technological advances),
and the level of maintenance expenditures
required to obtain the expected future cash flows
from the asset. Amortization methods and useful
li es are reviewed periodically including at each
f is Tcial year end.
e mpairment of Non-Financials Assets
The carrying amounts of assets are reviewed at
each reporting date if there is any indication of
impairment based on internal and external
factors.
An impairment loss is recognized wherever the
carrying amount of an asset exceeds its
recoverable amount. An asset's recoverable
amount is the higher of fair value less costs of
disposal and value in use. In assessing value in
use, the estimated future cash flows are
discounted to their present value using pre-tax
discount rate that reflects current market
assessments of the time value of money and the
risks specific to the asset.
In determining fair value less cost of disposal,
recent market transactions are taken into
account. If no such transactions can be identified,
an appropriate valuation model is used.
A previously recognized impairment loss is
further provided or reversed depending on
changes in circumstances.
Where an impairment loss subsequently
reverses, the carrying amount of the asset is
increased to the revised estimate of its
recoverable amount, but so that the increased
carrying amount does not exceed the carrying
amount that would have been determined had
no impairment loss been recognized for the asset
in prior years. A reversal of an impairment loss is
recognized as income immediately.
f) Cash and Cash Equivalents
Cash and cash equivalents in the balance sheet
comprise cash at banks and on hand and
demand deposits with an original maturity of
three months or less and highly liquid
investments that are readily convertible into
known amounts of cash and which are subject to
an insignificant risk of changes in value net of
outstanding bank overdrafts as they are
considered an integral part of the Company’s
cash management.
g) Foreign Currency Transactions and Foreign
Operations
i) The functional currency of the Company is
determined on the basis of the primary economic
environment in which it operates. The functional
currency of the Company is Indian National
Rupee (INR).
ii) In preparing the financial statements the
Company, transactions in currencies other than
the entity’s functional currency (foreign
currencies) are recognized at the rates of
exchange prevailing at the dates of the
transactions.
iii) At the end of each reporting period, monetary
items denominated in foreign currencies are
retranslated at the rates prevailing at that date.
Non-monetary items carried at fair value that are
denominated in foreign currencies are
retranslated at the rates prevailing at the date
when the fair value was determined.
iv) Non-monetary items that are measured in
terms of historical cost in a foreign currency are
not retranslated.
v) Exchange differences on monetary items are
recognized in Statement of Profit and Loss in the
period in which they arise except for:
- Exchange differences on foreign currency
borrowings relating to assets under construction
for future productive use, which are included in
the cost of those assets when they are regarded
as an adjustment to interest costs on those
foreign currency borrowings; and
- Exchange differences on transactions entered
into in order to hedge certain foreign currency
risks.
h) Employee Benefits
The Company has following post-employment
plans:
i) Defined Benefit Plans - Gratuity
1. The liability or asset recognized in the balance
sheet in respect of defined benefit gratuity plan
is the present value of defined benefit
obligations at the end of the reporting period
lessfairvalue of plan assets. The defined benefit
obligation is calculated annually by actuaries
through actuarial valuation using the projected
unit credit method.
2. The Company recognizes the following
changes in the net defined benefit obligation
as an expense in the statement of profit and
loss:
- Service costs comprising current service costs,
past-service costs, gains and losses on
curtailment and non-routine settlements
- Net interest expense or income
3. The net interest cost is calculated by applying
the discount rate to the net balance of the
defined benefit obligation and fair value of plan
assets. This cost is included in employee benefit
expenses in the statement of the profit & loss.
4. Re-measurement comprising of actuarial
gains and losses arising from
-Re-measurement of Actuarial (gains)/losses
-Return on plan assets, excluding amount
recognized in effect of asset ceiling
-Re-measurement arising because of change in
effect of asset ceiling are recognized in the
period in which they occur directly in other
comprehensive income.
Re- measurements are not reclassified to
Statement of Profit and Loss in subsequent
periods.
5) Ind AS 19 requires the exercise of judgment in
relation to various assumptions including
future pay rises, inflation and discount rates and
employee and pensioner demographics.
The Company determines the assumptions in
conjunction with its actuaries, and believes
these assumptions to be in line with best
practice, but the application of different
assumptions could have a significant effect on
the amounts reflected in the income
statement, other comprehensive income and
balance sheet. There may be also
interdependency between some of the
assumptions.
n) Defined Contribution Plans - Provident
fund
1) Under defined contribution plans, provident
fund, the Company pays pre-defined amounts to
separate funds and does not have any legal or
informal obligation to pay additional sums.
Defined Contribution plan comprise of
contributions to the employees’ provident fund
set up as trust and certain state plans like
Employees’ State Insurance. The Company’s
payments to the defined contribution plans are
recognized as expenses during the period in
which the employees perform the services that
the payment covers.
2) A liability for a termination benefit is
recognized at the earlier of when the entity can
no longer withdraw the offer of the termination
benefit and when the entity recognizes any
related restructuring costs.
iii) Short-term and other long-term employee
benefits
1) A liability is recognized for benefits accruing to
employees in respect of wages and salaries,
annual leave and sick leave in the period the
related service is rendered at the undiscounted
amount of the benefits expected to be paid in
exchange for that service.
2) Liabilities recognized in respect of short-term
employee benefits are measured at the
undiscounted amount of the benefits expected
to be paid in exchange for the related service.
3) Liabilities recognized in respect of other
long-term employee benefits are measured at
the present value of the estimated future cash
outflows expected to be made by the Company in
respect of services provided by employees up to
the reporting date.
4) Compensated absences which are not
expected to occur within twelve months after the
end of the period in which the employee renders
the related services are recognized as a liability at
the present value of the obligation as at the
Balance sheet date determined based on an
actuarial valuation.
iv) Taxation
Income tax comprises current and deferred tax.
Income tax expense is recognized in the
statement of profit and loss except to the extent
it relates to items directly recognized in equity or
in other comprehensive income.
1) Current Tax
Current tax is the amount of tax payable based
on the taxable profit for the Year. Taxable profit
differs from ‘profit before tax’ as reported in the
statement of profit and loss because of items of
income or expense that are taxable or
deductible in other years and items that are
never taxable or deductible. The Company’s
current tax is calculated using tax rates that
have been enacted or substantively enacted by
the end of the reporting period.
2) Deferred Tax
Deferred tax is recognized on temporary
differences between the carrying amounts of
assets and liabilities in the financial statements
and the corresponding tax bases used in the
computation of taxable profit. Deferred tax
liabilities are generally recognized for all taxable
temporary differences. Deferred tax assets are
generally recognized for all deductible
temporary differences to the extent that it is
probable that taxable profits will be available
against which those deductible temporary
differences can be utilized. Such deferred tax
assets and liabilities are not recognized if the
temporary difference arises from the initial
recognition (other than in a business
combination) of assets and liabilities in a
transaction that affects neither the taxable
profit nor the accounting profit. In addition,
deferred tax liabilities are not recognized if the
temporary difference arises from the initial
recognition of goodwill.
Deferred tax liabilities are recognized for
taxable temporary differences associated with
investments in subsidiaries and associates, and
interests in joint ventures, except where the
Company is able to control the reversal of the
temporary difference and it is probable that the
temporary difference will not reverse in the
foreseeable future. Deferred tax assets arising
from deductible temporary differences
associated with such investments and interests
are only recognized to the extent that it is
probable that there will be sufficient taxable
profits against which to utilize the benefits of
the temporary differences and they are
expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is
reviewed at the end of each reporting period
and reduced to the extent that it is no longer
probable that sufficient taxable profits will be
available to allow all or part of the asset to be
recovered.
Deferred tax liabilities and assets are measured
at the tax rates that are expected to apply in the
period in which the liability is settled or the asset
realized, based on tax rates (and tax laws) that
have been enacted or substantively enacted by
the end of the reporting period.
Deferred tax assets and liabilities are offset if a
legally enforceable right exists to set off current
tax assets against current tax liabilities and the
deferred tax assets relate to the same taxable
entity and same taxation authority.
3) Earnings Per Share
Basic earnings per share is computed by dividing
the profit/ (loss) for the year by the weighted
average number of equity shares outstanding
during theyear. The weighted average number of
equity shares outstanding during the year is
adjusted for treasury shares, bonus issue, bonus
element in a rights issue to existing shareholders,
share split and reverse share split (consolidation
of shares).
Diluted earnings per share is computed by
dividing the profit/ (loss) for the year as adjusted
for dividend, interest and other charges to
expense or income (net of any attributable taxes)
relating to the dilutive potential equity shares, by
the weighted average number of equity shares
considered for deriving basic earnings per share
and the weighted average number of equity
shares which could have been issued on the
conversion of all dilutive potential equity shares.
Potential equity shares are deemed to be dilutive
only if their conversion to equity shares would
decrease the net profit per share from continuing
ordinary operations. Potential dilutive equity
shares are deemed to be converted as at the
beginning of the period, unless they have been
issued at a later date.
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