1.3 Significant Accounting Policies:
1.3.1.- Property, Plant and Equipment:
Land and buildings held for use in the production or supply of goods or services, or for
administrative purposes, are stated in the balance sheet at cost less accumulated
depreciation and accumulated impairment losses. Freehold or Leasehold land is stated at
historical cost.
Properties in the course of construction for production, supply or administrative purposes
are carried at cost, less any recognised impairment loss. Cost includes professional fees
and, for qualifying assets, borrowing costs capitalised in accordance with the Company
accounting policy. Such properties are classified to the appropriate categories of property,
plant and equipment when completed and ready for intended use.
Fixtures and equipment are stated at cost less accumulated depreciation and accumulated
impairment losses.
The Board of Directors commissioned a valuation of the Plant & Machinery for the Textile
and Pipe Division by registered valuer Vijay Prakash Bhardwaj, with a valuation report
dated March 31, 2025, which indicated impairment of these assets; the original purchase
cost of these impaired assets totaled ^66.28 crores, with a Written Down Value (WDV) of
^6.44 crores as of March 31, 2025, and following the impairment assessment, the valuer
determined the revised value of the Plant & Machinery to be ^3.31 crores, impairment loss
Rs. 3.12 Crores that has been recorded in the company's books as of March 31, 2025.
An item of property, plant and equipment is derecognised upon disposal or when no
future economic benefits are expected to arise from the continued use of the asset. Any
gain or loss arising on the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognised in profit or loss. Impairment loss on Plant And
Machinery has been disclosed in extraordinary items in Profit and loss Account or if any
carried brought balance of other comprehensive Income Balance in connection with
revaluation Gain.
The company has declared land and building of Rs. 29.82 Lacs situated at Daulatpura,
Jaipur held for sale since long times. Refer to IND AS 105 for this to be the case, the assets
must be available for immediate sale in its present condition, for the sale to be highly
probable, the appropriate level of management must be committed to a plan of such assets.
In this regard the company management not provide any future plan to execute the same.
Where an obligation (legal or constructive) exists to dismantle or remove an asset or
restore a site to its former condition at the end of its useful life, the present value of the
estimate cost of dismantling, removing or restoring the site is capitalized along with the
cost of acquisition or construction upon completion and a corresponding liability is
recognized.
Cost of regular comprehensive maintenance work (such as major overhaul) are capitalized
as a separate component if they satisfy the recognition criteria otherwise they are charged
to Profit and Loss during the reporting period in which they are incurred.
1.3.2- Other Intangible Assets: -
Intangible assets with finite useful lives that are acquired separately are carried at cost
less accumulated amortisation and accumulated impairment losses. Intangible assets with
indefinite useful lives are carried at costless accumulated impairment losses.
1.3.3 Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are
expected from use or disposal. Gains or losses arising from derecognition of an intangible
asset, measured as the difference between the net disposal proceeds and the carrying
amount of the asset, are recognised in profit or loss when the asset is derecognised.
1.3.4- Depreciation & Amortisation: -
Depreciation is recognised so as to write off the cost of assets (other than freehold land
and properties under construction) less their residual values over their useful lives, using
the straight-line method as per the provisions of Part C of Schedule II of the Companies Act,
2013 based on useful life and residual value specified therein. The residual values are not
more than 5% of the original cost of the asset's the asset's residual value and useful life are
reviewed and adjusted if appropriate at the end of each reporting period.
Assets held under finance leases are depreciated over their expected useful lives on the
same basis as owned assets. However, when there is no reasonable certainty that
ownership will be obtained by the end of the lease term, assets are depreciated over the
shorter of the lease term and their useful lives.
The Use full life are taken as determined based on technical evaluation done by the
management expert or those specified by schedule II of the company Act,2013 in order to
reflect to the actual usages of the Assets
1.3.5 Capital Work-in-progress/ intangible assets under development and Pre-Operative
Expenses during Construction Period
Capital work-in-progress comprises of the cost of PPE that are not yet ready for their
intended use at the Balance Sheet date.
Cost of material consumed, erection charges thereon along with other related expenses
incurred for the projects are shown as CWIP for capitalization.
Expenditure attributable to construction of fixed assets are identified and allocated on a
systematic basis to the cost of the related asset.
Interest during construction and expenditure (net) allocated to construction are
apportioned to CWIP/ intangible assets under development on the basis of the closing
balance of Specific asset or part of asset being capitalized. The balance, if any, left after
such capitalization is kept as a separate item under the CWIP/intangible assets Schedule.
Claims for price variation / exchange rate variation in case of contracts are accounted for
on acceptance of claims.
Any other expenditure which is not directly or indirectly attributable to the construction
of the Project / construction of the Fixed Asset is charged off to statement of profit and
loss in the period in which they are incurred.
1.3.6 - Impairment of tangible and intangible assets other than goodwill:-
At the end of each reporting period, the Company reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment loss
(if any). When it is not possible to estimate the recoverable amount of an individual asset,
the Company estimates there coverable amount of the cash-generating unit to which the
asset belongs. When a reasonable and consistent basis of allocation can be identified,
corporate assets are also allocated to individual cash-generating units, or otherwise they
are allocated to the smallest Company of cash-generating units for which a reasonable and
consistent allocation basis can be identified.
The impairment losses and reversals are recognised in Statement of Profit and Loss. For
Plant & Machinery and other tangible Assets measured at FVTPL.
Intangible assets with indefinite useful lives and intangible assets not yet available for use
are tested for impairment at least annually, and whenever there is an indication that the
asset may be impaired.
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 a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset for which the estimates of future cash
flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than
its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced
to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a
cash-generating unit) 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 recognised for the asset (or cash¬
generating unit) in prior years. A reversal of an impairment loss is recognised immediately
in profit or loss.
1.3.7 - Borrowing costs: -
Borrowing costs directly attributable to the acquisition, construction or production of
qualifying assets, which are assets that necessarily take a substantial period of time to get
ready for their intended use or sale, are added to the cost of those assets, until such time
as the assets are substantially ready for their intended use or sale.
Interest income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible for
capitalisation.
All other borrowing costs are recognised in statement of profit or loss in the period in
which they are incurred.
Loan from directors (for deposited to one time settlement of Bank of India loans and other)
has been considered as payable on demand and there are no interest provision made in
the profit and loss in the period.
Bank of India has declared Non-Performing Assets (NPA) to the Company on 30.06.2022
(w.e.f. 27.11.2020) as on date outstanding loan amount was 7250.19 Lacs and Bank
Guarantee Rs. 57 lacs total Rs. 7307.19 Lacs. As management has been decided that there
is not made interest provision on NPA declared Bank Loan Account since declaration of
NPA by the banki.e. 1st July 2022.
1.3.8 - Cash and cash equivalents: -
Cash and cash equivalent in the balance sheet comprise of cash at banks and on hand and
demand deposits with an original maturity of three months or less that are readily
convertible into known amounts of cash and which are subject to an insignificant risk of
changes in value.
1.3.9 - Inventories: -
Inventories of Finished Goods, Raw Material and Work in Process are valued at cost or net
realizable value whichever is lower. Cost of inventories includes Cost of manufacturing
and other cost incurred for the manufacturing and in bringing the inventory to their
present location and condition and applicable statutory levies net of under recovered
levies charge to Profit and loss but exclude borrowing cost. Costs are assigned on the basis
of FIFO method. Net realizable value is the estimated selling price in the ordinary course of
business less the estimated cost of completion and estimated cost necessary to make the
sale.
1.3.10 - Revenue recognition: -
(a) Sale of Tubes and Pipes: -
Revenue is recognised to the extent that it is probable that economic benefit will flow to
the Company and that the revenue can be reliably measured. Revenue is measured at the
fair value of the consideration received or receivable. Amount disclosed as revenue are
exclusive of all taxes, and net of returns, trade allowances, rebate and amount collected on
behalf of third party.
Sales are recognized when the Goods are delivered to customers. No element of financing
is deemed present as the sales are made with a credit of 60-75 days which is consistent
with market practice.
(b) Interest income:
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.
1.3.11 - 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.
The tax currently payable is based on 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 current tax is calculated using tax rates that have
been enacted or substantively enacted by the end of the reporting period.
Deferred tax
Deferred tax is recognised 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 recognised for all
taxable temporary differences. Deferred tax assets are generally recognised 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 utilised. Such
deferred tax assets and liabilities are not recognised 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 recognised if the temporary difference arises from the initial
recognition of goodwill.
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 realised, based on tax rates (and
tax laws) that have been enacted or substantively enacted by the end of the reporting
period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that
would follow from the manner in which the Company expects, at the end of the reporting
period, to recover or settle the carrying amount of its assets and liabilities.
Minimum Alternative Tax ('MAT') credit is recognised as an asset only when and to the
extent there is convincing evidence that the Company will pay normal income-tax during
the specified period. In the year in which the MAT credit becomes eligible to be recognised
as an asset, the said asset is created by way of a credit to the statement of profit and loss.
The Company reviews the same at each balance sheet date and writes down the carrying
amount of MAT credit entitlement to the extent there is no longer convincing evidence to
the effect that Company will pay normal income-tax during the specified 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.
Current and deferred tax are recognised in profit or loss, except when they relate to items
that are recognised in other comprehensive income or directly in equity, in which case, the
current and deferred tax are also recognised in other comprehensive income or directly in
equity respectively.
The assessment of the valuation of deferred tax assets, resulting from net operating losses
of previous years and temporary differences, and provisions for uncertain tax positions is
significant to our audit as the calculations are complex and depend on sensitive and
judgmental assumptions. These include, amongst others, long-term future profitability and
local fiscal regulations and developments. As matter of prudence, the company has not
recognized the deferred tax assets. We have tested the management's assessment of the
recoverability of deferred tax assets and future profitability of the company. We also
assessed the applicable fiscal regulations and developments, in particular those related to
changes in the statutory income tax rate and of the statutes of limitation since, as these are
key assumptions underlying the valuation of the deferred tax assets and uncertain tax
positions.
1.3.12 - Earnings per share: -
Basic earnings per share is computed by dividing the profit/(loss) after tax by the
weighted average number of equity shares outstanding during the year. Diluted earnings
per share is computed by dividing the profit/(loss) after tax as adjusted for dividend,
interest and other charges to expense or income 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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