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3 Summary of Significant Accounting Policies
This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been
consistently applied to all the years presented, unless otherwise stated.
The Company follows the mercantile system of accounting and recognizes income and expenditure on an accrual basis.
Cash And Cash Equivalents
Cash comprises cash on hand and demand deposit with banks. Cash equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash on hand, 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.
Property, plant and equipment
The Company has elected to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements
as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost in accordance with the exemption
provided under IND AS 101.
Plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any such cost includes the cost of
replacing part of the plant and equipment and borrowing its for long-term construction projects if the recognition criteria are met. When
significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their
specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a
replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.
Depreciation on property, plant and equipment is calculated on a WDV basis using the rates arrived at based on the useful lives estimated by the
management which coincides with the rates as per Schedule II of the Companies Act, 2013. The useful life of major computer is 3 years.
Revenue Recognition
The Company has adopted Ind AS 115, Revenue from Contracts with Customers, with effect from 01 April 2018.The Company has applied the
following accounting policy for revenue recognition:
Revenue from contracts with customers:
The Company recognises revenue from contracts with customers based on a five step model as set out in Ind AS 115:
Step 1. Identify the contract(s) with a customer: A contract is defined as an agreement between two or more parties that creates enforceable rights
and obligations and sets out the criteria for every contract that must be met.
Step 2. Identify the performance obligations in the contract: A performance obligation is a promise in a contract with a customer to transfer a good
or service to the customer.
Step 3. Determine the transaction price: The transaction price is the amount of consideration to which the
Company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of
third parties
Step 4. Allocate the transaction price to the performanceobligations in the contract: For a contract that has more thanone performance obligation,
the Company will allocatethe transaction price to each performance obligation inan amount that depicts the amount of consideration to which the
Company expects to be entitled in exchange for satisfying each performance obligation.
Step 5. Recognise revenue when (or as) the entity satisfies a performance obligation.
The Company satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met:
1. The customer simultaneously receives and consumes the benefits provided by the Company'sperformance as the Company performs; or
2. The Company's performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
3. The Company's performance does not create an asset with an alternative use to the Group andthe entity has an enforceable right to payment for
performance completed to date.
Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment. The
Company assesses its revenue arrangements against specificcriteria to determine if it is acting as principal or agent.
The Company has concluded that it is acting as a principal in all of its revenue arrangements. As per the underlying construction contracts in force,
the Company bears certain indirect tax as it's own expense, and are effectively acting as principals and collecting the indirect
taxes on their own account. Accordingly, revenue from operations is presented as gross of such indirect taxes.
(I) Sales
(i) Sales are recognised when significant risks and rewards are transferred to the buyer as per the contractual terms or on dispatch where such
dispatch coincides with transfer of significant risks and rewards to the buyer.
ii) Interest income on financial asset is recognised using the effective interest rate method. The effective interest rate is the rate that exactly
discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of the financial asset. When
calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial
instruments.
(iii) Revenue from F&O trading activities is recognised on the basis of realised gains and losses in accordance with Ind AS 109 - Financial
Instruments
(II) Other Income
Dividends
Dividends are recognised in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated
with the dividend will flow to the group, and the amount of the dividend can be measured reliably.
Inventories Valuation
(i) Cost of Materials,components, stores & spares and packing material is arrived at Weighted Average Cost and Cost of goods purchased
(ii) Scrap is valued at net realisable value.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less
provision for impairment.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. They are
recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.^^^^^^^^^^^^^^B
Borrowing Cost
(i) Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost.
Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the
borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised 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 capitalised as a prepayment for liquidity
services and amortised over the period of the facility to which it relates.
(ii) Borrowings are classified as current financial liabilities unless the group 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.
Investments
All equity instruments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL.
For all other equity instruments, the company may make an irrevocable election to present in other comprehensive income subsequent changes in
the fair value. The company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is
irrevocable.
Investment in Subsidiary
Investment in Subsidiary -The Company's investment in its subsidiaries are carried at cost.
Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when
annual impairment testing for an asset is required, the Company estimates the asset's recoverable amount. An asset's recoverable amount is the
higher of an asset's or cash-generating unit's (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an
individual asset. unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets.
When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount.
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. In determining fair value less costs of disposal, recent market
transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are
corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised
impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset's or CGU's recoverable amount. A
previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable
amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its
recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been
recognised for the asset in prior years. Such reversal is recognised in the statement of profit or loss.
Employee Benefit
(i) Short term employee benefits are recognised as an expense at the undiscounted amounts in the Statement of Profit & Loss for the year in which
the related service is rendered .
(ii) The Company does not provide for retirement benefits. The same are payable as and when due.
Segment Report
(i) The company identifies primary segment based on the dominant source, nature of risks and returns and the internal organisaiton and
mangagement structure. The operating segement are the segments for which separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.
(ii) The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.
Leases
The Company has no leases or any contractcontaining lease accordingly, no disclosure has been made on the same.
Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average
number of equity shares outstanding during the period. Earnings considered in ascertaining the Company's earnings per share is the net profit for
the period. The weighted average number equity shares outstanding during the period and all periods presented is adjusted for events, such as
bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a
corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit of loss for the period attributable to
equity shareholders and the weighted average number of share outstanding during the period is adjusted for the effects of all dilutive potential
equity shares.
Taxation
(i) 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
for the jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences, to unused tax losses and
unabsorbed depreciation.
Current and deferred tax is recognized in the Statement of Profit and Loss except to the extent it relates to items recognized directly in equity or
other comprehensive income, in which case it is recognized in equity or other comprehensive income.
(ii) Provision for Income tax is made on the basis of the estimated taxable income for the current accounting period in accordance with the Income-
tax Act, 1961 and Revised Income Computation and Disclosure Standards (ICDS) of the Income-tax Act, 1961.
(iii) Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income
or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except when the deferred tax liability arises from the initial
recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses.
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except when the deferred tax asset relating to the
deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and,
at the time of the transaction. affects neither the accounting profit nor taxable profit or loss.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in
equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax as sets against current tax
liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Impairment of Assets
The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the
management estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash
generating unit to which the assets belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The
reduction is treated as an impairment loss and is recognized in the statement of profit and loss. If at the balance sheet date there is an indication
that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed , and the asset is reflected at the recoverable
amount subject to a maximum of depreciated historical cost.
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