2. Significant Accounting Policies - (IND AS Compliant).
a) Basis of Preparation of Financial Statements:
Statement of compliance: The financial statements of the Company have been prepared in
accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian
Accounting Standards) Rules, 2015 (as amended) and presentation requirements of Division II
of Schedule III to the Companies Act, 2013. The financial statements have been prepared on a
going concern basis using historical cost convention, except for certain financial assets and
liabilities which are measured at fair value.
Functional and presentation currency: These financial statements are presented in Indian
Rupees (INR), which is also the Company’s functional currency. All amounts have been
rounded-off to the nearest Lakhs, unless otherwise indicated.
Current versus 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:
• Expected to be realised or intended to be sold or consumed in normal operating cycle.
• Held primarily for the purpose of trading.
• Expected to be realised within twelve months after the reporting period, or
• Cash or cash equivalent 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 Liabilities is treated as current when it is:
• It is expected to be settled in normal operating cycle,
• It is held primarily for the purpose of trading.
• It is due to be settled within twelve months after the reporting period, or
• There is no unconditional right to defer the settlement of the liability for at least twelve months
after the reporting period.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Operating Cycle: The operating cycle is the time between the acquisition of assets for
processing and their realisation in cash and cash equivalents. The Company has identified twelve
months as its operating cycle.
b) Use of Estimates and Judgements:
The preparation of financial statements requires management to make judgments, estimates, and
assumptions that affect the reported amounts of assets, liabilities, income, and expenses.
Significant areas involving a higher degree of judgment include:
• Useful lives and residual values of property, plant, and equipment
• Classification and measurement of leases
• Evaluation of expected credit losses on receivables
• Inventory valuation and obsolescence
• Determination of revenue recognition timing and classification
c) Property, Plant and Equipment (PPE):
PPE is carried at cost less accumulated depreciation and impairment losses. Cost includes
purchase price, installation charges, and any directly attributable expenses for bringing the asset
to its intended use. Major renovations and improvements are capitalized, while routine
maintenance and repairs are expensed. Depreciation is charged on a written down value method
over the estimated useful lives as per Schedule II of the Companies Act, 2013 or management's
estimate, whichever is lower.
d) Intangible Assets:
Intangible assets consist primarily of software and franchise fees, which are capitalized and
amortized over their estimated useful lives, generally 3 to 5 years, using the straight-line method.
However the small value of intangible assets are expensed out fully.
e) Impairment of Assets:
Impairment of Non-flnancial assets:
Property, plant and equipment and intangible assets Property, plant and equipment and intangible
assets with finite life are evaluated for recoverability whenever there is any indication that their
carrying amounts may not be recoverable. If any such indication exists, the recoverable amount
(i.e. higher of the fair value less cost to sell and the value-in-use) is determined on an individual
asset basis unless the asset does not generate cash flows that are largely independent of those
from other assets. In such cases, the recoverable amount is determined for the cash generating
unit (CGU) to which the asset belongs. If the recoverable amount of an asset (or CGU) is
estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is
reduced to its recoverable amount. An impairment loss is recognized in the Statement of Profit
and Loss.
Impairment of financial assets:
The Company recognises loss allowances for expected credit losses on:
- Financial assets measured at amortised cost; and
-Trade receivables
At each reporting date, the Company assesses whether financial assets carried at amortised cost
impaired. A financial asset is ‘credit- impaired’ when one or more events that have a detrimental
impact on the estimated future cash flows of the financial asset have occurred.
Loss allowances for trade receivables are always measured at an amount equal to lifetime
expected credit losses. Lifetime expected credit losses are the expected credit losses that result
from all possible default events over the expected life of a financial instrument. 12-month
expected credit losses are the portion of expected credit losses that result from default events that
are possible within 12 months after the reporting date (or a shorter period if the expected life of
the instrument is less than 12 months).
In all cases, the maximum period considered when estimating expected credit losses is the
maximum contractual period over which the Company is exposed to credit risk.
When determining whether the credit risk of a financial asset has increased significantly since
initial recognition and when estimating expected credit losses, the Company considers
reasonable and supportable information that is relevant and available without undue cost or
effort. This includes both quantitative and qualitative information and analysis, based on the
Company's historical experience and informed credit assessment and including forward- looking
information. The Company assumes that the credit risk on a financial asset has increased
significantly if it is more than 30 days past due.
Measurement of expected credit losses: Expected credit losses are a probability-weighted
estimate of credit losses. Credit losses are measured at the present value of all cash shortfalls (i.e.
the difference between the cash flows due to the Company in accordance with the contract and
the cash flows that the Company expects to receive). Presentation of allowance for expected
credit losses in the balance sheet, loss allowances for financial assets measured at amortised cost
are deducted from the gross carrying amount of the assets.
Write-off: The gross carrying amount of a financial asset is written off (either partially or in full)
to the extent that there is no realistic prospect of recovery. This is generally the case when the
Company determines that the debtor does not have assets or sources of income that could
generate sufficient cash flows to repay the amounts subject to the write-off.
However, financial assets that are written off could still be subject to enforcement activities in
order to comply with the Company's procedures for recovery of amounts due.
f) Leases (Ind AS 116)
The Company assesses whether a contract is or contains a lease at the inception of the contract.
Right-of-use (ROU) assets and corresponding lease liabilities are recognized at the
commencement date. Lease liabilities are measured at the present value of lease payments,
discounted using the incremental borrowing rate. ROU assets are measured at cost and
depreciated over the lease term or useful life, whichever is shorter. Lease payments for short¬
term leases and leases of low-value assets are recognized as an expense on a straight-line basis.
g) Revenue Recognition (Ind AS 115)
Revenue from sale of goods and Services: Revenue is recognized when control of the goods or
services is transferred to the customer. In the context of the restaurant business, revenue is
primarily recognized at the point of sale when food and beverages are delivered to the customer.
Revenue from online orders, dine-in, and Catering services are recognized similarly. Discounts,
loyalty programs, and GST & other taxes are accounted for as reductions in revenue.
Interest income: Interest income is included in the other income in the statement of Profit and
Loss. Interest income is recognized on a time proportion basis taking into account the amount
outstanding and the applicable interest rate when there is a reasonable certainty as to realization.
Dividend Income: Dividends are recognized when the Company’s right to receive the payment
is established, it is probable that the economic benefits associated with the dividend will flow to
the Company and the amount of dividend can be measured reliably.
h) Inventories
Inventories consist of food and beverage items and are valued at the lower of cost and net
realizable value. Cost is determined on a FIFO basis and includes all costs of purchase and other
costs incurred in bringing the inventories to their present location and condition. Obsolete and
slow-moving items are periodically reviewed and written down as necessary.
i) Financial Instruments
• Initial recognition: Financial assets and financial liabilities are recognized when the Company
becomes a party to the contractual provisions of the instruments. Financial assets and financial
liabilities are initially measured at fair value. Transaction costs that are directly attributable to
the acquisition or issue of financial assets and financial liabilities (other than financial assets and
financial liabilities at fair value through profit or loss) are added to or deducted from the fair
value of the financial assets or financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition of financial assets or financial liabilities
at fair value through profit or loss are recognized immediately in profit or loss.
• Subsequent measurement: Based on the business model and cash flow characteristics, financial
assets are classified as amortized cost, FVOCI, or FVTPL.
Financial liabilities: Classification, subsequent measurement and gains and losses:
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability
is classified as at FVTPL if it is classified as held- for trading, or it is a derivative or it is
designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value
and net gains and losses, including any interest expense, are recognised in profit or loss. Other
financial liabilities are subsequently measured at amortised cost using the effective interest
method. Interest expense and foreign exchange gains and losses are recognised in profit or loss.
Any gain or loss on derecognition is also recognised in profit or loss.
• Impairment: The expected credit loss (ECL) model is applied for financial assets measured at
amortized cost, such as trade receivables and investment in subsidiaries.
j) Employee Benefits
• Short-term employee benefits: Recognized as an expense as services are rendered.
• Defined contribution plans: Contributions to provident and other statutory funds are recognized
as an expense.
• Defined benefit plans: Gratuity obligations are measured using actuarial techniques and
recognized based on projected unit credit method.
• Leave encashment: Liability for earned leave is provided on the basis of actuarial valuation.
k) Income Taxes
Current tax is measured on the basis of taxable income for the year in accordance with the
provisions of the Income Tax Act, 1961. Deferred tax is recognized on temporary differences
between the carrying amounts of assets and liabilities in the financial statements and the
corresponding tax bases.
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