A. BACKGROUND
Varyaa Creations Limited is a public limited company domiciled in India and incorporated under the
provisions of the Companies Act, 1956 and now governed by Provisions of Companies Act 2013, having
Company Incorporation No. (CIN) U36910MH2005PLC154792 the Company is primarily engaged in
trading and manufacturing of gold ornaments, precious metals, precious stones and diamonds.
B. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF PREPARATION OF FINANCIAL SATEMENTS
The financial statements have been prepared and presented under the historical cost convention, on
the accrual basis of accounting in accordance with the accounting principles generally accepted in India
('Indian GAAP') and comply with the Accounting standards prescribed in the Companies (Accounting
Standards) Rules, 2006 which continue to apply under Section 133 of the Companies Act, 2013 ('the
Act') read with Rule 7 of the Companies (Accounts) Rules, 2014.
2. USE OF ESTIMATES
The preparation of financial statements in conformity with Indian GAAP requires management to make
judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets
and liabilities and the disclosures of contingent liabilities at the end of reporting period.
3. FIXED ASSETS
Fixed assets are stated at historical cost less accumulated depreciation and impairment losses. Cost
includes purchase price and all other attributable cost to bring the assets to its working condition for the
intended use.
Subsequent expenditures related to an item of tangible asset are added to its book value only if
they increase the future benefits from the existing asset beyond its previously assessed standard of
performance.
4. DEPRECIATION AND AMORTISATION
Depreciation is provided on a written down value basis over the useful lives of assets, which is as stated
in Schedule II of the Companies Act 2013 or based on technical estimation made by the Company.
Intangible assets are amortized over their estimated useful economic lives and validity.
Depreciation and amortization methods, useful lives and residual values are reviewed at each reporting
date.
5. BORROWING COSTS
Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalized as
part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time
to get ready for intended use. All other borrowing costs are recognized as an expense in the period in
which they are incurred. Capitalization of borrowing costs is suspended during the extended period in
which active development is interrupted. Capitalization of borrowing costs is ceased when substantially
all the activities necessary to prepare the qualifying asset for its intended use or sale are complete.
Other borrowing costs are charged to statement of profit and loss as and when incurred.
6. IMPAIRMENT OF ASSETS
In accordance with AS 28 on 'Impairment of assets' as prescribed in the Companies (Accounting
Standards) Rules, 2006, 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 Company estimates the
recoverable amount of the asset. The recoverable amount of the assets (or where applicable that of the
cash generating unit to which the asset belongs) is estimated as the higher of its net selling price and
its value in use. Value in use is the present value of estimated future cash flows expected to arise from
the continuing use of the assets and from its disposal at the end of its useful life. An impairment loss is
recognized whenever the carrying amount of an asset or the cash-generating unit to which it belongs,
exceeds it recoverable amount. Impairment loss is recognized in the statement of profit and loss or
against revaluation surplus, where applicable. If at the balance sheet date, there is an indication that a
previously assessed impairment loss no longer exists, the recoverable amount is re-assessed and the
asset is reflected at the recoverable amount subject to a maximum of the depreciated historical cost.
7. INVESTMENTS
Investments, which are readily realizable and intended to be held for not more than one year from the
date on which such investments are made, are classified as current investments. All other investments
are classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost comprises purchase price and
directly attributable acquisition charges such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of cost and fair value determined
on an individual investment basis. Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary in the value of the investments.
On disposal of an investment, the difference between its carrying amount and net disposal proceeds is
charged or credited to the statement of profit and loss.
8. INVENTORIES
Raw materials, stores and spares and trading goods are valued at lower of cost and net realizable
value.
Work-in-Progress and finished goods are valued at the lower of cost and net realizable value. Cost
includes direct materials and labour and a part of manufacturing overheads based on normal operating
capacity.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated
costs of completion and estimated costs necessary to make the sale.
Cost comprises of cost of Purchase & other costs incurred in bringing them to their respective present
location and condition and is determined on First-in-First-Out (FIFO) basis.
9. CURRENT/NON CURRENT CLASSIFICATIONS
The Schedule III to the Act requires assets and liabilities to be classified as either Current or Noncurrent.
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realized in, or is intended for sale or consumption in, the entity's normal
operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realized within twelve months after the balance sheet date; or
d) i t is cash or a cash equivalent unless it is restricted from being exchanged or used to settle a
liability for at least twelve months after the balance sheet date.
Current assets include the current portion of non-current financial assets. All other assets are classified
as non-current.
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in, the entity's normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within twelve months after the balance sheet date; or
d) The Company does not have an unconditional right to defer settlement of the liability for at least
twelve months after the balance sheet date.
Current liabilities include current portion of non-current financial liabilities. All other liabilities are
classified as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for processing and their realization in cash
or cash equivalents.
10. REVENUE RECOGNITION
i) Revenue from sale of goods is recognizing when the significant risks and rewards of ownership
have been transferred to the buyer. Revenue from sale of goods is net of sales tax, trade discounts,
rebates etc.
ii) Service income is recognized as and when services are rendered in accordance with the terms of
the specific contracts, net of all contractual deductions. Revenue is recognized net of all taxes and
levies.
iii) Interest income is recognized on a time proportion basis.
iv) Export of goods is eligible for incentives from Government as per Import-Export policies declared
by the Government from time to time. Company's export products are eligible for duty drawback.
Rates for duty drawback vary according to products and destinations. The Company recognizes duty
drawback amount on accrual basis for this financial year, however, in respect of preceding years
benefits are recognized on receipt basis.
11. FOREIGN CURRENCY TRANSACTIONS
- Initial recognition:
Foreign currency transactions are recorded at the exchange rates prevailing on the date of
transaction.
- Conversion:
Foreign currency monetary items are retranslated using the exchange rate prevailing at the
reporting date.
12. EMPLOYEE BENEFITS
All employee benefits wholly within twelve months of rendering the service are classified as short term
employee benefits and are charged to Statement of Profit and Loss of the year. Gratuity is not applicable
to the company as employee in the company less than ten.
13. SEGMENT ACCOUNTING
(i) Business Segment
The Company operates in one Business Segment only and hence no separate information for
business segment wise disclosure is required.
(ii) Geographical Segment
The Company operates in one Geographical Segment namely “within India” and hence no separate
information for geographic segment wise disclosure is required.
14. ACCOUNTING FOR TAXES ON INCOME
Current Tax
Current tax is determined as the amount of tax payable under the provisions of Income Tax Act, 1961,
in respect of taxable income for the year.
Deferred Tax
Deferred income taxes reflect the impact of current year timing difference between taxable income
and accounting income for the year and reversal of timing difference of earlier year. Deferred tax is
measured based on the tax rates and the tax laws enacted or substantively enacted at the balance
sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that
the assets can be realized in the future; however, where there is unabsorbed depreciation or carried
forward loss under taxation laws, deferred tax assets are recognized only if there is virtual certainty of
realization of such assets. Deferred tax assets are reviewed at each balance sheet date and written
down or written up to reflect the amount that is reasonably / virtually certain (as the case may be) to be
realized.
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