Note 2 - Statement of Significant Accounting Policies
The Company has prepared financial statements for the year ended March 31, 2024
in accordance with Indian Accounting Standards (Ind AS) notified under the
Companies (Indian Accounting Standards) Rules, 2015 (as amended) read with
Section 133 of the Companies Act, 2013, (the ‘Act’) and other relevant provision of
the act together with the comparative data as at and for the year ended March 31,
2023.
The financial statements are presented in Indian Rupees which is the functional
currency of the company All the financials information is presented in Indian
rupees and are rounded to the nearest rupees in lakhs except when otherwise
indicated.
2.1 Basis of preparation
The financial statements have been prepared on the historical cost basis, except
for:
(i) certain financial instruments that are measured at fair values at the end of each
reporting period;
(ii) defined benefit plans - plan assets that are measured at fair values at the end of
each reporting period, as explained in the accounting policies below. Historical cost
is generally based on the fair value of the consideration given in exchange for goods
and services.
The Company has consistently applied the following accounting policies to all
periods presented in these financial statements.
a) Use of estimates and judgements
The preparation of Company’s financial statements in conformity with the
recognition and measurement principles of Ind AS requires management of the
Company to make estimates and judgements that affect the reported balances of
assets and liabilities, disclosures of contingent liabilities as at the date of company
financial statements and the reported amounts of income and expenses for the
periods presented. Estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimates are revised and future periods are affected. The Company uses
the following critical accounting estimates in preparation of its standalone financial
statements:
b) Current versus non-current classification
Assets and Liabilities are classified as current or non - current, inter-alia
considering the normal operating cycle of the company’s operations and the
expected realization/settlement thereof within 12 months after the Balance
Sheet date.
Deferred tax assets and liabilities are classified as non-current assets and
liabilities.
c) Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the
measurement date. The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability takes place either:
• In the principal market for the asset or liability, or
• In the absence of a principal market, in the most advantageous market for
the asset or liability
The principal or the most advantageous market must be accessible by the
Company.
The fair value of an asset or a liability is measured using the assumptions that
market participants would use when pricing the asset or liability, assuming
that market participants act in their economic best interest.
The Company uses valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to measure fair value,
maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the
financial statements are categorised within the fair value hierarchy, described
as follows, based on the lowest level input that is significant to the fair value
measurement as a whole:
• Level 1 — Quoted (unadjusted) market prices in active markets for identical
assets or liabilities
• Level 2 — Valuation techniques for which the lowest level input that is
significant to the fair value measurement is directly or indirectly observable
• Level 3 — Valuation techniques for which the lowest level input that is
significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a
recurring basis, the Company determines whether transfers have occurred
between levels in the hierarchy by re-assessing categorisation (based on the
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lowest level input that is significant to the fair value measurement as a whole)
at the end of each reporting period.
d) Revenue recognition
Revenue from contracts with customers is recognised when control of the goods
or services are transferred to the customer at an amount that reflects the
consideration to which the Company expects to be entitled in exchange for
those goods or services.
The Company has generally concluded that it is the principal in its revenue
arrangements, since it is the primary obligor in all of its revenue arrangement,
as it has pricing latitude and is exposed to inventory and credit risks.
Revenue is stated net of goods and service tax and net of returns, chargebacks,
rebates and other similar allowances. These are calculated on the basis of
historical experience and the specific terms in the individual contracts.
In determining the transaction price, the Company considers the effects of
variable consideration, the existence of significant financing components,
noncash consideration, and consideration payable to the customer (if any).
The Company estimates variable consideration at contract inception until it is
highly probable that a significant revenue reversal in the amount of cumulative
revenue recognised will not occur when the associated uncertainty with the
variable consideration is subsequently resolved.
Royalties: Royalty revenue is recognised on an accrual basis in accordance
with the substance of the relevant agreement (provided that it is probable that
economic benefits will flow to the Company and the amount of revenue can be
measured reliably). Royalty arrangements that are based on production, sales
and other measures are recognised by reference to the underlying arrangement.
e) Cash and cash equivalents
The Company considers all highly liquid investments, which are readily
convertible into known amounts of cash that are subject to an insignificant risk
of change in value, to be cash equivalents. Cash and cash equivalents consist of
balances with banks which are unrestricted for withdrawal and usage.
Interest: Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the applicable interest applicable.
Interest income is included under the head “Other income” in the statement of
profit & loss account.
Dividends: Dividend income is recognised when the Company’s right to receive
dividend is established by the balance sheet date.
f) Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial
assets are held within a business whose objective is to hold these assets in
order to collect contractual cash flows and the contractual termsof the financial
assets give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
g) Financial assets at fair value through other comprehensive income
Financial assets are measured at fair value through other comprehensive
income if these Financial assets are held within a business whose objective is
achieved by both collecting contractual cash flows on specified dates that are
solely payments of principal and interest on the principal amount outstanding
and selling financial assets. The Company has made an irrevocable election to
present subsequent changes in the fair value of equity investments not held for
trading in other comprehensive income.
h) Financial assets at fair value through profit or loss
Financial assets are measured at fair value through profit or loss unless they
are measured at amortised cost or at fair value through other comprehensive
income on initial recognition. The transaction costs directly attributable to the
acquisition of financial assets and liabilities at fair value through profit or loss
are immediately recognised in statement of profit and loss.
i) Income Tax.
Income tax expense consists of current and deferred tax. Income tax expense is
recognised in profit or loss except to the extent that it relates to items
recognised in OCI or directly in equity, in which case it is recognised in OCI or
directly in equity respectively
i. Current income tax
Current tax is the expected tax payable on the taxable profit for the year, using
tax rates enacted or substantively enacted by the end of the reporting period,
and any adjustment to tax payable in respect of previous years. Current tax
assets and tax liabilities are offset where the Company has a legally enforceable
right to offset and intends either to settle on a net basis, or to realise the asset
and settle the liability simultaneously. Current income tax assets and liabilities
are measured at the amount expected to be recovered from or paid to the
taxation authorities.
Current income tax relating to items recognised outside profit or loss is
recognised outside profit or loss (either in other comprehensive income or in
equity). Current tax items are recognised in correlation to the underlying
transaction either in OCI or directly in equity. Management periodically
evaluates positions taken in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation and establishes
provisions where appropriate.
The Govt, of India had issued the Taxation Laws (Amendment) Act 2019 which
provides Domestic Companies an option to pay corporate tax at reduced rates
from April 1, 2019 subject to certain conditions. The company intends to opt
for lower tax regime. No tax provision has been made for the year in view of
losses. The company has recognised consequential impact by reversing deferred
tax assets. -----
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ii, 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 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
• In respect of taxable temporary differences associated with investments in
subsidiaries and interests in joint ventures when the timing of the reversal of
the temporary differences can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable future
Deferred tax assets are recognised for all deductible temporary differences and
the carry forward of 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 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
• In respect of deductible temporary differences associated with investments in
subsidiaries and interests in joint ventures deferred tax assets are
recognised only to the extent that it is probable that the temporary
differences will reverse in the foreseeable future and taxable profit will be
available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date
and reduced to the extent that it is no longer probable that sufficient taxable
profit will be available to allow all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are re-assessed at each reporting date and
are recognised to the extent that it has become probable that future taxable
profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply in the }?ear 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 assets against current tax liabilities and the
deferred taxes relate to the same taxable entity and the same taxation
authority.
j) Property, plant and equipment
Plant and equipment is stated at cost of acquisition or constructions including
attributable borrowing cost till such assets are ready for their intended use,
less of accumulated depreciation and accumulated impairment losses, if any.
Cost of acquisition for the aforesaid purpose comprises its purchase price,
including import duties and other non-refundable taxes or levies and any
directly attributable cost of bringing the asset to its working condition for its
intended use, net of trade discounts, rebates and credits received if any.
Such cost includes the cost of replacing part of the plant and equipment and
borrowing costs 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.
Property Plant and equipment are eliminated from financial statements, either
on disposal or when retired from active use. Losses arising in case of retirement
of Property, Plant and equipment and gains or losses arising from disposal of
property, plant and equipment are recognised in statement of profit and loss in
the year of occurrence.
Depreciation is calculated on a straight-line basis over the estimated useful
lives of the assets. Useful lives used by the Company are same as prescribed
rates prescribed under Schedule II of the Companies Act 2013. The range of
useful lives of the property, plant and equipment are as follows:
k) Intangible Assets
Intangible assets acquired separately are measured on initial recognition at
cost. Following initial recognition, intangible assets are carried at cost less any
accumulated amortisation and accumulated impairment losses. Internally
generated intangibles are not capitalised and the related expenditure is
reflected in profit or loss in the period in which the expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic life
and assessed for impairment whenever there is an indication that the
intangible asset may be impaired. Intangible assets are amortised as follows:
> Software - 3 years
Software for internal use, which is primarily acquired from third-party vendors
and which is an integral part of a tangible asset, including consultancy charges
for implementing the software, is capitalised as part of the related tangible
asset. Subsequent costs associated with maintaining such software are
recognised as expense as incurred. The capitalised costs are amortised over the
lower of the estimated useful life of the software and the remaining useful life of
the tangible fixed asset.
l) Investments in the nature of equity in subsidiaries.
The Company has elected to recognise its investments in equity instruments in
subsidiaries and associates at cost in the separate financial statements in
accordance with the option available in Ind AS 27, ‘Separate Financial
Statements'.
m) Investment properties
Investment properties comprise portions of office buildings and residential
premises that are held for long-term rental yields and/or for capital
appreciation. Investment properties are initially recognised at cost.
Subsequently investment property comprising of building is carried at cost less
accumulated depreciation and accumulated impairment losses.
The cost includes the cost of replacing parts and borrowing costs for long-term
construction projects if the recognition criteria are met. When significant parts
of the investment property are required to be replaced at intervals, the Group
depreciates them separately based on their specific useful lives. All other repair
and maintenance costs are recognised in profit and loss as incurred.
Depreciation on building is provided over the estimated useful lives as specified
in Schedule II to the Companies Act, 2013. The residual values, useful lives
and depreciation method of investment properties are reviewed, and adjusted
on prospective basis as appropriate, at each financial year end. The effects of
any revision are included in the statement of profit and loss when the changes
arise.
Though the group measures investment property using cost based
measurement, the fair value of investment property is disclosed in the notes.
Investment properties are derecognised when either they have been disposed of
or when the investment property is permanently withdrawn from use and no
future economic benefit is expected from its disposal.
The difference between the net disposal proceeds and the carrying amount of
the asset is recognised in the statement of profit and loss in the period of
de-recognition.
n) 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 Company’s 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.
Impairment losses of continuing operations, including impairment on
inventories, are recognised in the statement of profit and loss.
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 canying amount of the asset does not exceed its
recoverable amount, nor exceed the canying 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.
o) Non- current Asset held for sale.
Non-current assets and disposal groups are classified as held for sale if their
canying amount will be recovered principally through a sale transaction rather
than through continuing use. This condition is regarded as met only when the
asset (or disposal group) is available for immediate sale in its present condition
subject only to terms that are usual and customary for sales of such asset (or
disposal group) and its sale is highly probable. Management must be
committed to the sale, which should be expected to qualify for recognition as a
completed sale within one year from the date of classification. Non-current
assets (and disposal groups) classified as held for sale are measured at the
lower of their carrying amount and fair value less costs to sell. Non-current
assets are not depreciated or amortised.
p) Borrowing costs:
a. Borrowing costs that are attributable to the acquisition, construction, or
production of a qualifying asset are capitalised as a part of the cost of such
asset till such time the asset is ready for its intended use or sale, A
qualifying asset is an asset that necessarily requires a substantial period of
time (generally over twelve months) to get ready for its intended use or sale.
b. All other borrowing costs are recognised as expense in the period in which
they are incurred.
q) Leases
The Company evaluates each contract or arrangement, whether it qualifies as
lease as defined under Ind AS 116.
The Company as a lessee:
The Company enters into an arrangement for lease of land, buildings, plant
and machinery including computer equipment and vehicles. Such
arrangements are generally for a fixed period but may have extension or
termination options. The Company assesses, whether the contract is, or
contains, a lease, at its inception. A contract is, or contains, a lease if the
contract conveys the right to
a) control the use of an identified asset,
b) obtain substantially all the economic benefits from use of the identified
asset, and
c) direct the use of the identified asset.
The Company determines the lease term as the non-cancellable period of a
lease, together with periods covered by an option to extend the lease, where the
Company is reasonably certain to exercise that option.
The Company at the commencement of the lease contract recognizes a
Right-of-Use (RoU) asset at cost and corresponding lease liability, except for
leases with term of less than twelve months (short term leases) and low-value
assets. For these short term and low value leases, the Company recognizes the
lease payments as an operating expense on a straight-line basis over the lease
term.
The cost of the right-of-use asset comprises the amount of the initial
measurement of the lease liability, any lease payments made at or before the
inception date of the lease, plus any initial direct costs, less any lease
incentives received. Subsequently, the right-of-use assets are measured at cost
less any accumulated depreciation and accumulated impairment losses, if any.
The right-of-use assets are depreciated using the straight-line method from the
commencement date over the shorter of lease term or useful life of right-of-use
asset. The estimated useful lives of right-of-use assets are determined on the
same basis as those of property, plant and equipment.
The Company applies Ind AS 36 to determine whether an RoU asset is impaired
and accounts for any identified impairment loss as described in the impairment
of non-financial assets below.
For lease liabilities at the commencement of the lease, the Company measures
the lease liability at the present value of the lease payments that are not paid at
that date. The lease payments are discounted using the interest rate implicit in
the lease, if that rate can be readily determined, if that rate is not readily
determined, the lease payments are discounted using the incremental
borrowing rate that the Company would have to pay to borrow funds, including
the consideration of factors such as the nature of the asset and location,
collateral, market terms and conditions, as applicable in a similar economic
environment.
After the commencement date, the amount of lease liabilities is increased to
reflect the accretion of interest and reduced for the lease payments made. The
Company recognizes the amount of the re-measurement of lease liability as an
adjustment to the right-of-use assets. Where the carrying amount of the
right-of-use asset is reduced to zero and there is a further reduction in the
measurement of the lease liability, the Company recognizes any remaining
amount of the re-measurement in statement of profit and loss. Lease liability
payments are classified as cash used in financing activities in the statement of
cash flows.
The Company as a lessor
Leases under which the Company is a lessor are classified as finance or
operating leases. Lease contracts where all the risks and rewards are
substantially transferred to the lessee, the lease contracts are classified as
finance leases. All other leases are classified as operating leases. For leases
under which the Company is an intermediate lessor, the Company accounts for
the head-lease and the sub-lease as two separate contracts. The sub-lease is
further classified either as a finance lease or an operating lease by reference to
the RoU asset arising from the head-lease.
r) Corporate Social Responsibility (CSR) Expenditure
CSR spend are charged to the statement of profit and loss as an expense in the
period they are incurred.
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