Summary of significant accounting policies
1.05 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 liability is current when:
- 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.
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.
1.06 Fair value measurement
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 lowest level input that is significant to the fair value measurement as a
whole) at the end of each reporting period.
The Company's Management determines the policies and procedures for both recurring fair value
measurement, such as derivative instruments and unquoted financial assets measured at fair value,
and for non-recurring measurement, such as assets held for distribution in discontinued operations.
At each reporting date, the Management analyses the movements in the values of assets and
liabilities which are required to be remeasured or re-assessed as per the Company's accounting
policies. Forthis analysis, the Management verifies the major inputs applied in the latest valuation by
agreeing the information in the valuation computation to contracts and other relevant documents.
The Management also compares the change in the fair value of each asset and liability with relevant
external sources to determine whether the change is reasonable.
Forthe purpose of fair value disclosures, the Company has determined classes of assets and liabilities
on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair
value hierarchy as explained above.
This note summarises accounting policy for fairvalue. Otherfair value related disclosures are given in
the relevant notes.
Disclosures for valuation methods, significant estimates and assumptions.
Financial instruments (including those carried at amortised cost).
1.07 Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the
Company and the revenue can be reliably measured, regardless of when the payment is being made.
Revenue is measured at the fairvalue of the consideration received or receivable, taking into account
contractually defined terms of payment and excluding taxes or duties collected on behalf of the
government.
Revenue from sale of goods -
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed
as revenue are net of GST, value added taxes, service tax, discounts, rebates and incentives. The
Company recognises revenue when the amount of revenue can be reliably measured and it is
probable that future economic benefits will flow to the Company.
Interest and dividend income -
The interest and dividends are recognised only when no uncertainty as to measurability or
collectability exists. Interest on fixed deposits is recognised on time proportion basis taking into
account the amount outstanding and the rate applicable.
1.08 Inventories
Inventories are valued at the lower of cost or net realisable value.
1.09 Foreign currency transactions and translation
i) Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of
transaction. Monetary assets and liabilities denominated in foreign currencies are translated in
functional currency at closing rates of exchange at the reporting date.
ii) Exchange differences arising on settlement or translation of monetary items recognised in statement
of profit and loss.
1.10 Taxes
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from
or paid to the taxation authorities. The Company determines the tax as per the provisions of Income
Tax Act 1961 and other rules specified thereunder.
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.
1.11 Deferred tax
Deferred tax is provided in full 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.
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 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 assets against current tax liabilities and the deferred taxes relate to the same taxable
entity and the same taxation authority.
1.12 a) Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and where applicable
accumulated impairment losses. Property, plant and equipment and capital work in progress cost
include expenditure that is directly attributable to the acquisition of the asset. The cost of self-
constructed assets includes the cost of materials, direct labour and any other costs directly attributable
to bringing the asset to a working condition for its intended use, and the costs of dismantling and
removing the items and restoring the site on which they are located. Purchased software that is
integral to the functionality of the related equipment is capitalized as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are
accounted for as separate items (major components) of property, plant and equipment.
Subsequent Cost
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying
amount of the item if it is probable that the future economic benefits embodied within the part will
flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is
de-recognised and charged to the statement of Profit and Loss. The costs of the day-to-day servicing of
property, plant and equipment are recognised in the Statement of Profit and Loss.
b) Intangible assets
Intangible assets are stated at cost less accumulated amortisation and impairment loss. The system
software which is expected to provide future enduring benefits is capitalised. The capitalised cost
includes license fees and cost of implementation/system integration.
Depreciation and amortisation
The depreciation on tangible assets is provided at the rates and in manner prescribed under Part C of
Schedule II to the Companies Act 2013.
The Company Follow WDV Method For Depreciation.
Computer software is amortised over a period of 5 years.
The residual values, useful lives and methods of depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted prospectively, if appropriate.
Derecognition of assets
An item of property plant & equipment and any significant part initially recognised is derecognised
upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or
loss arising on derecognition of the asset is included in the income statement when the asset is
1.13 Investment property
Property that is held for long term rental yield or for capital appreciation or both, and that is not
occupied by the Company, is classified as Investment property. Investment properties measured
initially at cost including related transitions cost and where applicable borrowing cost. Subsequent
expenditure is capitalised to the assets carrying amount only when it is probable that future economic
benefits associated with the expenditure will flow to the entity and the cost of the item can be
measured reliably. All other repairs and maintainance costs are expensed when incurred. When part
of an investment property is incurred the carrying amount of replaced part is derecognised.
Investment properties other than land are depreciated using SLM method over the estimated useful \
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life of assets prescribed by the Schedule II to the Companies Act 2013 i.e. 60 years. \
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1.14 Borrowing costs \
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Borrowing costs directly attributable to the acquisition, construction or production of an asset that |
necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised \
as part of the cost of the asset. All other borrowing costs are expensed in the period in which they \
occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the \
borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an j
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