NOTE 1: MATERIAL ACCOUNTING POLICIES:
BASIS OF PREPARATION OF FINANCIAL STATEMENTS
a) Statement of Compliance & Accounting Conventions:
The financial statements for the year ended March 31, 2025 have been prepared in accordance with the Indian Accounting Standards
(hereinafter referred to as the "Ind AS") as notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) read
with Section 133 of the Companies Act, 2013 ("the Act") and rules and regulations notified thereunder to the extent applicable and the
other relevant provisions of the Act, pronouncements of the regulatory bodies applicable to the company.
The accounting policies are applied consistently over the years since adoption of Ind-AS as basis for preparation and disclosure of
the financial statements except where a newly issued accounting standard is initially adopted or a revision to an existing accounting
standard requires a change in the accounting policy hitherto in use.
As made effective from April 01, 2023, the company has adopted the amendments to Ind-AS vide Companies (Indian Accounting
Standard) Amendment Rules, 2023 notifying amendment to existing Ind AS. These amendments to the extent relevant to the Company's
operation include amendment to Ind AS 1 "Presentation of Financial Statements" which requires the entities to disclose their material
accounting policies rather than their significant accounting policies, Ind AS 8 "Accounting Policies, Changes in Accounting Estimates and
Errors" which has introduced a definition of 'accounting estimates' and includes amendments to help entities distinguish changes in
accounting policies from changes in accounting estimates. Further consequential amendments with respect to the concept of material
accounting policies have also been made in "Ind AS 107 "Financial Instruments: Disclosures".
Apart from above there are other material amendments to various Ind-AS including Ind AS 101 "First-time Adoption of Indian Accounting
Standards", Ind AS 103 "Business Combinations, Ind AS 109 "Financial Instruments " Ind AS 115 "Revenue from Contracts with
Customers", Ind AS 12 "Income Taxes". These amendments and other amendments have reduced the scope of the initial recognition
exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences.
The company has reviewed the amendments to Ind-AS as notified vide Companies (Indian Accounting Standard) Amendment Rules,
2023 and ascertained the revision in Ind-AS does not have any material impact on the reported amounts of assets, equity, liabilities,
incomes, expenses, profits, losses and earning per share for the year.
The Financial Statements have been prepared on a historical cost basis except the following assets and liabilities which have been
measured at fair values:
• Certain Financial Assets and Liabilities that are measured at Fair Value
Items included in the financial statements are measured using the currency of the primary economic environment in which
the Company operates ('the functional currency'). The financial statements are presented in Indian rupee (INR), which is the
Company's functional and presentation currency.
b) Use of Estimates:
The preparation of financial statements requires management to make estimates and assumptions that are believed to be
reasonable under the circumstances and such estimates and assumptions may affect the reported amount of assets and liabilities,
classification of assets and liabilities into non-current and current and disclosures relating to contingent liabilities as at the date of
financial statements and the reported amounts of income and expenses and cash flows during the reporting period. Although the
financial statements have been prepared based on the management's best knowledge of current events and procedures/actions,
the actual results may differ on the final outcome of the matters/transactions/procedures to which the estimates relate. All assets
and liabilities are classified into current and non-current generally based on the criteria of realisation/settlement within a twelve
months period from the balance sheet date.
c) 1. Property, Plant and Equipment (PPE):
The Company had applied for the one-time transition exemption of considering the carrying cost on the transition date i.e. 1st
April, 2017 as the deemed cost under IND AS, regarded thereafter as historical cost.
The cost of an item of property, plant and equipment is recognized as an asset if, and only if:
(a) it is probable that future economic benefits associated with the item will flow to the entity; and
(b) the cost of the item can be measured reliably.
The acquisition of property, plant and equipment, directly increasing the future economic benefits of any particular existing item
of property, plant and equipment, which are necessary for the Company to obtain the future economic benefits from its other
assets, are recognized as assets.
The items of Property, Plant and Equipment are stated at cost of acquisition/construction (less Accumulated Depreciation and
Impairment, if any). The cost of Property, Plant and Equipment comprises of their purchase prices including freight, duties, taxes or
levies, directly attributable cost of bringing the assets to their working conditions for their intended use. The Company capitalises
its Property, Plant and Equipment at a value net of GST/ Other Tax Credits received/receivable during the year in respect of eligible
item of Property, Plant and Equipment. Subsequent costs are included in the carrying amount of respective Property, Plant and
Equipment or recognized as separate assets as appropriate, only if such costs increase the future benefits from the existing items
beyond their previously assessed standard of performance and cost of such items can be measured reliably.
3. Depreciation & Amortization:
The Depreciation on tangible items of Property, Plant and Equipment is provided on straight line method for the period of
acquisition/construction i.e. from the period from which such assets were available for their intended use on pro-rata basis on
the basis of useful life of each of the fixed assets as per Schedule II of the Companies Act, 2013 and in the manner specified in
Schedule II of the Companies Act, 2013.
d) Inventories
The Inventories of Raw Materials-uncut ships have been valued at cost. The Trading Goods have been valued at cost or net realisable
value whichever is lower. The cost of Raw Materials and Trading Goods comprises of the purchase price including duties and taxes,
freight inwards and other expenditure directly attributable to the acquisition.
Consumable Stores and Spares are considered to have been consumed at the time of purchases.
I n ship recycling industry, the weight of ship purchased is accounted in terms of LDT/MT of the ship at the time of its construction.
Ascertaining weight of ship at the time of purchase is not possible due to its nature and size. There is loss of weight of ship on account
of corrosion and other factors during the usage of ship during its operating years and its voyage for long period cutting loss. The
inventory at the balance sheet date is ascertained by the management by reducing the weight of the scrap sold together with the
estimated wastage of the material.
e) Revenue Recognition:
Tevenue is measured at the fair value of the consideration received or receivable from the customers/parties net of returns, rebates,
and discount to the customers and amounts collected on behalf of third parties. The 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.
Sale of Goods:
T he revenue from the sale of goods is recognized at the transaction price when the company had transferred the property in Goods to
the buyer for a price or all significant risks and rewards of ownership had been transferred to the buyer and no significant uncertainty
existed as to the amount of consideration that would be derived from such sale. The recognition event is usually the dispatch of goods
to the buyer such that the Company retains no effective control over the goods dispatched.
Rent Income:
Rental income is recognized in the period to which such income relates.
Interest Income:
I ncome from investments and deposits, where appropriate, is taken into revenue in full on declaration or accrual on time basis and tax
deducted at source thereon is treated as advance tax. The interest income from a financial asset is recognized when it is probable that
the economic benefits will flow to the company and the amount interest income can be measured reliably.
f) Foreign Currency Transactions
The Company's financial statements have been prepared and presented in Indian Rupees (?) which is also its functional currency.
The transactions in foreign currency initially have been recorded using the rate of exchange prevailing on the date of transactions. The
differences arising on the settlement/restatement of the foreign currency denominated Financial Assets/Liabilities into Indian rupees
have been recognized as expenses/income (net) of the year and carried to the statement of profit and loss.
The monetary items denominated in foreign currencies outstanding as at the end of the reporting period, are translated at the exchange
rates prevailing as at the end of the reporting period.
g) Employee Benefits:
1. Short Term Obligations:
Short term employee benefits of like wages, salaries and other monetary and non-monetary benefits are recognized in the period
during which services are rendered by the employees and are recognized at the value at amounts at which liabilities have been settled
or are expected to be settled.
2. Post-Employment and Other Long-Term Employee Benefits:
2.1 Contribution to Provident Fund:
The Company's contributions to the Employee Provident Fund and Employee State Insurance are remitted as per the provisions
relating to the Employee Provident Fund Scheme and Employee State Insurance Scheme respectively and such contributions are
charged to the Statement of Profit & Loss of the period to which contributions relate.
2.2 Gratuity:
The management of the company is of the view that none of the employees were eligible in respect of which the company was
required to make contribution as per the provisions relating to the Payment of Gratuity and accordingly provision for gratuity was
not required to be made. However, if the company is required to make payment of gratuity on happening of any event/incident
due to which the provisions relating to payment of gratuity becomes applicable to the company, the same will be accounted as
and when incurred.
h) Borrowing Costs
The borrowing costs incurred during the year have been debited to the Statement of Profit and Loss of the current year.
i) Operating Segment
The Company identifies operating segments on the basis of dominant source, nature of risks and returns and the internal organization.
The operating segments are the segments for which separate financial information is available and for which operating profit/loss
amounts are evaluated regularly by the Managing Director/Chief Executive Officer who is Company's chief operating maker in deciding
how to allocate resources and in assessing performance.
The dominant source of income of the company is from Manufacturing (Ship Breaking Activities) and Trading of Scrap of Iron and Steel.
On the basis of dominant source, nature of risks and returns and the internal organization, the company has identified two operating
segments: i. Manufacturing (Ship Breaking) and ii. Trading.
The reporting of segment information is the same as provided to the management for the purpose of the performance assessment and
resource allocation to the segments.
The following specific accounting policies have been followed for segment reporting:
i. Segment revenue includes sales and other operational revenue directly identifiable with/allocable to the segment.
ii. Expenses that are directly identifiable with/allocable to segments
iii. I ncome/Expenses which relates to the Company as a whole and not allocable to segments is included in unallocable corporate
income/expenditure.
The geographical/regulatory environment in which the company operates does not materially differ considering the political and
economic environment, the type of customers, assets employed and the risk and return associated in respect of each of the geographical
area.
j) Taxes On Income:
1. Current Tax:
The provision for current tax is made as per the provisions of the Income Tax Act, 1961.
Taxes on income have been determined based on the tax rates and tax laws that have been enacted or substantively enacted by
the balance sheet date. The current tax liabilities and assets are measured at the amounts expected to be paid or to be recovered
from the taxation authorities as at the balance sheet date.
The current tax liabilities and assets are offset where the entity has a legally enforceable right to offset and intends either to settle
on a net basis or to realise the assets and settle the liabilities simultaneously.
The current income tax relating to items recognized outside profit or loss is recognized either in the Other Comprehensive Income
or in Other Equity Directly.
2. Deferred Tax:
Deferred tax is provided on temporary differences between the tax bases of assets and liabilities as per the provisions of the
Income Tax Act, 1961 and their carrying amounts for financial reporting purposes as at the balance sheet date.
Deferred tax liabilities are recognized for all taxable temporary timing differences. Deferred tax assets are recognized for all
deductible taxable temporary timing differences, the carry forward of unused tax losses and unused tax credits to the extent
to which future taxable profits are expected to be available against which the deductible temporary differences and the carry
forward of unused tax losses and unused tax credits can be utilized/set-off.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is
realised based on the tax rates and tax laws that have been enacted or substantially enacted by the end of the reporting period.
The carrying amount of deferred tax assets are reviewed at the end of each reporting period. The net deferred tax assets and
liabilities are not discounted to the present value as at the end of each period.
Deferred tax assets and deferred tax liabilities are off set when there is a legally enforceable right to set-off assets against liabilities
representing current tax and where the deferred tax assets and deferred tax liabilities relate to taxes on income levied by the same
governing taxation laws.
k) 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 groups of assets.
Impairment loss is recognized when the carrying amount of an asset exceeds recoverable amount.
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