1.13 Provisions, Contingent Liabilities and Capital Commitments
1.13.1 Provisions are recognized when there is a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the
obligation.
1.13.2 The expenses relating to a provision is presented in the Statement of
Profit and Loss net of reimbursements, if any.
1.13.3 If the effect of the time value of money is material, provisions are
discounted using a current pre-tax rate that reflects, when appropriate,
the risks specific to the liability. When discounting is used, the increase
in the provision due to the passage of time is recognized as a finance
cost.
1.13.4 Contingent liabilities are possible obligations whose existence will only
be confirmed by future events not wholly within the control of the
Company, or present obligations where it is not probable that an
outflow of resources will be required or the amount of the obligation
cannot be measured with sufficient reliability.
1.13.5 Contingent liabilities are not recognized in the financial statements but
are disclosed unless the possibility of an outflow of economic resources
is considered remote.
1.13.6 Contingent liabilities and Capital Commitments disclosed are in respect
of items which in each case are above the threshold limit.
1.14 Fair Value measurement
1.14.1 The Company measures certain financial instruments at fair value at
each reporting date.
1.14.2 Certain accounting policies and disclosures require the measurement of
fair values, for both financial and non- financial assets and liabilities.
1.14.3 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 in the principal or, in its absence,
the most advantageous market to which the Company has access at that
date. The fair value of a liability also reflects its non-performance risk.
1.15 Financial Assets
1.15.1 Initial recognition and measurement
Trade Receivables and debt securities issued are initially recognised
when they are originated. All other financial assets are initially
recognised when the Company becomes a party to the contractual
provisions of the instrument. All financial assets other than those
measured subsequently at fair value through profit and loss, are
recognised initially at fair value plus transaction costs that are
attributable to the acquisition of the financial asset.
1.15.2 Subsequent measurement
Subsequent measurement is determined with reference to the
classification of the respective financial assets. Based on the business
model for managing the financial assets and the contractual cash flow
characteristics of the financial asset, the Company classifies financial
assets as subsequently measured at amortised cost, fair value through
other comprehensive income or fair value through profit and loss.
Debt instruments at amortised cost
A 'debt instrument' is measured at the amortised cost if both the
following conditions are met:-
The asset is held within a business model whose objective is -
- To hold assets for collecting contractual cash flows; and
- Contractual terms of the asset give rise on specified dates to cash
flows that are solely payments of principal and interest (SPPI) on
the principal amount outstanding.
After initial measurement, such financial assets are subsequently
measured at amortised cost using the effective interest rate (EIR)
method. Amortised cost is calculated by taking into account any
discount or premium and fees or costs that are an integral part of the
EIR. The EIR amortisation is included in finance income in the
Statement of Profit and Loss. The losses arising from impairment are
recognised in the Statement of Profit and Loss.
Debt instruments at Fair value through Other Comprehensive Income
fFVOCn
A 'debt instrument' is measured at the fair value through Other
Comprehensive Income if both the following conditions are met:
The asset is held within a business model whose objective is achieved
by both
- collecting contractual cash flows and selling financial assets; and
- contractual terms of the asset give rise on specified dates to cash
flows that are SPPI on the principal amount outstanding.
After initial measurement, these assets are subsequently measured at
fair value. Interest income under effective interest method, foreign
exchange gains and losses and impairment losses are recognised in the
Statement of Profit and Loss. Other net gains and losses are recognised
in other comprehensive Income.
Debt instruments at Fair value through Profit or Loss (FVTPL)
Fair Value through Profit or Loss is a residual category for debt
instruments. Any debt instrument, which does not meet the criteria for
categorisation at amortised cost or as FVOCI, is classified as FVTPL.
After initial measurement, any fair value changes including any interest
income, foreign exchange gain and losses, impairment losses and other
net gains and losses are recognised in the Statement of Profit and Loss.
1.15.3 Impairment of financial assets
In accordance with Ind AS 109, the Company applies Expected Credit
Loss (“ECL”) model for measurement and recognition of impairment
loss on the financial assets measured at amortized cost and debt
instruments measured at FVOCI.
Loss allowances on trade receivables are measured following the
'simplified approach' at an amount equal to the lifetime ECL at each
reporting date. The application of simplified approach does not require
the Company to track changes in credit risk. Based on the past history
and track records the company has assessed the risk of default by the
customer and expects the credit loss to be insignificant. In respect of
other financial assets such as debt securities and bank balances, the loss
allowance is measured at 12 month ECL only if there is no significant
deterioration in the credit risk since initial recognition of the asset or
asset is determined to have a low credit risk at the reporting date.
1.16 Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported
in the Balance Sheet, if there is a currently enforceable legal right to offset the
recognized amounts and there is an intention to settle on a net basis, or to
realise the assets and settle the liabilities simultaneously.
1.17 Taxes on Income
1.17.1 Current Tax
Income-tax Assets and liabilities are measured at the amount expected
to be recovered from or paid to the taxation authorities. The tax rates
and tax laws used to compute the amount are those that are enacted or
substantively enacted, by the end of reporting period.
Current Tax items are recognised in correlation to the underlying
transaction either in the Statement of Profit and Loss, other
comprehensive income or directly in equity.
1.17.2 Deferred tax
Deferred tax is provided using the Balance Sheet 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.
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.
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 items are recognised in correlation to the underlying
transaction either in the Statement of Profit and Loss, other
comprehensive income 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.
1.18 Earnings per share
Basic earnings per share are calculated by dividing the profit or loss for the
period attributable to equity shareholders (after deducting preference
dividends, if any, and attributable taxes) by the weighted average number of
equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the profit or loss for
the period attributable to equity shareholders and the weighted average number
of shares outstanding during the period are adjusted for the effect of all dilutive
potential equity shares.
1.19 Classification of Assets and Liabilities as Current and Non-Current:
All assets and liabilities are classified as current or non-current as per the
Company's normal operating cycle (determined at 12 months) and oth er criteria
set out in Schedule III of the Act.
1.20 Cash and Cash equivalents
Cash and cash equivalents in the Balance Sheet include cash at bank, cash,
cheque, draft on hand and demand deposits with an original maturity of less
than three months, which are subject to an insignificant risk of changes in value.
For the purpose of Statement of Cash Flows, Cash and cash equivalents include
cash at bank, cash, cheque and draft on hand. The Company considers all highly
liquid investments with a remaining maturity at the date of purchase of three
months or less and that are readily convertible to known amounts of cash to be
cash equivalents.
1.21 Cash Flows
Cash flows are reported using the indirect method, where by net profit before
tax is adjusted for the effects of transactions of a non-cash nature, any deferrals
or accruals of past or future operating cash receipts or payments and item of
income or expenses associated with investing or financing cash flows. The cash
flows from operating, investing and financing activities are segregated.
1.22 CORPORATE SOCIAL RESPONSIBILITY
The Company has attracted the provision of section 135 and has contributed in
lacs Rs 15.50/- towards CSR activities for F.Y. 2023-24 as per required Section
135 of the Companies Act, 2013.s
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