K. Provisions:
Provisions are recognized when the Company has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Company will be
required to settle the obligation, and are liable estimate can be made of the amount of
the obligation.
If the effect of the time value of money is material, provisions are determined by
discounting the expected future cash flows to net present value using an appropriate
pre-tax discount rate that reflects current market assessments of the time value of
money and, where appropriate, the risks specific to the liability.
A present obligation that arises from past events, where it is either not probable that an
outflow of resources will be required to settle or a reliable estimate of the amount
cannot be made, is disclosed as a contingent liability.
Contingent liabilities are also disclosed when there is a possible obligation arising from
past events, the existence of which will be confirmed only by the occurrence or non¬
occurrence of one or more uncertain future events not wholly within the control of the
company.
Claims against the Company, where the possibility of any outflow of resources in
settlement is remote, are not disclosed as contingent liabilities.
Contingent assets are not recognized in the financial statements since this may result in
the recognition of income that may never be realized. However, when the realization of
income is virtually certain, then the related asset is not a contingent asset and is
recognized.
I. Financial instruments:
a. Recognition and Initial recognition-
The Company recognizes financial assets and financial liabilities when it becomes a
party to the contractual provisions of the instrument. All financial assets and
liabilities are recognized at fair value on initial recognition, except for trade
receivables which are initially measured at transaction price. transaction costs that
are directly attributable to the acquisition or issues of financial assets and financial
liabilities that are not at fair value through profit or loss, are added to the fair value
on initial recognition.
A financial asset or financial liability is initially measured at fair value plus, for an
item not at fair value through profit and loss (FVTPL), transaction costs that are
directly attributable to its acquisition or issue.
b. Classification and Subsequent measurement-
I. Financial assets:
On initial recognition, a financial asset is classified as measured at
- Amortized cost.
-FVTPL
Financial assets are not reclassified subsequent to their initial recognition, except if
and in the period the Company changes its business model for managing financial
assets.
A financial asset is measured at amortized cost if it meets both of the following
conditions and is not designated as at FVTPL:
- The asset is held within a business model whose objective is to hold assets to collect
contractual cash flows;
&
- The contractual terms of the financial asset give rise on specified dates to cash flows
that are solely payments of principal and interest on the principal amount
outstanding.
All financial assets not classified as measured at amortized cost as described
above are measured at FVTPL. On initial recognition, the Company may
irrevocably designate a financial asset that otherwise meets the requirements
to be measured at amortized cost at FVTPL if doing so eliminates or
significantly reduces an accounting mismatch that would otherwise arise.
Financial assets: Business model assessment
The Company makes an assessment of the objective of the business model in which
a financial asset is held at a portfolio level because this best reflects the way the
business is managed, and information is provided to management. The information
considered includes:
- The stated policies and objectives for the portfolio and the operation of
those policies in practice. These include whether management’s strategy
focuses on earning contractual interest income, maintaining a particular
interest rate profile, matching the duration of the financial assets to the
duration of any related liabilities or expected cash outflows or realizing
cash flows through the sale of the assets.
1.1. How the performance of the portfolio is evaluated and reported to the
Company’s management.
1.2. The risks that affect the performance of the business model (and the financial
assets held within that business model) and how those risks are managed.
1.3. How managers of the business are compensated-e.g., whether compensation is
based on the fair value of the assets managed or the contractual cash flows collected;
and
The frequency, volume and timing of sales of financial assets in prior periods, the reasons for
such sales and expectations about future sales activity.
Transfers of financial assets to third parties in transactions that do not qualify for
derecognition are not considered sales for this purpose, consistent with the Company’s
continuing recognition of the assets.
Financial assets that are held for trading or are managed and whose performance is evaluated
on a fair value basis are measured at FVTPL.
Financial assets: Assessment whether contractual cash flows are solely payments of principal
and interest for the purposes of this assessment, ‘principal’ is defined as the fair value of the
financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of
money and for the credit risk associated with the principal amount outstanding during a
particular period of time and for other basic lending risks and costs (e.g., liquidity risk and
administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest,
the Company considers the contractual terms of the instrument. This includes assessing
whether the financial asset contains a contractual term that could change the timing or
amount of contractual cash flows such that it would not meet this condition. In making this
assessment, the Company considers:
- Contingent events that would change the amount or timing of cashflows.
- Terms that may adjust the contractual coupon rate, including variable interest rate
features.
- Prepayment and extension features; and
- Terms that limit the Company’s claim to cash flows from specified assets (e.g., non¬
recourse features).
A prepayment feature is consistent with the solely payments of principal and interest criterion
if the prepayment amount substantially represents unpaid amounts of principal and interest
on the principal amount outstanding, which may include reasonable additional compensation
for early termination of the contract.
Additionally, for a financial asset acquired at a significant discount or premium to its
contractual paramount, a feature that permits or requires prepayment at an amount that
substantially represents the contractual par amount plus accrued (but unpaid) contractual
interest (which may also include reasonable additional compensation for early termination) is
treated as consistent with this criterion if the fair value of
Financial assets: Subsequent measurement and gains and losses
- Financial assets at FVTPL: These assets are subsequently measured at fair
value. Net gains and losses, including any interest or dividend income, are
recognized in profit or loss.
- Financial assets at amortized cost: These assets are subsequently measured at
amortized cost using the effective interest method. The amortized cost is reduced
by impairment losses. Interest income, foreign exchange gains and losses and
impairment are recognized in profit or loss. Any gain or loss on de recognition is
recognized in profit or loss.
Classification, Subsequent measurement and gains and losses financial liabilities
are classified as measured at amortized cost or FVTPL. A financial liability is
classified as at FVTPL if it is classified as held for trading, or it is a derivative or it
is designated as such on initial recognition. Financial liabilities at FVTPL are
measured at fair value and net gains and losses, including any interest expense, are
recognized in profit or loss. Other financial liabilities are subsequently measured at
amortized cost using the effective interest method. Interest expense and foreign
exchange gains and losses are recognized in profit or loss. Any gain or loss on
derecognition is also recognized in profit or loss.
c. Derecognition -
- Financial assets:
The Company derecognizes a financial asset when the contractual rights to
the cash flows from the financial asset expire, or it transfers the rights to
receive the contractual cash flows in a transaction in which substantially all of
the risks and rewards of ownership of the financial asset are transferred or in
which the Company neither transfers nor retains substantially all of the risks
and rewards of ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognized
on its balance sheet but retains either all or substantially all of the risks and
rewards of the transferred assets, the transferred assets are not derecognized.
- Financial liabilities:
The Company derecognizes a financial liability when its contractual
obligations are discharged or cancelled or expire. The Company also
derecognizes a financial liability when its terms are modified and the cash
flows under the modified terms are substantially different. In this case, a new
financial liability based on the modified terms is recognized at fair value. The
difference between the carrying amount of the financial liability extinguished
and the new financial liability with modified terms is recognized in profit.
d. Offsetting -
Financial assets and financial liabilities are offset, and the net amount presented in the
balance sheet when and only when, the Company currently has a legally enforceable right
to set off the amounts and it intends either to settle them on a net basis or to realize the
asset and settle the liability simultaneously.
e. Impairment-
The Company recognizes loss allowances for expected credit losses on financial assets
measured amortized cost.
At each reporting date, the Company assesses whether financial assets carried at
amortized cost and debt securities at fair value through other comprehensive income
(FVOCI) are credit impaired. A financial asset is ‘credit impaired’ when one or more
events that have a detrimental impact on the estimated future cash flows of the financial
asset have occurred.
Evidence that a financial asset is credit impaired includes the following observable data:
- Significant financial difficulty of the borrower or issuer.
- The restructuring of a loan or advance by the Company on terms that the
Company would not consider otherwise.
- It is probable that the borrower will enter bankruptcy or other financial re
organization; or
- The disappearance of an active market for a security because of financial
difficulties.
The Company measures loss allowances at an amount equal to lifetime expected credit
losses, except for the following, which are measured as 12month expected credit losses:
a. Debt securities that are determined to have low credit risk at the reporting date;
and
b. Other debt securities and bank balances for which credit risk (i.e., the risk of
default occurring over the expected life of the financial instrument) has not increased
significantly since initial recognition. Loss allowances for trade receivables are always
measured at an amount equal to lifetime expected credit losses.
c. Lifetime expected credit losses are the expected credit losses that result from all
possible default events over the expected life of a financial instrument. 12-month
expected credit losses are the portion of expected credit losses that result from default
events that are possible within 12 months after the reporting date (or a shorter period
if the expected life of the instrument is less than 12 months).
In all cases, the maximum period considered when estimating expected credit losses is the
maximum contractual period over which the Company is exposed to credit risk.
When determining whether the credit risk of a financial asset has increased significantly since
initial recognition and when estimating expected credit losses, the Company considers
reasonable and supportable information that is relevant and available without undue cost or
effort. This includes both quantitative and qualitative information and analysis, based on the
Company’s historical experience and informed credit assessment and including forward
looking information.
Measurement of expected credit losses -
Expected credit losses are a probability weighted estimate of credit losses. Credit losses are
measured as the present value of all cash shortfalls (i.e., the difference between the cash flows
due to the Company in accordance with the contract and the cash flows that the Company
expects to receive).
Presentation of allowance for expected credit losses in the balance sheet -
Loss allowances for financial assets measure data mortised cost are deducted from the gross
carrying amount of the assets.
Write-off -
The gross carrying amount of a financial asset is written off (either partially or in full) to the
extent that there is no realistic prospect of recovery. This is generally the case when the
Company determines that the trade receivable does not have assets or sources of income that
could generate sufficient cash flows to repay the amounts subject to the write off. However,
financial assets that are written off could still be subject to enforcement activities in order to
comply with the Company’s procedures for recovery of amounts due.
j. Estimation of uncertainties relating to the global health pandemic from COVID-19
The Company has made detailed assessment of its liquidity position for the next year and
there coverability and carrying value of its assets comprising property, inventory and trade
receivables. Based on current indicators of future economic conditions, the Company expects
to recover the carrying amount of these assets. The Company continues to evaluate them as
highly probable considering the orders in hand. The situation is changing rapidly giving rise
to inherent uncertainty around the extent and timing of the potential future impact of the
COVID-19 which may be different from that estimated as at the date of approval of the
financial results. The Company will continue to closely monitor any material changes a rising
of future economic conditions and impact on its business.
The notes referred to above form an integral part of financial statements
As per Our Report of even date By order of Board of Directors
For Anjaneyulu & Co. For EQUIPPP SOCIAL IMPACT TECHNOLOGIES LIMITED
Chartered Accountants - FRN 000180S
K Narayana Murthy VINDHYA DRONAMRAJU SREENIVASA CHARY
Partner Whole Time Director KALMANOOR
M No: 026012 DIN : 03169319 Executive Director
DIN: 09105972
Date: 30-05-2025 AMOL ARVIND PALKAR P°°JA SHARMA
Place: Hyderabad Chief Executive Officer Company Secretary
M.No : A68710
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