14. Provisions & contingent liabilities
Provisions are recognised when the Company has 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. When the Company expects some or all of a provision to be reimbursed, for
example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is
virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
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
recognised as a finance cost.
Contingent liability arises when the Company has:
a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non¬
occurrence of one or more uncertain future events not wholly within the control of the entity; or
b) a present obligation that arises from past events but is not recognised because:
(i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or
(ii) the amount of the obligation cannot be measured with sufficient reliability.
Contingent liabilities are not recorded in the financial statement but, rather, are disclosed in the Balance sheet but are disclosed in
the note to the financial statement.
(B) Key accounting estimates
1. Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted
prices in active markets, their fair value are measured using valuation techniques. The inputs to these models are taken from
observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values.
Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions relating to
these factors could affect the reported fair value of financial instruments. See Note 16 for further disclosures.
2. Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher
of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data
from binding sales transactions, conducted at arm's length, for similar assets or observable market prices less incremental costs
for disposing of the asset. The value in use calculation is based on a discounted cash flow (DCF) model. The cash flows are derived
from the budget and do not include restructuring activities that the Company is not yet committed to or significant future
investments that will enhance the asset's performance of the CGU being tested. The recoverable amount is sensitive to the
discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation
purposes. There is no losses due to impairment of asset.
3. Taxes
Deferred tax assets are recognised for unused tax credits to the extent that it is probable that taxable profit will be available
against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred tax
assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning
strategies.
The Company has Rs. NIL as at March 31, 2024 (Rs. NIL as at March 31, 2023) of tax credits carried forward. These credits can be
utilised over the period of 15 years. The Company has taxable temporary difference and tax planning opportunities available that
could support the recognition of these credits as deferred tax assets. On this basis, the Company has determined that it can
recognise deferred tax assets on the tax credits carried forward.
4. Property, Plant and Equipment
The carrying values of Property, plant and equipment have been disclosed in Note 2.
5. Intangible assets
There is no intangible asset in the company.
6. Allowance for doubtful trade receivables
Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for
estimated irrecoverable amounts.
Estimated irrecoverable amounts are derived based on a provision matrix which takes into account various factors such as
customer specific risks, geographical region, product type, currency fluctuation risk, repatriation policy of the country, country
specific economic risks, customer rating, and type of customer, etc. The allowances for doubtful trade receivables were NIL as at
March 31, 2024 (as at March 31, 2023: Rs. NIL ).
Individual trade receivables are written off when the management deems them not to be collectable.
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