3.15. Provision and Contingencies
A provision is recognized when the Company has a present obligation (legal or constructive) as a result
of 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. The expense
relating to a provision is presented in the Statement of Profit and Loss.
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.
If the Company has a contract that is onerous, the present obligation under the contract is recognised and
measured as a provision However, before a separate provision for an onerous contract is established, the
Company recognizes any impairment loss that has occurred on assets dedicated to that contract.
An onerous contract is a contract under which the unavoidable costs (i.e., the costs that the Company
cannot avoid because it has the contract) of meeting the obligations under the contract exceed the
economic benefits expected to be received under it. The unavoidable costs under a contract reflect
the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any
compensation or penalties arising from failure to fulfil it.
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed
by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the
Company or a present obligation that is not recognized because it is not probable that an outflow of
resources will be required to settle the obligation. The Company does not recognize a contingent liability
but discloses its existence in the Standalone Financial Statements.
3.16. Cash and Cash Equivalents
Cash and cash equivalent for the purpose of presentation in cash flow statement and in the balance sheet
comprise cash at banks and on hand and short-term deposits with an original maturity of three months
or less that are readily convertible to known amounts of cash, which are subject to an insignificant risk of
changes in value.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability
or equity instrument of another entity.
A Financial Assets
1. Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not
recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of
the financial asset.
In order for a financial asset to be classified and measured at amortized cost or fair value through
OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on
the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at
an instrument level. Financial assets with cash flows that are not SPPI are classified and measured at
fair value through profit or loss, irrespective of the business model
The Company’s business model for managing financial assets refers to how it manages its financial
assets in order to generate cash flows. The business model determines whether cash flows will result
from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified
and measured at amortized cost are held within a business model with the objective to hold financial
assets in order to collect contractual cash flows while financial assets classified and measured at
fair value through OCI are held within a business model with the objective of both holding to collect
contractual cash flows and selling.
Purchases or sales of financial assets that require delivery of assets within a time frame established
by regulation or convention in the marketplace (regular way trades) are recognised on the trade date,
i.e., the date that the Company commits to purchase or sell the asset.
ii Subsequent Measurement
For purposes of subsequent measurement, financial assets are classified in below categories:
Debt instruments at amortized cost
Equity instruments measured at fair value through other comprehensive income (FVTOCI) Financial
assets at fair value through profit or loss.
Debt instruments at amortized cost other than derivative contracts
A ‘debt instrument’ is measured at the amortized 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 amortized cost using
the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any
discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR
amortization is included in Other Income in the Statement of Profit and Loss. The losses arising from
impairment are recognised in the Statement of Profit and Loss. This category generally applies to
trade and other receivables.
Equity Investments
All equity investments in scope of Ind-AS 109 are measured at fair value other than equity
investments measured at deemed cost on first time adoption of Ind AS. Equity instruments which are
held for trading are classified as at FVTPL. For all other equity instruments, the Company decides to
classify the same either as at FVTOCI or Fair Value Through Profit or Loss (FVTPL). The Company
makes such election on an instrument-by-instrument basis. The classification is made on initial
recognition and is irrevocable.
If the Company decides to classify an equity instrument at FVTOCI, then all fair value changes on
the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts
from OCI to Statement of Profit and Loss, even on sale of investment. However, the Company may
transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes
recognized in the Statement of Profit and Loss
iii Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a Company’s similar
financial assets) is primarily derecognized when:
The rights to receive cash flows from the asset have expired, or
The Company has transferred substantially all the risks and rewards of the asset
iv 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 following financial assets and credit risk
exposure:
Financial assets that are debt instruments, and are measured at amortized cost e.g., loans, debt
securities, deposits, trade receivables and bank balance.
The Company follows ‘simplified approach’ for recognition of impairment loss allowance on Trade
receivables.
The application of simplified approach does not require the Company to track changes in credit risk.
Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right
from its initial recognition.
Lifetime ECL are the expected credit losses resulting from all possible default events
over the expected life of a financial instrument. ECL is the difference between all contractual cash
flows that are due to the Company in accordance with the contract and all the cash flows that the
entity expects to receive, discounted at the original EIR. When estimating the cash flows, an entity is
required to consider:
a. All contractual terms of the financial instrument (including prepayment, extension, call and similar
options) over the expected life of the financial instrument. However, in rare cases when the
expected life of the financial instrument cannot be estimated reliably, then the entity is required
to use the remaining contractual term of the financial instrument
b. Cash flows from the sale of collateral held or other credit enhancements that are integral to the
contractual terms
As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance
on portfolio of its trade receivables. The provision matrix is based on its historically observed default
rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At
every reporting date, the historical observed default rates are updated and changes in the forward- looking
estimates are analyzed.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/
expense in the Statement of Profit and Loss (SPL). This amount is reflected under the head ‘other
expenses’ in the SPL. The balance sheet presentation for various financial instruments is described below:
Financial assets measured at amortized cost: ECL is presented as an allowance, i.e., as an integral part
of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount.
Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross
carrying amount
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on
the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to
enable significant increases in credit risk to be identified on a timely basis.
i) Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit
or loss, loans and borrowing or payables, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs.
The Company’s financial liabilities include trade and other payables, loans and borrowings including
bank overdrafts and financial guarantee contracts
ii) Subsequent Measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include derivatives, financial liabilities held for trading
and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial
liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the
near term. This category also includes derivative financial instruments entered into by the Company that
are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated
embedded derivatives are also classified as held for trading unless they are designated as effective
hedging instruments.
Gains or losses on liabilities held for trading are recognised in the Statement of Profit and Loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated
as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities
designated as FVTPL, fair value gains/ losses attributable to changes in own credit risks are recognized in
OCI. These gains/ losses are not subsequently transferred to SPL. However, the Company may transfer
the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in
the Statement of Profit and Loss
3.18.Trade Payable
Trade payables represent liabilities for goods and services provided to the Company prior to the end
of financial year which are unpaid. Trade and other payables are presented as current liabilities unless
payment is not due within 12 months after the reporting period.
De-Recognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as the de-recognition of the original liability and the recognition of a new liability. The
difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
Reclassification of Financial Assets and Liabilities:
The Company determines classification of financial assets and liabilities on initial recognition. After initial
recognition, no reclassification is made for financial assets which are equity instruments and financial
liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a
change in the business model for managing those assets. Changes to the business model are expected to
be infrequent. The Company’s senior management determines change in the business model as a result of
external or internal changes which are significant to the Company’s operations. Such changes are evident
to external parties. A change in the business model occurs when the Company either begins or ceases to
perform an activity that is significant to its operations If the Company reclassifies financial assets, it applies
the reclassification prospectively from the reclassification date which is the first day of the immediately next
reporting period following the change in business model. The Company does not restate any previously
recognised gains, losses (including impairment gains or losses) or interest.
Financial assets and financial liabilities are off-set and the net amount is reported in the balance sheet if
there is a currently enforceable legal right to offset the recognised amounts and there is an intention to
settle on a net basis, to realize the assets and settle the liabilities simultaneously. The legally enforceable
right must not be contingent on future events and must be enforceable in the normal course of business
and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
Note 11.2 : b) Terms / Rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs 10 each. Holder of each equity share is
entitled to one vote per share. The company declares and pays dividents in Indian Rupees. The dividend proposed
by the Board of Director is subject to approval of the shareholders in the ensuing Annual Genral Metting, except
in case of interim dividend. In the event of liquidation of the Company, the holders of equity shares will be entitled
to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in
proportion to the number of equity shares held by the shareholders.
34 (A) Additional regulatory information required by Schedule III to the companies Act , 2013
(i) The Company does not have any benami property held in its name. No proceedings have been initiated on or
are pending against the Company for holding benami property under the Benami transactions (Probibition) Act,
1988 (45 of 1988) and Rules made thereunder.
(ii) The Company has not been declared wilful defaulter by any bank or financial institution or other lender or
government or any government authority.
(iii) There is no income surrendered or disclosed as income during the year in tax assessment under the Income
Tax Act, 1961, (such assearch or survey) that has not been recorded in the books of account.
(iv) The Company has not traded or invested in crypto currency or virtual currency during the year.
(v) The company does not have any pending charges which is yet to be registered with the Registrar of Companies
beyond the statutory period.
(vi) The company has complied with the number of layers prescribed under (87) of section 2 of the Companies Act,
2013 read with the Companies (Restriction on number of Layers) Rules, 2017
(vii) The Company has not advanced or loaned or invested fund (either borrowed funds or share premium or any
other sources or kind of funds) to any other persons or entityies, including foreign entities (Intermediaries) with
the understanding that the intermediary shall:
(a) Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or
on behalf of the Parent Company (Ultimate Beneficiaries) or
b) Provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.
(viii) The company has not received any fund from any persons or entity(ies), inculding foreign entities (Funding
Party) with the understanding (Whether recorded in writing or otherwise) the Company Shall :
(a) Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or
on behalf of the Funding Party Ultimate beneficiaries) or
(b) Provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.
(ix) The Company does not have any transactions with Companies Struck off.
Note 35
Previous years figures have been regrouped whenever necessary to confirm to the current year presentation.
Note 36
All figures are in lakhs unless otherwise stated
Note 37
There were non Significant events after end of the reporting period which required any adjustment on the disclosure
in the financial statement subsequent to the reporting period.
As per our report of even date
For HEGDE & ASSOCIATES For and on behalf of the Board of Directors of TARMAT LTD
Chartered Accountants
(Registration No. 103610W)
Sd/- Sd/- Sd/- Sd/-
MANOJ SHETTY JERRY VARGHESE DILIP VARGHESE S. CHAKRABORTY
(PARTNER) Chairman Managing Director Company Secretary / CFO
Membership No.138593 Din No. 00012905 Din No. 01424196
Place: Mumbai
Date: 30.05.2025
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