3. SIGNIFICANT ACCOUNTING POLICIES
a) Cash & Cash Equivalents
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short term
balances (with an original maturity of three months or less from the date of acquisition) and highly
liquid investments that are readily convertible into known amounts of cash and which are subject to
insignificant risk of changes in value.
b) Cash flow statement
Cash flows are reported using the indirect method, whereby net profit after tax is adjusted for the
effects of transactions of non-cash nature, tax and any deferrals or accruals of past or future cash
receipts or payments. The cash flows are prepared for the operating, investing and financing
activities of the Company.
c) Property plant and equipment (PPE)
The property plant and equipment are the assets held for the use in the supply of services
Property, plant and equipment's are stated in the balance sheet at cost (net of duty/ tax credit
availed) less accumulated depreciation and accumulated impairment losses.
Cost of acquisition is inclusive of freight, non-refundable duties & taxes and other directly
attributable cost of bringing the asset to its working condition for the intended use.
Depreciation is recognised to write off the cost of assets less their residual values over their useful
lives, using the Straight line method. The estimated useful lives, residual values and depreciation
method are reviewed at the end of each reporting period, with the effect of any changes in estimate
accounted for on a prospective basis.
d) Intangible assets
Intangible assets are identified non-monetary assets without physical existence.
Intangible assets with finite useful lives that are acquired separately are capitalized and carried at
cost less accumulated amortisation and accumulated impairment losses.
Intangible assets are recognized in books only when it is probable that future economic benefits
associated with the asset will flow to the company and the cost can be measured reliably.
The cost of the intangible asset shall include the purchase price, including non-refundable duties and
taxes, all the directly attributable costs to bring the intangible to the present location, working
condition and intended use.
Intangible assets represent Computer software whose cost is amortized over their expected useful
life 2 to 5 years on a straight-line basis.
The estimated useful life and amortization method are reviewed at the end of each reporting period,
with the effect of any changes in estimate being accounted for on a prospective basis.
Impairment loss, if any, is provided to the extent, the carrying amount of assets exceeds their
recoverable amount. Recoverable amount is the higher of an assets net selling price and the present
value of estimated future cash flows expected to arise from the continuing use of the asset and from
its disposal at the end of its useful life.
e) Impairment of tangible and intangible assets
"At the end of each reporting period, the Company reviews the carrying amounts of its tangible and
intangible assets to determine whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in
order to determine the extent of the impairment loss (if any). When it is not possible to estimate the
recoverable amount of an individual asset, the Company estimates the recoverable amount of the
cash-generating unit to which the asset belongs. When a reasonable and consistent basis of
allocation can be identified, corporate assets are also allocated to individual cash-generating units,
or otherwise they are allocated to the smallest group of cash-generating units for which a
reasonable and consistent allocation basis can be identified."
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested
for impairment at least annually, and whenever there is an indication that the asset may be
impaired. Recoverable amount is the higher of fair value less costs of disposal and value in use. In
assessing value in use, the estimated future cash flows are discounted to their present value using a
pretax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the
recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable
amount. An impairment loss is recognised immediately in profit or loss. When an impairment loss
subsequently reverses, the carrying amount of the asset (or a cash generating unit) is increased to
the revised estimate of its recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss been
recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is
recognised immediately in profit or loss.
f) Revenue recognition
As per Ind AS 109, Financial Instruments, Interest income is recognised on a time proportion basis
taking into account the amount outstanding and the applicable interest rate.
g) "Financial instruments"
A financial instrument is a contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity. Financial assets and financial liabilities are recognized
when the Company becomes a party to the contractual provisions of the relevant instrument and
are initially measured at fair value. Transaction costs that are directly attributable to the acquisition
or issue of financial assets and financial liabilities (other than financial assets and financial liabilities
at fair value through profit or loss) are added to or deducted from the fair value of the financial
assets or financial liabilities at fair value through profit or loss are recognized immediately in profit
or loss.
Financial Asset
(i) Financial assets comprise of investments in Equity, Trade Receivables, Cash and Cash Equivalents
and Other Financial Assets.
(ii) Depending on the business model (i.e) nature of transactions for managing those financial assets
and its contractual cash flow characteristics, the financial assets are initially measured at fair value
and subsequently measured and classified at:
a) Amortized cost; or
b) Fair value through Other Comprehensive Income (FVTOCI); or
c) Fair value through Profit or Loss (FVTPL)
d) Amortized cost represents carrying amount on initial recognition at fair value plus or minus
transaction cost."
(iv) The company derecognises a financial asset when the contractual rights to the cash flows from
the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of
ownership of the asset to another party. On derecognition of a financial asset or part thereof, the
difference between the carrying amount measured at the date of recognition and the consideration
received including any new asset obtained less any new liability assumed shall be recognized in the
statement of profit and Loss.
(v) The company assesses at each balance sheet date whether the financial asset or group of
financial assets is impaired. IND AS 109 requires expected credit losses to be measured through a
loss allowance. The company recognizes lifetime expected losses for trade receivables that do not
constitute a financing transaction. For all other financial assets, expected credit losses are measured
at an amount equal to 12 month expected credit losses or at an amount equal to lifetime expected
losses, if the credit risk on the financial asset has increased significantly since initial recognition.
h) Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as
equity in accordance with the substance of the contractual arrangements and the definitions of a
financial liability and an equity instrument."
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments issued by a Company entity are recognised at the
proceeds received, net of direct issue costs.
Repurchase of the Company's own equity instruments is recognised and deducted directly in equity.
No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the
Company's own equity instruments.
Financial Liability
Financial liabilities comprise of Borrowings from Banks, Trade payables, Derivative financial
instruments, financial guarantee obligation and other financial liabilities.
(i) All financial liabilities are subsequently measured at amortised cost using the effective interest
method or at FVTPL.
(ii) Financial liabilities are derecognised when and only when it is extinguished (i.e) when the
obligation specified in the contract is discharged or cancelled or expired.
(iii) Upon de-recognition of its financial liabilities or part thereof, the difference between the
carrying amount of a financial liability that has been extinguished or transferred to another party
and the consideration paid including any non-cash assets transferred or liabilities assumed is
recognized in the Statement of Profit and Loss.
i) Employee benefit
Short term employee benefits for services rendered by employees are recognised during the period
when the services are rendered.
j) Segment Reporting
The Company is engaged in only one business of Financial Activities. Accordingly there are no
separate reportable segments according to Ind AS 108 'Operating Segments' issued under the
Companies (Accounting Standards) Rules, 2006.
k) Leases
Ind AS 116 'Leases' replaces Ind AS 17 - Leases and related interpretation and guidance. However,
The Company has not entered into any Lease Agreements and hence this is not applicable.
l) Earnings per share
The basic earnings per share has been computed by dividing the net income attributable to equity
shareholders by weighted average number of shares outstanding during the year / period.
The diluted earnings per share have been computed using weighted average number of shares
adjusted for effects of all potentially dilutive equity shares.
m) Taxation
Tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent
that it relates to a business combination, or items recognised directly in equity or in OCI.
Current tax: Current tax is measured at the amount expected to be paid in respect of taxable income
for the year in accordance with the Income Tax Act, 1961. Current tax comprises the tax payable on
the taxable income or loss for the year and any adjustment to the tax payable in respect of previous
years. It is measured using tax rates enacted at the reporting date.
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