Note : 1 Significant Accounting Policies
1) Company Overview
Adhata Global Limited (formerly MV Cotspin Limited ) is a public limited company listed with the Bombay Stock Exchange & Commodities Stock Exchange ( Currently Suspended ) and is primarily engaged in the business of trading in Timber.
2) Basis Of Preparation
(i) Compliance with Ind AS:
The financial statements comply in all material aspects with Indian Accounting Standards (“Ind AS”) notified under Section 133 of the Companies Act, 2013 (“the Act”), and relevant rules issued thereunder and relevant provisions of the Act. In accordance with proviso to the Rule 4A of the Companies (Accounts) Rules, 2014, the terms used in these financial statements are in accordance with the definitions and other requirements specified in the applicable Accounting standards.
(ii) The Ind AS Financial Statements have been prepared on a going concern basis using historical cost convention and on an accrual method of accounting, except for certain financial assets and liabilities as specified have been measured at actuarial valuation as required by relevant Ind AS.
3) Basis for Classification of Assets & Liabilities:
All the assets and liabilities have been classified as current or non current as per the Company's normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets or processing and their realization in cash and cash equivalent, the Company has ascertained its operating cycle to be 12 months for the purpose of current - non current classification of assets and liabilities.
4) Use Of Judgements, Estimates & Assumptions
While preparing standalone financial statements in conformity with Ind AS, the management makes certain estimates and assumptions that require subjective and complex judgments. These judgments affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses, disclosure of contingent liabilities at the statement of financial position date and the reported amount of income and expenses for the reporting period. Financial reporting results rely on our estimate of the effect of certain matters that are inherently uncertain. Future events rarely develop exactly as forecast and the best estimates require adjustments, as actual results may differ from these estimates under different assumptions or conditions. The management continually evaluate these estimates and assumptions based on the most recently available information.
Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the standalone financial statements are as below:
Key sources of estimation uncertainty
(i) Financial instruments;
The Financial Instruments are measured as financial assets in terms of Ind AS 109. Considering the financial statements of earlier years and the future plans of Soni Exports Pvt Ltd, the management is of the view that fair value of the equity shares of Soni Exports Pvt Ltd would be at least equal to its carrying amount and have been valued at the same The carrying amounts of trade receivables, trade payables, current loans, capital creditors and cash and cash equivalents, other financial liabilities are considered to be the same as their fair values, due to their short-term nature.The fair values of non-current borrowings and non current Loans are same as their amortised cost since the borrowings are interest bearing at the prevalent market rate.
(ii) Valuation of inventories;
Stock are valued on First In First Out (FIFO) basis and are stated at lower of cost or net realisable value. Closing Stock includes Custom Duty and other cost incurred in bringing the inventories to their present location and conditions.
(iii) Property Plant and Equipment and Intangible Assets;
Management assesses the remaining usefull lives and residual value of property, plant and equipment. Management believes that the assigned useful lives and residual values are reasonable.
5) Cash and Cash Equivalents
For the purpose of Cash Flow Statement, cash and cash equivalents includes cash on hand, deposits held at call with banks or financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
6) Financial Instruments
Initial Recognition and Measurement - Financial Assets and Financial Liabilities
Financial assets and financial liabilities 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 and ancillary costs related to borrowings) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the Statement of Profit and Loss.
Classification and Subsequent Measurement: Financial Assets
The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income (“FVTOCI”) or fair value through profit or loss (“FVTPL”) on the basis of following:
- the entity's business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.
Amortised Cost:
A financial asset is classified and measured at amortised cost if both of the following conditions are met:
- the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
- 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.
FVTOCI:
A financial asset is classified and measured at FVTOCI if both of the following conditions are met:
- the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
- 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.
FVTPL:
A financial asset is classified and measured at FVTPL unless it is measured at amortised cost or at FVTOCI.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
Classification and Subsequent measurement: Financial Liabilities
The Company's financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
Financial Liabilities at FVTPL:
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or are designated upon initial recognition as FVTPL. Gains or losses on financial liabilities held for trading are recognised in the Statement of Profit and Loss.
Other Financial Liabilities:
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
7) Property Plant and Equipment and Intangible Assets
Initial Recognition: The initial cost of property plant and equipment comprises of purchase price, including non-refundable taxes, import duty, costs directly attributable of bringing the asset to a working condition and location for its intended use. It also included the initial estimate of costs of dismantling and removing the item and restoring the site on which it was located.
Subsequent expenses and Recognition: Expenditure incurred after the property, plant and equipment have been put to use such as repair and maintenance are normally charged to the Statement of Profit and Loss in the period in which such costs are incurred.Major expenditure and overhaul expenditure is capitalised if other recognition criteria is fulfilled. Subsequently Proprty, Plant and Equipment are carried at costs less accumulated depreciation and accumulated impairment losses if any.
Depreciation: Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life and is provided on a straight line basis or a written down value method. Property Plant and Equipment is depreciated at Written Down Value method.
8) Investment Property
Initial Recognition: An investment property shall be measured initially at its cost. Transaction costs shall be included in the initial measurement.The cost of a purchased investment property comprises its purchase price and any directly attributable expenditure. Directly attributable expenditure includes, for example, professional fees for legal services, property transfer taxes and other transaction costs.
The Company recognised its Investment property initially at its cost.
Subsequent expenses and Recognition: Ind AS 40 permits entities to choose between (a) Fair Value Model, and (b) Cost Model After Initial recognition, an entity is required to measure all of its investment property in accordance with Ind AS 16's requirement for cost model, other than those that meet the criteria to be classified as held for sale or included in a disposal group that is classified as held for sale in accordance with Ind As 105, Non- Cuurent Assets held for sale and discontinued operations.
Entities are required to measure the fair value of Investment Property, for the purpose of disclosure even though they are required to follow the cost model. An entity is encouraged, but not required, to measure the fair value of Investment Property on the basis of the valuation by an independent valuer who holds a recognised and relevant professional qualification and has recent experience in the location and category of the Investment Property being valued.
9) Foreign Currency Transaction
The financial statements are presented in Indian Rupees, which is the Company's functional and presentation currency. Transactions denominated in foreign currency are normally recorded at the exchange rate prevailing at the time of the transaction.Monetary items denominated in foreign currency at the year end and not covered by forward contracts are translated at the year end rates.
10) Employee retirement benefits
Short term employee benefits are recognised as an expense on accrual basis.
11) Revenue Recognition -- Sale of goods
Revenue from the sale of goods is recognised when significant risks and rewards of ownership of the goods have passed to the buyer. Revenue from sale of goods is measured at the fair value of consideration received or receivable, net of returns and allowances, trade
12) Other Income
a) Interest: Interest income is accrued in a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assets net carrying amount on initial recognition.
b) Other Income: Other income is recognised when no significant uncertainity as to determination or realisations exists.
13) Earnings per share
Basic earnings per share is computed using the net profit fot the year attributable to the shareholders and weighted average number of shares outstanding during the year.
Diluted earnings per share is computed using the net profit for the year attributable to the shareholders and weighted average number of equity and potential equity shares outstanding during the year, except where the results would be anti-dilutive.
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