Note 1: Significant Accounting policies
1.1 Statement of Compliance
These financial statements are prepared in accordance with the Indian Accounting
Standards (referred to as 'Ind AS') prescribed under section 133 of the Companies
Act, 2013, read with the Companies (Indian Accounting Standards) Rules, as
amended from time to time. The Ind AS are prescribed under Section 133 of the
Companies Act, 2013 (the Act) read with Rule 3 Companies (Indian Accounting
Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment
Rules, 2016.
The accounting policies have been consistently applied except where a newly-
issued accounting standard is initially adopted or a revision to existing accounting
standards required a change in the accounting policies hitherto in use.
1.2 Inventories
The company has held shares as stock in trade and the same are valued at lower of
cost or market value.
1.3 Taxes on Income
Tax expense for the period, comprising current tax and deferred tax, are included
in the determination of the net profit or loss for the period. Current tax is
measured at the amount expected to be paid to the tax authorities in accordance
with the Income Tax Act, 1961.
Deferred tax is recognized on temporary differences between the carrying
amounts of assets and liabilities in the separate financial statements and the
corresponding tax bases used in the computation of taxable profit. Deferred tax
liabilities are generally recognized for all taxable temporary differences. Deferred
tax assets are generally recognized for all deductible temporary differences to the
extent that it is probable that taxable profits will be available against which those
deductible temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at the end of each
reporting period and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset to be
recovered. Deferred tax liabilities and assets are measured at the tax rates that are
expected to apply in the period in which the liability is settled or the asset realized,
based on tax rates (and tax laws) that have been enacted or substantively enacted
by the end of the reporting period.
Current and deferred tax are recognized in profit or loss, except when they relate
to items that are recognized in other comprehensive income or directly in equity,
in which case, the current and deferred tax are also recognized in other
comprehensive income or directly in equity respectively.
1.4 Property, plant & equipment:
All Property, Plant & Equipment's are stated at cost of acquisition, less
accumulated depreciation and accumulated impairment losses, if any. Direct costs
are capitalized until the assets are ready for use and include freight, duties, taxes
and expenses incidental to acquisition and installation.
Subsequent expenditures related to an item of Property, Plant & Equipment are
added to its carrying value only when it is probable that the future economic
benefits from the asset will flow to the Company and cost can be reliably
measured.
Losses arising from the retirement of, and gains or losses arising from disposal of
Property, Plant and Equipment are recognized in the Statement of Profit and Loss.
Depreciation is provided on a pro-rata basis on the straight line method ('SLM')
over the estimated useful lives of the assets specified in Schedule II of the
Companies Act, 2013.
On transition to Ind AS, the Company has elected to continue with the carrying
value of all of its property, plant and equipment recognized as at April 1, 2016
measured as per the previous GAAP and use that carrying value as the deemed
cost of the property, plant and equipment.
1.5 Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable
and recognized when it is probable that the economic benefits associated with the
transaction will flow to the entity.
1.6 Financial Instruments
(A) Financial Assets
Recognition and measurement
Financial assets are recognised when the Company becomes a party to the
contractual provisions of the instrument. On initial recognition, a financial
asset is recognised at fair value, in case of financial assets which are
recognised at fair value through profit and loss (FVTPL), its transaction cost
are recognised in the statement of profit and loss. In other cases, the
transaction cost are attributed to the acquisition value of the financial asset.
Financial assets are subsequently classified as measured at
• amortised cost
• fair value through profit and loss (FVTPL)
• fair value through other comprehensive income (FVOCI)
(a) Measured at amortised cost: Financial assets that are held within a
business model whose objective is to hold financial assets in order to
collect contractual cash flows that are solely payments of principal and
interest, are subsequently measured at amortised cost using the
effective interest rate ('EIR') method less impairment, if any. The
amortisation of EIR and loss arising from impairment, if any, is
recognised in the Statement of Profit and Loss.
(b) Measured at fair value through other comprehensive income: Financial
assets that are held within a business model whose objective is achieved
by both, selling financial assets and collecting contractual cash flows that
are solely payments of principal and interest, are subsequently
measured at fair value through other comprehensive income. Fair value
movements are recognized in the other comprehensive income (OCI).
Interest income measured using the EIR method and impairment losses,
if any are recognised in the Statement of Profit and Loss. On de¬
recognition, cumulative gain or loss previously recognised in OCI is
reclassified from the equity to 'other income' in the Statement of Profit
and Loss.
(c) Measured at fair value through profit or loss: A financial asset not
classified as either amortised cost or FVOCI, is classified as FVTPL. Such
financial assets are measured at fair value with all changes in fair value,
including interest income and dividend income if any, recognised as
'other income' in the Statement of Profit and Loss.
Financial assets are not reclassified subsequent to their recognition, except
if and in the period the Company changes its business model for managing
financial assets.
Trade Receivables and Loans:
Trade receivables and loans are initially recognised at fair value.
Subsequently, these assets are held at amortised cost, using the effective
interest rate (EIR) method net of any expected credit losses. The EIR is the
rate that discounts estimated future cash income through the expected life
of financial instrument.
Equity Instruments:
All investments in equity instruments classified under financial assets are
subsequently measured at fair value. Equity instruments which are held for
trading are measured at FVTPL. For all other equity instruments, the
Company may, on initial recognition, irrevocably elect to measure the same
either at FVOCI or FVTPL. The Company makes such election on an
instrument-by-instrument basis. Fair value changes on an equity instrument
shall be recognised as 'other income' in the Statement of Profit and Loss
unless the Company has elected to measure such instrument at FVOCI. Fair
value changes excluding dividends, on an equity instrument measured at
FVOCI are recognised in OCI. Amounts recognised in OCI are not
subsequently reclassified to the Statement of Profit and Loss. Dividend
income on the investments in equity instruments are recognised as 'other
income' in the Statement of Profit and Loss.
Market value of shares delisted from the stock exchange as on balance
sheet date is taken as Nil.
De-recognition
The Company derecognises a financial asset when the contractual rights to
the cash flows from the financial asset expire, or it transfers the contractual
rights to receive the cash flows from the asset.
Impairment of Financial Assets
Expected credit losses are recognized for all financial assets subsequent to
initial recognition other than financials assets in FVTPL category. For
financial assets other than trade receivables, as per Ind AS 109, the
Company recognises 12 month expected credit losses for all originated or
acquired financial assets if at the reporting date the credit risk of the
financial asset has not increased significantly since its initial recognition. The
expected credit losses are measured as lifetime expected credit losses if the
credit risk on financial asset increases significantly since its initial
recognition. The Company's trade receivables do not contain significant
financing component and loss allowance on trade receivables is measured
at an amount equal to life time expected losses i.e. expected cash shortfall.
The impairment losses and reversals are recognised in Statement of Profit
and Loss, if any.
(B) Financial Liabilities:
Initial recognition and measurement
Financial liabilities are recognised when the Company becomes a party to
the contractual provisions of the instrument. Financial liabilities are initially
measured at the amortised cost unless at initial recognition, they are
classified as fair value through profit and loss. In case of trade payables,
they are initially recognised at fair value and subsequently, these liabilities
are held at amortised cost, using the effective interest method.
Subsequent measurement
Financial liabilities are subsequently measured at amortised cost using the
EIR method. Financial liabilities carried at fair value through profit or losses
are measured at fair value with all changes in fair value recognised in the
Statement of Profit and Loss.
De-recognition
A financial liability is derecognised when the obligation specified in the
contract is discharged, cancelled or expires.
1.7 Employee Benefits
The Company follows the policy of accounting for the same only on crystallization
of the liability.
1.8 Earnings Per Share
Basic Earnings per share is computed by dividing the net profit attributable to
equity shareholders by the weighted average number of equity shares outstanding
during the period.
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