Significant Accounting Policies
1. Background -
KCD Industries India Limited (" the Company") is a Public Limited Company domiciled and incorporated under the
provisions of erstwhile Companies Act, 1956. It came into existence on May 25th, 1985 and is listed on the Bombay
Stock Exchange (“BSE”). The Company has its registered office at “1101/1102, Techno I.T. Park, Link Road, Borivali
(West), Mumbai - 400092.”
The Company had commenced businesses and engaged themselves in real estate and constructions, in the past few
years, the Company also expanded its business into Decor, Infra, Printing, Hospitality and Auto mobiles sectors. The
Company has its wide network of operations in Pan India.
2. Basis of preparation -
2.1 Accounting Convention
These standalone financial statements (‘financial statements’) have been prepared in accordance with the Indian
Accounting Standards (hereinafter referred to as the ‘Ind AS’) as notified by Ministry of Corporate Affairs pursuant
to Section 133 of the Companies Act, 2013 (‘Act’) read with of the Companies (Indian Accounting Standards) Rules,
2015, as amended, and other relevant provisions of the Act and guidelines issued by the Securities and Exchange
Board of India (SEBI) under the historical cost convention on the accrual basis. The accounting policies are applied
consistently to all the periods presented in the financial statements.
2.2 Previous year figures
Previous Year's figures have been regrouped/reclassified, wherever necessary, to correspond with the current year's
classification/disclosures.
2.3 Rounding of Amounts
All amounts disclosed in the standalone financial statements and notes is in INR, except where otherwise indicated.
2.4 Use of Judgments, 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 forecasted and the best estimates require adjustments, as actual results may differ from these
estimates under different assumptions or conditions. The management continually evaluates these estimates and
assumptions based on the most recently available information.
The said estimates are based on the facts and events, that existed as at the reporting date, or that occurred after that
date but provide additional evidence about conditions existing as at the reporting date.
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 assumptions
(i) Financial instruments (Refer note 27)
(ii) Useful lives of Property, Plant and Equipment and Intangible Assets (Refer note 04)
(iii) Assets and obligations relating to employee benefits (Refer note 22)
(iv) Evaluation of recoverability of deferred tax assets (Refer note 06)
3. Summary of Significant Accounting Policies
3.1 Current versus non-current classification:
• The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
• An asset is treated as current when it is:
a) Expected to be realised in normal operating cycle or within twelve months after the reporting period held
primarily for the purpose of trading, or
b) Cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting period
c) All other assets are classified as non-current.
• A liability is current when:
a) It is expected to be settled in normal operating cycle or due to be settled within twelve after the reporting
period or
b) There is no unconditional right to defer the settlement of the liability for at least twelve months after the
reporting period.
• The Company classifies all other liabilities as non-current.
• Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash
equivalents. The Company has identified period of twelve months as its operating cycle.
3.2 Dues to Micro and Small Enterprises
It is informed that the Company has certain dues to suppliers registered under as ‘micro’ and ‘small’ under Micro,
Small and Medium Enterprises Development Act, 2006 (‘MSMED Act’). The disclosures pursuant to the said
MSMED Act forms integral part of the financial statements.
3.3 Cash and Cash Equivalents
Cash and Cash equivalent in the presentation of balance sheet and the statement of cash flows, includes comprise cash
at banks and on hand.
3.4 Inventories
Inventories of Stock-in Trade is stated at cost or net realizable value, whichever is lower.
3.5 Property, Plant and Equipment
Property, Plant and Equipment are stated at cost, net of recoverable taxes, trade discount and rebates less accumulated
depreciation and impairment losses, if any. Such cost includes purchase price, borrowing cost and any cost directly
attributable to bringing the assets to its working condition for its intended use.
Depreciation on property, plant and equipment is provided using Written down value method. Depreciation is provided
based on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each
financial year end and adjusted prospectively, if appropriate.
Gains or losses arising from derecognition of a property, plant and equipment are measured as the difference between
the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss
when the asset is derecognised.
3.6 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or an
equity instrument of another entity.
(i) Financial Assets
A. Initial recognition and measurement
All financial assets are initially recognised at fair value. Transaction costs that are directly attributable to the
acquisition or issue of financial assets, which are not accounted at fair value through profit or loss, are adjusted to the
fair value on initial recognition. Purchase and sale of financial assets are recognised using trade date accounting.
B. Subsequent measurement
Ý Financial assets measured at amortised cost:
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is
to hold the asset 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.
The effective interest rate amortisation is included in other income in the Statement of Profit and Loss.
Ý Financial assets measured at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at fair value through other comprehensive income if it 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 assets give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
Ý Financial assets measured at fair value through profit or loss (FVTPL).
A financial asset which is not classified in any of the above categories are measured at fair value through profit or
loss.
C. Impairment of financial assets
In accordance with Ind AS 109, the Company uses ‘Expected Credit Loss’ (ECL) model, for evaluating impairment
of financial assets other than those measured at fair value through profit and loss (FVTPL).
Expected credit losses are measured through a loss allowance at an amount equal to:
a) The 12-months expected credit losses (expected credit losses that result from those default events on the financial
instrument that are possible within 12 months after the reporting date); or
b) Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of
the financial instrument)
For trade receivables, the Company applies ‘simplified approach’ which requires expected lifetime losses to be
recognised from initial recognition of the receivables. Further, the Company uses historical default rates to determine
impairment loss on the portfolio of the trade receivables. At every reporting date, these historical default rates are
reviewed and changes in the forward-looking estimates are analysed.
For other assets, the Company uses 12 months ECL to provide for impairment loss where there is no significant
increase in credit risk. If there is significant increase in credit risk full lifetime ECL is used. ECL impairment allowance
is recognised in the Statement of Profit and Loss.
(ii) Financial Liabilities
A. Initial recognition and measurement
All financial liabilities are recognized initially at fair value and in case of borrowings, net of directly attributable cost.
Fees of recurring nature are directly recognised in the Statement of Profit and Loss as finance cost.
B. Subsequent measurement
Financial liabilities are carried at amortised cost using the effective interest method. For trade and other payables
maturing within one year from the Balance Sheet date, the carrying amounts approximate fair value due to the short
maturity of these instruments.
(iii) Derecognition of financial instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset
expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial
liability (or a part of a financial liability) is derecognized from the Company’s Balance Sheet when the obligation
specified in the contract is discharged or cancelled or expires.
(iv) Offsetting
Financial assets and financial liabilities are offset and the net amount is presented in the balance sheet when, and only
when, the Company has a legally enforceable right to set off the amount and it intends, either to settle them on a net
basis or to realise the asset and settle the liability simultaneously.
3.7 Earnings per share
Basic earnings per share is calculated by dividing the net profit after tax by the weighted average number of equity
shares outstanding during the year adjusted for bonus element in equity share. Diluted earnings per share adjust the
figures used in determination of basic earnings per share to take into account the conversion of all dilutive potential
equity shares. Dilutive potential equity shares are deemed converted as at the beginning of the period unless issued at
a later date.
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