A. Background of the Company
Lexus Granito (India) Limited (the "Company") is a Limited company incorporated in India under the provisions of the Companies Act 1956. The CIN is L26914GJ2008PLC053838. The company is engaged in manufacturing, trading, and marketing of vitrified ceramic tiles and wall tiles in the domestic and international market.
The registered office of the company is situated Survey No. 800, Opposite Lakhdhirpur Village, Lakhdhirpur,
N.H.8A,Tal. Morbi, Rajkot-363642, Gujarat, India.
B. Significant Accounting Policies:
1. Compliance with Indian Accounting Standards
This is first year, the company has been adopted Indian Accounting Standard (IND AS), therefore the financial statements are prepared in accordance with the as prescribed under section 133 of The Companies Act, 2013 read with Rule3 of Companies (Indian IND AS Accounting Standard) Rules 2015 and other relevant provision of this Act.
The financial statements have been prepared on accrual and going concern basis. The accounting policies are applied consistently to all the periods presented in the financial statements. All the assets and liabilities have been classified as current and non-current as per the Company's normal operating cycle and other criteria as set out in Division II of Schedule III to the Companies Act, 2013.
Previously the company had prepared its financial statements accordance with the Accounting Standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (Indian GAAP). However, due to first time adoption of IND AS company has been required to prepare its financial statement accordance to IND AS with complied IND AS 101 "First Time Adoption of IND AS",
First time adoption of Ind AS (IND AS 101)
Basis of Preparation
The accounting policies set out in Note 1 have been applied in preparing financial statements for the year ended March 31, '24, the comparative information presented in these financial statements for the year ended March 31, '23.
a. Exemptions and exceptions availed
Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.
Ind AS optional exemptions
i. Deemed cost
Ind AS 101 permits a first-time adopter to elect to continue with the carrying value of all its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning
liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Asset. Accordingly, the Company has elected to measure all its property, plant and equipment at their previous GAAP carrying value.
Ind AS mandatory exceptions
ii. Estimates
An entity's estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at 1 April 2021 are consistent with the estimates as at the same date made in conformity with previous GAAP.
iii. Derecognition of financial assets and financial liabilities
Ind AS 101 required a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the derecognition requirements from a date of entity's choosing, provided the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for these transactions.
The Company has elected to apply the de-recognition provisions of Ind AS 109 retrospectively from the date of transition to Ind AS.
iv. Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortized cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable. Accordingly, the Company has determined the classification of financial assets based on the facts and circumstances that existed on the date of transition to Ind AS.
2. Use of estimates and judgments: -
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosure and the disclosure of contingent liabilities. Uncertainty about these estimates and assumptions could result in outcomes that requires material adjustments to the carrying amount of the assets and liabilities in future period/s.
These estimates and assumptions are based on the facts and events, that existed as at the date of Statement of Financial Position, or that occurred after that date but provide additional evidence about conditions existing as at the Statement of Financial Position date.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying values of assets and liabilities within the next financial year are discussed below.
I. Useful lives of Property, Plant and Equipment
The Property, Plant and Equipment are depreciated, on written down value basis in the case of other assets, over their respective useful lives. Management estimates the useful lives of these assets as detailed in Point10, Changes in the expected level of usage, technological developments, level of wear and tear could impact the economic useful lives and
the residual values of these assets, therefore, future depreciation charges could be revised and could have an impact on the profit/loss in future years.
II. Retirement benefit obligation
The cost of retirement benefits and present value of the retirement benefit obligations in respect of Gratuity is determined using actuarial valuations. An actuarial valuation involves making various assumptions which may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension Increases. Due to the complexity of the valuation, the underlying assumptions and its long-term nature, these retirement benefit obligations are sensitive to changes in these assumptions.
All assumptions are reviewed at each reporting date. In determining the appropriate discount rate, management considers the interest rates of Government Bonds with a tenure similar to the expected working lifetime of the employees. The mortality rate is based on publicly available mortality table for the specific countries.
III. Fair value measurement of financial instrument
When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow (DCF) model. Further in case relevant information is not available to ascertain the fair market value, then the cost price is taken. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
3. Functional and presentation currency: -
The financial statements are prepared in Indian Rupees ('Rs.'), which is the Company's functional and presentation currency. All financial information presented in Indian Rupees has been rounded to the lakhs with nearest two decimal places, unless stated otherwise.
4. Current versus non-current classification:-
The Company presents assets and liabilities in the balance sheet based on current/non-current classification.
An asset is classified as current when it is:-
• expected to be realized, or intended to be sold or consumed in normal operating cycle,
• held primarily forthe purpose of trading,
• expected to be realized within 12 months after the reporting period; or
• cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.
All other assets are classified as non-current.
A liability is classified as current when it is:
• expected to be settled in the normal operating cycle,
• Held primarily forthe purpose of trading.
• due to be settled within 12 months after the reporting date; or
• There is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting date.
All other liabilities are classified as non-current.
Operating Cycle:
The operating cycle is the time between acquisition of assets for processing and their realization in cash and cash equivalent. The Company has identified twelve months as its operating cycle.
5. Revenue Recognition:-
Revenue has been recognised as per IND AS 18- Revenue Recognition issued by Central Government of India under the supervision and control of Accounting Standards Board (ASB) of Institute of Chartered Accountants of India. Revenue from sale of goods is recognized when significant risk and rewards of ownership of the goods have been passed to the buyer and it is reasonable to expect ultimate collection. Sale of goods is recognized net of GST and other taxes as the same is recovered from customers and passed on to the government.
6. Taxes on Income:-
Tax expense for the year comprises of Current Tax and Deferred Tax.
a) Current Tax
Current income tax, assets and liabilities are measured at the amount expected to be paid to or recovered from the taxation authorities in accordance with the tax regime inserted by the Taxation Laws (Amendment) Act, 2019 in the Income Tax Act, 1961 and the Income Computation and Disclosure Standards (ICDS) enacted in India by using tax rates and the tax laws that are enacted at the reporting date.
b) Deferred Tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax assets and liabilities are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
For detailed breakup of current year deferred tax refer to sub note 6. (Notes to the accounts)
7. Provisions and Contingent Liability:-a) Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, and 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 obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation, at the Balance Sheet date.
If the effect of the time value of money is material, provisions are discounted to reflect its present value using a current pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
b) Contingent Liabilities
A disclosure for a contingent liability is made when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation arising because of past event that probably will not require an outflow of resources or where a reliable estimate of the obligation cannot be made.
For detailed contingent assets and liabilities refer to note 32. (Notes to the accounts)
8. Tangible Assets & Capital Work-In-Progress:-
Tangible Assets are stated at cost less Depreciation. Cost includes taxes, duties, freight and other incidental expenses related to acquisition, improvements and installation of the assets.
9. Property, Plant & Equipment (PPE):-
Property, Plant & Equipment, are accounted for on historical cost basis (inclusive of the cost of installation and other incidental costs till commencement of commercial production) net of recoverable taxes, less accumulated depreciation, and impairment loss, if any. It also includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.
Subsequent costs are added to the existing asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Statement of Profit and Loss during the period in which they are incurred.
Depreciation on property, plant & equipment is provided on pro-rata basis, on written down value basis in the case of Plant & Machinery, Buildings and Data Processing Equipment, over the useful life of the assets estimated by the management, in the manner prescribed in Schedule II of the Companies Act, 2013. The asset's residual values, useful lives and method of depreciation are reviewed at the end of each reporting period and necessary adjustments are made accordingly, wherever required. The useful lives in the following cases are different from those prescribed in Schedule II of the Companies Act, 2013. The Useful Life of Various assets are mentioned in the Chart below.
Class of Assets
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Useful Life as per schedule 2
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Useful Life as per Group
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Computer
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3 years
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3 years
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Furniture and Fixtures
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10 years
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10 years
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Office Equipment
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5 years
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5 years
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Plant and Equipment
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15 years
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15 years
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Vehicles
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10 years
|
10 years
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Motor Car
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8 years
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8 years
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Intangible Assets
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10 years
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10 years
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Building
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30 years
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30 years
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10. 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.
1) Financial Assets
Financial assets are recognized when the Company becomes a party to the contractual provisions of the instrument.
a) Initial recognition and measurement
At initial recognition, all financial assets are recognized at its fair value, in the case of a financial asset not carried at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
b) Classification and subsequent measurement
For subsequent measurement, financial assets are classified in the following categories
1. Financial assets measured at amortized cost.
2. Financial assets measured at fair value through other comprehensive income (FVTOCI);
3. Financial assets measured at fair value through profit and loss (RVTPL).
Where financial assets are measured at fair value, gains and losses are either recognized entirely in the Statement of Profit and Loss (i.e. fair value through profit and loss), or recognized in other comprehensive income (i.e. fair value through Other Comprehensive Income).
The classification of financial assets depends on the Company's business model for managing the financial assets and the contractual terms of the cash flows, Management determines the classification of its financial assets at initial recognition.
1. Financial assets measured at amortized cost:
A financial asset is measured at amortized cost if both the following conditions are met
• Business Model Test: The objective of the business model is to hold financial asset in order to collect contractual
cash flows (ratherthan to sell the asset prior to its financial maturity to realize its fair value changes).
• Cash Flow Characteristics Test: Contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
This category is most relevant to the Company. After initial measurement, such financial asset is subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by considering any discount or premium on acquisition and fees or costs that are an integral part of EIR. EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses. The EIR amortization is included in interest income in the statement of profit and loss. The losses arising from impairment are recognized in the statement of profit or loss. This category generally applies to trade receivables, deposits with banks, security deposits, investment in debt instruments, cash and cash equivalents and employee loans, etc.
2. Financial instruments measured at Fair Value through Other Comprehensive Income (FVTOCI):
A financial instrument shall be measured at fair value through other comprehensive income if both of the following conditions are met:
• Business Model Test: The objective of the business model is achieved by both collecting contractual cash flows and selling financial assets; and
• Cash Flow Characteristics Test: The Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on principal amount outstanding.
Financial instruments.included within FVTOCI category are measured initially as well as at each reporting period at fair value. Fair value movements are recognized in Other Comprehensive Income (OCI) except for the recognition of interest income, impairment gains and losses and foreign exchange gain and losses which are recognized in the Statement of Profit and Loss. This category generally applies to non-current investments in un-quoted equity instruments.
3. Financial instruments measured at Fair Value through Profit and Loss (FVTPL)
Fair Value through Profit and Loss is a residual category. Any financial instrument, which does not meet the criteria for categorization as at amortized cost or fair value through other comprehensive income is classified as FVTPL. Financial instruments included in FVTPL category are measured initially as well as at each reporting period at fair value. Fair value movements i.e. gain or loss and interest income are recorded in Statement of Comprehensive Income.
a. Impairment of financial assets
The Company assesses impairment based on expected credit losses (ECL) model to the following
• Financial Assets measured at amortized cost.
• Financial Assets measured at FVTOCL
Expected credit losses are measured through a loss allowance at an amount equal to:
• The 12 months expected credit losses (expected credit losses that resultfrom those default events on the financial instrument that are possible within 12 months after the reporting date);
Or
• Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
The Company follows 'simplified approach for recognition of impairment loss allowance on:
• Financial assets that are debt instruments, and are measured at amortized cost i.e. Trade receivables, deposits with banks, security deposits and employee loans etc.
• Financial assets that are debt instruments and are measured at FVTOCI. The Company as at the Balance Sheet date is not having any such instruments.
Under the simplified approach, the Company does not track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
The trade receivables are initially recognized at the sale/recoverable value and are assessed at each Balance Sheet date for collectability. Trade receivables are classified as current assets, if collection is expected within twelve months as at Balance Sheet date, if not, they are classified under non-current assets.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12 months (Expected Credit Loss) ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the Company reverts to recognizing impairment loss allowance based on 12-months ECL.
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 timely basis.
b. Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (le. removed from the Company's Balance Sheet date) when:
a) The rights to receive cash flows from the asset have been expired/transferred, or
b) The Company retains the contractual right to receive the cash flows of the financial asset but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the Company has transferred an asset, it evaluates whether it has substantially transferred all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized. When the Company has not transferred substantially all the risks and rewards of ownership of a financial asset, the financial asset is not derecognized.
Where the Company has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognized if the Company has not retained control of the financial asset. When the entity retains control of the financial asset, the asset is continued to be recognized to the extent of continuing involvement in the financial asset.
2) Financial Liabilities
Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument.
a) Initial recognition and measurement
All financial liabilities are recognized initially at fair value and, in the case of loans, borrowings and payables, net of directly attributable transaction costs. The Company's financial liabilities include loans, borrowings, trade payables, security deposits and other payables etc.
b) Subsequent measurement
All the financial liabilities after initial recognition at fair value, are subsequently measured at amortized cost using EIR method. Amortized cost is calculated by considering any discount or premium on acquisition and costs or fee that is an integral part of the EIR. The EIR amortization is included as finance costs in the Statement of Profit and Loss
c) Financial Guarantee Contract
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109. and the amount recognized less cumulative amortization.
d) Derecognition
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 recognized in the Statement of Profit and Loss.
e) Offsetting of financial instruments:
Financial assets and financial liabilities are offset, and the net amount is reported in the balance sheet, if there is enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
11. Earnings per Share:-
Basic earnings per share are computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the period. The numbers of equity shares are adjusted retrospectively for all periods presented.
12. Investments:-
Non-Current/ Long-term Investments are stated at fair value as per IND AS 32 and 109 except investment in subsidiaries are stated at cost. Provision is made for a diminution in the value of the investments, if, in the opinion of the management, the same is considered to be other than temporary in nature. On disposal of an investment, the difference between it carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss
Current investments are carried at lower of cost and fair value determined on an individual basis. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss.
Investments are either classified as current or non-current based on the management's intention. Long Term Investments includes investment made in the share capital of Subsidiary Company which are carried at cost.
13. Foreign Currency Transactions:-
a. Initial recognition
Transactions in foreign currency are accounted for at exchange rates prevailing on the date of the transaction.
b. Measurement of foreign currency monetary items at Balance Sheet date
Foreign currency monetary items (other than derivative contracts) as at Balance Sheet date are restated at the year End rates.
c. Exchange difference
Exchange differences arising on settlement of monetary items are recognized as income or expense in the period in which they arise.
Exchange difference arising on restatement of foreign currency monetary items as at the year End being difference between exchange rate prevailing on initial recognition/subsequent restatement on reporting date and as at current reporting date is adjusted in the Statement of Profit & Loss for the respective year.
Any expense incurred in respect of Forward contracts entered into for the purpose of hedging is charged to the Statement of Profit and loss.
14. Inventories-
The Inventories are carried in the Balance Sheet as follows:
A. Raw materials and stores & spares: At lower of cost (FIFO Method) and net realizable Value
B. Finished goods and stock-in-process: At lower of cost, and net realizable value. Cost includes cost of inputs, conversion costs and other costs incurred in bringing finished goods and stock-in-process, to their present location and condition.
C. Broken tiles are valued at Net realizable value.
The net-realizable value is the estimated selling price in the ordinary estimated costs of completion and estimated costs necessary to make sale.
15. Duty Drawback
Duty Drawback is recorded on Receipt basis. Management is not able to estimable the amount of Claim receivable, therefore the duty drawback is recorded on receipt basis rather than on Accrual basis.
16. Prior Period expenses
Prior period Expenses for previous years have been expensed out during the current year and it is disallowed as per income Tax Act.
17. Management Remuneration
Disclosures with respect to the remuneration of directors and employees are disclosed as required under Section 197 of Companies Act, 2013 and rule 5 (1) Companies (Appointment and Remuneration of managerial Personnel) Rules, 2014.
18. Cash and Cash Equivalents:-
Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand, fixed deposits with banks which are short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
19. Segment Reporting:-
The activities of the company are such that the according to IND AS-108 "Operating Segment": is applicable in the company.
20. Lease:-
Leases are recognized as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Company. The Company allocates the consideration in the contract to the lease based on their relative stand-alone prices. However, for leases of real estate for which the Company is a lessee, it has elected not to separate lease and non-lease components and instead accounts for these as a single lease component.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include net present value of the following lease payments:
• Fixed payments (including in substance fixed payments), less any lease incentives receivable, Variable lease payments that are based on an index or a rate, initially measured using the index
• or rate as at the commencement date,
• Amounts expected to be payable by the Company under residual value guarantees, The exercise price of a purchase option if the Company is reasonably certain to exercise that option, and
• Payment of penalties for terminating the lease, if the lease term reflects the Company exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for lease in the Company, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in similar economic environment with similar terms, security, and conditions. Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Right-of-use assets are measured at cost comprising the following:
• The amount of the initial measurement of lease liability.
• Any lease payments made at or before the commencement date less any lease incentives received
• Any initial direct costs.
• And Restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straightline basis. If the Company is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset's useful life. Payments associated with short-term leases of equipment and all leases of low value assets are recognised on a straight-line basis as an expense in profit or loss. Short term leases are leases with a lease term of twelve months or less.
21. Impairment of Non-Financial Assets: -
The Company assesses at each reporting date, using external and internal sources, whether there is an indication that a non-financial asset may be impaired and whether there is an indication of reversal of impairment loss recognized in the previous period/s. If any indication exists, or when annual impairment testing for an asset is required, the Company determines the recoverable amount and impairment loss is recognized when the carrying value of an asset exceeds its recoverable amount.
The recoverable amount is determined:
• in the case of an individual asset, at the higher of the asset's fair value less cost of sell and value in use, and • In the case of cash generating unit (a group of assets that generates identified, independent cash flows) at the higher of the cash generating units fair value less cost to sell and value in use.
In assessing value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that affects current market assessments of the time value of money and the risks specific to that asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
An impairment loss for an asset is reversed, if and only if, the reversal can be related objectively to an event occurring after the impairment loss was recognized, the carrying amount of an asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss being recognized for the asset in prior year/s.
22. Employee Benefits: -
a. Short Term Employee Benefits
All Employee benefits payable within twelve months of rendering the services are classified as short-term benefits. Such benefits include salaries, wages, bonus, awards, ex-gratia etc. and the same are recognized in the period in which the employee renders the related services.
b. Defined contribution plan:
The Company's approved provident fund scheme, pension scheme, employees' state insurance scheme, and employees' superannuation scheme are defined contribution plans. The Company has no obligation, other than the contribution paid/payable under such schemes. The contribution paid/payable under the schemes is recognized during the period in which the employee renders the related service.
c. Defined Benefit Plan
The employees' Gratuity fund scheme is the Company's defined benefit plan and is partly funded/ managed by a Trust. The liability with respect to gratuity is determined based on the actuarial valuation on projected unit credit method as at the balance sheet date. The difference, if any, between the actuarial valuation and the balance of the funds maintained by the Trust, is provided for as liability/assets in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to the Statement of Profit and Loss in subsequent periods.
d. Other Long-Term Benefit
The liability towards encashment of the employees' long term compensated absences, which are partly en-cashable during the service period and balance at the time of retirement/separation of the employees is determined based on the actuarial valuation on projected unit credit method as at the balance sheet date. Re-measurement, comprising of actuarial gains and losses, is recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to Statement of Profit and Loss in subsequent periods.
e. Others Accounting Policies
1. The financial statements including financial information have been prepared after making such regroupings and adjustments, considered appropriate to comply with the same. As result of these regroupings and adjustments, the amount reported in the financial statements/information may not necessarily be same as those appearing in the respective audited financial statements for the previous year.
2. The Micro Small and Medium Enterprise registered under The Micro-small and Medium Enterprise Development Act 2006 has been taken based on the list of MSME creditors provided by the management. However, as the Company has not received any claims in respect of such interest and as such, no provision has been made in the books of accounts.
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