2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of preparation and presentation
These standalone financial statements are prepared to comply in all material
aspects with Indian Accounting Standards (Ind AS) notified under section 133 of
the Companies Act, 2013 (the Act) read with Companies (Indian Accounting
Standards) Rules, 2015; and other relevant provisions of Companies Act, 2013 and
the rules made thereunder. The financial statements are prepared under Ind AS
application w.e.f. 01-04-2016.
The standalone financial statements are prepared on accrual basis of accounting
under historical cost convention in accordance with generally accepted accounting
principles in India and the relevant provisions of the Companies Act, 2013 including
Indian Accounting Standards notified thereunder, except for certain financial assets
liabilities measured at fair value.
2.2 Use of Estimates
The preparation of financial statements are in conformity with the recognition and
measurement principles of Ind AS which requires management to make critical
judgments, estimates and assumptions that affect the reporting of assets, liabilities,
income and expenditure.
Estimates and underlying assumptions are reviewed on an ongoing basis and any
revisions to the estimates are recognised in the period in which the estimates are
revised and future periods are affected.
Key source of estimation of uncertainty at the date of financial statements, which
may cause material adjustment to the carrying amount of assets and liabilities within
the next financial year, is in respect of:
• Useful lives of property, plant and equipment
• Valuation of deferred tax assets
• Valuation of inventories
• Provisions & contingent liabilities
2.3 Property, plant and equipment
2.3.1 Tangible Assets:
Property (including lease assets), plant and equipment are stated at cost of
acquisition or construction less accumulated depreciation and any
accumulated impairment losses. The cost of fixed assets comprises of its
purchase price, non-refundable taxes & levies, freight and other incidental
expenses related to the acquisition and installation of the respective assets.
Borrowing cost attributable to financing of acquisition or construction of the
qualifying fixed assets is capitalized to respective assets when the time taken
to put the assets to use is substantial.
When major items of property, plant and equipment have different useful
lives, they are accounted for as separate items of property, plant and
equipment. The cost of replacement of any property, plant and equipment is
recognized in the carrying amount of the item if it is probable that the future
economic benefit associated with the item will flow to the Company and its
cost can be measured reliably.
The Estimated Useful Lives of assets are in accordance with the Schedule II
of the Companies Act, 2013.
2.3.2 Capital WIP includes advances for Capital work in Progress amounting to
Rs. 126.98 lacs. These are old advances prior to 2016 pending for
completion.
2.3.3. The Company has revalued leasehold GIDC (Halol) land at fair
value in the financial year 2017-2018 and the increased amount of such
land amount by Rs.36,50,00,000/- which has been credited to Reserve
Surplus under the head Other Comprehensive Income as per the
Requirement of Ind AS 16.
2.4 Financial Instruments
2.4.1 Cash and cash equivalents
Cash and cash equivalents in the cash flow statement comprise cash on
hand and balance in banks (including Non-operational Bank accounts) to
know amounts of cash and which are subject to an insignificant risk of
change in value.
Cash flows are reported using the indirect method, whereby profit before
tax is adjusted for the effects of transactions of non-cash nature, any
deferrals or accruals of past or future operating cash receipts or
payments and item of income or expenses associated with investing or
financing cash flows. Cash flows from operating, investing and financing
activities of the Company are segregated, accordingly.
2.4.2 Investments
The company has enter into Joint Venture with Ankita-Navkar-Sarjit JV by
giving bank guarantee to said JV. There is no capital investment. The
profit/loss of F.Y. 2024-25 accounted for is Rs. 1,98,300 on tentative basis
as accounts of the Joint venture are yet to be finalised. The business of the
JV is construction of infrastructure.
During the year the company invested of Rs.25,00,000/- in Panth Infinity
Ltd.
2.4.3 Trade Receivables
Trade receivables are amounts due from customers for sale of goods or
services performed in the ordinary course of business. Trade receivables
are initially recognized at its transaction price which is considered to be its
fair value and are classified as current assets as it is expected to be
received within the normal operating cycle of the business.
2.4.4 Borrowings
Borrowings are initially recorded at fair value and subsequently measured
at amortized costs using effective interest method. Transaction costs are
charged to statement of profit and loss as financial expenses over the term
of borrowing.
2.4.5 Trade payables
Trade payables are amounts due to vendors for purchase of goods or
services and sub contracts given in the ordinary course of business and are
classified as current liabilities to the extent it is expected to be paid within
the normal operating cycle of the business.
2.4.6 Other financial assets and liabilities
Other non-derivative financial instruments are initially recognized at fair
value and subsequently measured at amortized costs using the effective
interest method.
2.5 Leases
Finance lease
Leases where the Company assumes substantially all the risks and rewards
of ownership are classified as finance lease. Such leases are capitalized at
the inception of the lease at lower of the fair value or the present value of
the minimum lease payments and a liability is recognized for an equivalent
amount.
Land acquired on long-term leases
The Company classifies leasehold land of GIDC (Halol) as finance lease
where:
• Initial amount paid is substantially all of the fair value of land
• The company has option to purchase the land at a price that is
sufficiently lower than fair value at the date option is exercisable
• Lessor has agreed to renew lease on expiry of lease term.
• The Company has revalued leasehold GIDC (Halol) land at fair value
in the financial year 2017-2018 and the increased amount of such
land amount by Rs.36,50,00,000/- which has been credited to Reserve
Surplus under the head Other Comprehensive Income as per the
Requirement of Ind AS 16
From the above details analysis, company concludes that a land lease is
finance lease and will be presented as an item of PPE covered under Ind
AS-16. The company expects to obtain ownership of the land by the end of
the lease term. Hence, the company has not charged any depreciation/
amortisation on such asset since the land has unlimited useful life.
Operating lease
Lease arrangements where the risks and rewards incidental to ownership of
an asset substantially vest with the lessor, are recognized as operating
lease. Operating lease payments are recognized as an expense on a
straight line basis over the lease term unless the payments are structured
to increase in line with the expected general inflation so as to compensate
for the lessor’s expected inflationary cost increases. There is no such
operating lease.
2.6 Inventories
Items of inventories are measured at lower of cost or net realisable
value after providing for obsolescence, if any. Cost of inventories
comprises of cost of purchase, cost of conversion and other costs including
overheads incurred in bringing them to their respective present location and
condition.
2.7 Impairment of Property Plant & Equipment:
There is no impairment of Property Plant & Equipment during the
year.
Employee Benefit
Short term employee benefits
Short term benefits payable before twelve months after the end of the
reporting period in which the employees have rendered service are
accounted as expense in statement of profit and loss.
Long term employee benefits
Defined benefit plans
There is no provision for gratuity liability as at 31-03-2024. The Company
has not obtained actuarial valuation at the end of the financial year and has
not made provision for gratuity liability during the year under audit.
Defined Contribution Plan
Defined contribution to provident fund and ESIC are by charged to the
profit and loss account on accrual basis.
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