4. Summary of significant accounting policies:
A summary of the significant accounting policies applied in the preparation of the financial statements are as given
below.
4(a) Revenue recognition:
The Company derives revenue principally from sale of its products:
Pure Gold and Gold Jewellery, Loose Diamond and Diamond Jewellery, Platinum Jewellery.
The Company recognizes revenue when it satisfies a performance obligation in accordance with the provisions
of contract with the customer.
This is achieved when control of the product has been transferred to the customer, which is generally
determined when title, ownership, risk of obsolescence & loss pass to the customer and the Company has the
present right to payment, all of which occurs at a point in time upon shipment or delivery of the product. Hence
in case where there is no uncertainty as to measurment or collectability of consideration, revenue is recognised
as soon as the control of the products has been given. When there is uncertainty as to measurement or ultimate
collectability, revenue recognition is postponed until such uncertainty is resolved.
The Company considers the terms of the contract in determining the transaction price. The transaction price is
based upon the amount the Company expects to be entitled to in exchange for transferring of promised goods
and services to the customer after deducting discounts, volume rebates etc.
Revenues in excess of invoicing are classified as contract assets (which we refer as unbilled revenue) while
invoicing in excess of revenues are classified as contract liabilities (which we refer to as unearned revenues).
Further in company's case, no element of financing is deemed present as the sales are made with no or minimal
credit terms as per prevalent trade practice and credit policy followed by the Company.
In case of the company, the performance obligation is delivery of the products. Generally the company sells its
products at cash basis (the amounts are collected at the time of sale itself) or provides very limited credit terms
to its customers. Hence generally revenue is recognised at the time of sale of the products only. In case where
invoicing is done but delivery is pending to be made then revenue recognition is postponed until such delivery is
made.
The Company presents revenues net of indirect taxes in its statement of Profit and loss.
4(b) Other Income
Other income is comprised primarily of gain on sale of investments / property, plant & equipments, interest on
security deposits and income from sale of electricity.
Gain on sale of investments as well as the property, plant & equipments are recognised as and when it arises.
Income from sale of electricity is recognised when the company delivers the electricity to the customer in line
with the terms of the contract and it is probable that the economic benefits will flow to the Company. Income in
excess of invoicing are classified as contract assets (which we refer as unbilled revenue) while invoicing in excess
of revenues are classified as contract liabilities (which we refer to as unearned revenues).
Interest income is recognised on accrual basis considering the time proportion basis.
4(c) Property, Plant & Equipment:
Property, Plant & Equipment
Property, plant and equipment held for use in the production and/or supply of goods or services, or for
administrative purposes, are stated at cost, less accumulated depreciation and accumulated impairment losses.
Initial Measurement
The initial cost comprises purchase price, non-refundable purchase taxes, other expenditure directly attributable
to bringing the assets to its location and condition necessary for it to be capable of operating in the manner
intended by the management, and borrowing costs (incl. foreign exchange) if any, incurred.
In case of self-constructed assets, cost includes the costs of all materials used in construction, direct labour,
allocation of overheads, borrowing costs (incl. foreign exchange) and other directly attributable cost incurred.
Subsequent measurement
Expenditure on major inspection/maintenance or repairs including cost of replacing the parts of assets and overhaul
costs where it is probable that future economic benefits associated with the expenditure will be available to the
Company over a period of more than one year, are capitalised and the carrying amount of the identifiable parts so
replaced is derecognised.
(ii) Capital Work-in-progress
Properties in the course of construction (CWIP) for production, supply or administrative purposes are carried at cost,
less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs
capitalised in accordance with the Company's accounting policy. Such properties are classified to the appropriate
categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets,
on the same basis as other property assets, commences when the assets are ready for their intended use.
(iii) Depreciation on Property, Plant & Equipment
Depreciation on assets are provided as per written down value method over their useful life as prescribed under
Schedule II of the Companies Act, 2013.
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual
value.
Component of an item of property, Plant and Equipment with a cost that is significant in relation to the total cost of that
item, is depreciated separately if its useful life differs from that of the asset.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period,
with the effect of any changes in estimate accounted for on a prospective basis.
(iv) De-recognition of assets
An item of property, plant and equipment is de-recognised upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item
of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount
of the asset and is recognised in profit or loss.
4(d) Intangible Assets and Amortization:
Intangible assets acquired are measured at cost or fair value as on the date of acquisition, as applicable. Following initial
recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if
any.
Intangible assets are amortised as per written down value method over their estimated useful lives, commencing from
the date the asset is available to the Company for its intended use. (Useful lives for softwares are considered at 3 years
for amortisation purposes).
The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each
financial year and the amortisation period is revised to reflect the changed pattern, if any.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or
disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between
the net disposal proceeds and the carrying amount of the asset are recognised in the statement of profit and
loss when the asset is derecognised.
4(e) Impairment of Property, Plant & Equipment and intangible assets :
At the end of each reporting period, the Company reviews the carrying amounts of its Property, Plant &
Equipment and intangible assets to determine whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss (if any).
When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the
recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent
basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or
otherwise they are allocated to the smallest group of cash- generating units for which a reasonable and
consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for
impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of :
i) Fair value less costs of disposal Or,
ii) Value in use.
In assessing value in use, the estimated future cash flows from assets, are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset for which the estimates of future cash flows have not been adjusted.
Carrying amount equals to cost less accumulated depreciation and accumulated impairment losses recognised
previously.
4(f) Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added
to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Interest income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
4(g) Inventories
Inventories are stated at the lower of cost and net realizable value. The cost of finished goods includes raw
materials (such as gold, diamond, platinium) and direct labour (i.e. making charges) which are necessary in making
process. Borrowing costs are included in the cost of finished goods in case of inventories which necessarily take
a substantial period of time to get ready for its intended use or sale.
Cost is determined using the weighted average cost basis. However, the same cost basis is applied to all
inventories of a particular class.
Net realizable value represents the estimated selling price for inventories less all estimated costs of completion
and costs necessary to make the sale.
Raw-materials (such as gold, diamond, platinium) and other supplies held for use in the production of inventories (i.e.
finished goods and work-inprogress) are not written down below the cost if the finished products in which they will be
used are expected to sell at or above the cost.
4(h) Dividend
Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim dividends
are recorded as a liability on the date of declaration by the company's Board of Directors.
4(i) Indirect Taxes
Credit of indirect taxes such as CENVAT / Service Tax / VAT / GST on materials purchased for production or services
availed for production or input service are taken into account at the time of purchase while credit of indirect taxes on
purchase of capital items wherever applicable are taken into account as and when the assets are acquired.
Credits so taken are utilized for payment of custom duty / GST on goods sold. The unutilized credit is carried forward
in the books.
4(j) Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
Financial Assets
Initial recognition and measurement
At initial recognition, the Company measures a financial asset at fair value plus transaction costs through profit or loss
except for those financial assets which are classified as at fair value through profit or loss (FVTPL) at inception.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in following categories:
1. Financial assets measured at amortised cost;
2. Financial assets at fair value through profit or loss (FVTPL) and
3. Financial assets at fair value through other comprehensive income (FVTOCI).
The Company classifies its financial assets in the above mentioned categories based on:
a) The Company's business model for managing the financial assets, and
b) The contractual cash flows characteristics of the financial asset.
1. Financial assets measured at amortised cost :
A financial asset is measured at amortised cost if both of the following conditions are met:
a) A financial asset is measured at amortised cost if 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
assets give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal
amount outstanding.
b) Financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are
an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from
impairment are recognised in the profit or loss.
2. Financial assets at fair value through profit or loss (FVTPL):
Financial assets are measured at fair value through profit and loss unless it is measured at amortised cost or at fair
value through other comprehensive income on initial recognition. The transaction costs directly attributable to the
acquisition of financial assets and liabilities at fair value through profit or loss are immediately recognized in profit or loss.
Current investments in mutual funds are measured at fair value through profit or loss (FVTPL).
3. Financial assets at fair value through other comprehensive income (FCTOCI):
Financial assets are measured at fair value through other comprehensive income if these financial assets are
held within a business model whose objective is achieved by collecting both contractual cash flows that gives rise
on specified dates to solely payments of principal and interest on the principal amount outstanding and by selling
financial assets.
In addition, The Company may elect to designate a financial asset, which otherwise meets amortised cost or
FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a
measurement or recognition inconsistency (referred to as 'accounting mismatch')
Trade receivables, Cash and Cash Equivalents and Other receivables etc. are classified for measurement at
amortised cost.
Derecognition
The Company derecognizes a financial asset when contractual rights to the cash flows from the asset expire, or
when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to
another party.
On derecognition of a financial asset in its entirety, the difference between the assets's carrying amount and the
sum of the consideration received and receivable is recognized in the Statement of Profit and Loss.
Impairment
The Company applies expected credit losses (ECL) model for measurement and recognition of loss allowance on
the following:
i. Trade receivables,
ii. Financial assets measured at amortized cost (other than trade receivables and lease receivables),
iii. Financial assets measured at fair value through other comprehensive income (FVTOCI).
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the
contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the
original effective interest rate.
In case of trade receivables, the Company follows a simplified approach wherein an amount equal to lifetime ECL
is measured and recognized as loss allowance. As a practical expedient, the Company uses a provision matrix to
measure lifetime ECL on its portfolio of trade receivables.
In case of other assets (listed as ii and iii above), the Company determines if there has been a significant increase
in credit risk of the financial asset since initial recognition. If the credit risk of such assets has not increased
significantly, an amount equal to 12-month ECL is measured and recognized as loss allowance. However, if credit
risk has increased significantly, an amount equal to lifetime ECL is measured and recognized as loss allowance.
Subsequently, if the credit quality of the financial asset improves such that there is no longer a significant
increase in credit risk since initial recognition, the Company reverts to recognizing impairment loss allowance
based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a
financial asset. 12-month ECL are a portion of the lifetime ECL which result from default events that are possible
within 12 months from the reporting date.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the
Statement of Profit and Loss under the head 'Other expenses'.
ECL are measured in a manner that they reflect unbiased and probability weighted amounts determined by a
range of outcomes, taking into account the time value of money and other reasonable information available as a
result of past events, current conditions and forecasts of future economic conditions.
The Company's financial assets are very minimal as the company collects amount at the time of sale itself. On
account of the same, ECL provision is majorly created for the items wherein credit risk is increased significantly
or credit-impaired assets.
Financial Liabilities
Initial recognition and measurement
All financial liabilities are recognised initially at fair value and subsequently carried at amortised cost using the effective
interest method.
The company's financial liabilities include trade and other payables, loans and borrowings.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
1. Financial liabilities measured at amortised cost.
2. Financial liabilities at fair value through profit or loss.
1. Financial liabilities measured at amortised cost :
All financial liabilities are measured at amortised cost. Any discount or premium on redemption/ settlement is recognised
in the Statement of Profit and Loss as finance cost over the life of the liability using the effective interest method and
adjusted to the liability figure disclosed in the Balance Sheet.
2. Financial assets at fair value through profit or loss (FVTPL):
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for
trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading
are recognised in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial
date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/
losses attributable to changes in own credit risk are recognized in OCI. These gains/ loss are not subsequently
transferred to P&L. However, the company may transfer the cumulative gain or loss within equity. All other changes in
fair value of such liability are recognised in the statement of profit and loss.
(iii) Derecognition
Financial liabilities are derecognised when the liability is extinguished, that is, when the contractual obligation is discharged
or cancelled or expiry. 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 derecognition of the original liability and the recognition of a new liability. The difference in the respective
carrying amounts is recognised in the statement of profit and loss.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of
its liabilities.
(iv) Derivative financial instruments
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are
subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised
in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which the timing
of the recognition in profit or loss depends on the nature of the hedging relationship and the nature of the hedged item.
Currently the company does not enter into any derivative financial instruments.
(v) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a
currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to
realize the assets and settle the liabilities simultaneously.
4(k) Cash and cash equivalents
For disclosure purposes in balance sheet as well as for the purpose of cash flow statement, Cash and cash equivalents
comprise cash at bank, cash on hand and deposits with original maturities of three months or less that are readily
convertible to known amounts of cash & which are subject to an insignificant risk of changes in value.
4(l) Employee benefits
Short term employee benefits and other long-term employee benefits
Liabilities recognised for benefits accruing to employees in respect of wages, salaries and other short-term
employee benefits in the period the related service is rendered by the employees, at the undiscounted amount
of the benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of other long-term employee benefits such as annual leaves are measured at the
present value of the estimated future cash outflows expected to be made by the Company in respect of
services provided by employees up to the reporting date.
Post employment benefits Defined
(ii) contribution plans
Payments to defined contribution retirement benefit plans are recognised as an expense when employees have
rendered service entitling them to the contributions.
Defined benefit plans
The Liability for Gratuity to employees, which is a defined benefit plan (funded), as at Balance Sheet date
determined on the basis of actuarial Valuation based on Projected Unit Credit method.
The present value of the defined benefit obligations is determined by discounting the estimated future cash
flows by reference to market yields at the end of the reporting period on government bonds that have terms
approximating to the terms of the defined benefit obligations. The net interest cost is calculated by applying the
discount rate to the net balance of the defined benefit obligation and the fair value of defined benefit plan
assets. This cost is included in employee benefit expenses in the statement of profit and loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are
recognized in the period in which they occur, directly in "other comprehensive income". They are included in
retained earnings in the statement of changes in equity and in balance sheet.
Changes in present value of the defined benefit obligation resulting from plan amendment or curtailments are
recognized immediately in profit or loss as "past service cost".
4(m) Income Taxes
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from 'profit before tax'
as reported in the statement of profit and loss because of items of income or expense that are taxable or
deductible in other years and items that are never taxable or deductible. The Company's current tax is
calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Management periodically evaluates contingencies and positions taken in uncertain tax positions in tax returns with
respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities.
(ii) Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in
balance sheet and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for all taxable temporary differences.
Deferred tax assets are generally recognised 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
utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the
initial recognition of good will and from the initial recognition of assets and liabilities (other than in a business
combination) in a transaction that affects neither the taxable profit nor the accounting profit.
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 realised, based on tax rates (and tax laws) that have been enacted or substantively enacted
by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the
manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of
its assets and liabilities.
(iii) Current and deferred tax for the period
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other
comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial
accounting for a business combination, the tax effect is included in the accounting for the business combination.
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