1.9 Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is
probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation. Contingent liabilities are disclosed in the financial statements unless possibility of an outflow of resources embodying
economic benefit is remote. Contingent assets are disclosed in the financial statements when an inflow of economic benefits is
probable.
1.10 Earnings Per Share (EPS):
Basic EPS is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average
number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss
for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are
adjusted for the effect of all dilutive potential equity shares.
1.11 Cash and Cash Equivalents:
Cash and cash equivalents in the cash flow statement comprise cash at banks and on hand and short-term deposits with an original
maturity of three months or less, which are subject to an insignificant risk of changes in value.
1.12 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 and financial liabilities are recognised when Company becomes a party to the contractual provisions
of the instruments.
A. 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. Equity instruments issued by the Company are recognised at the proceeds received. Incremental costs directly
attributable to the issuance of new ordinary equity shares are recognized as a deduction from equity, net of tax effects.
B. Initial recognition and measurement
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to
the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair
value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as
appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognised immediately in the statement of profit and loss.
C. Financial assets
i. Subsequent measurement
(a) Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost using the Effective Interest Rate method (EIR) if these
financial assets are held within a business whose objective is to hold these assets 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.
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. This category generally applies to bank deposits, loans and other financial
assets.
(b) Financial assets at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at FVTOCI 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 asset give rise on specified dates
to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(c) Financial assets at fair value through profit or loss (FVTPL)
Financial assets are measured at fair value through profit or loss unless it is measured at amortised cost or at FVTOCI on
initial recognition.
ii. Investment in subsidiaries, Associates and Joint Ventures
The Company has accounted for its investments in subsidiaries, associates and joint venture at cost.
iii. Impairment of financial assets
In accordance with Ind-AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of
impairment loss on the financial assets and credit risk exposure.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the statement
of profit and loss (P&L). This amount is reflected under the head ‘other expenses’ in the P&L. In balance sheet, ECL is
presented as an allowance, i.e., as an integral part of the measurement of financial assets.
The Company derecognises a financial asset when the 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.
D. Financial liabilities
(i) Financial liabilities at amortised cost
Financial liabilities are measured at amortised cost using the effective interest rate method (EIR). Gains and losses are
recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. 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 as finance costs in the statement of profit and loss. This category applies to trade
and other payables.
(ii) Compound Financial Instrument
At the issue date the fairvalue of the liability component of a compound instrument is estimated using the market interest rate
for a similar non-convertible instrument. This amount is recorded as a liability at amortised cost using the effective interest
method until extinguished upon conversion or at the instrument’s redemption date. The equity component is determined as
the difference of the amount of the liability component from the fair value of the instrument. This is recognised in equity, net of
income tax effects, and is not subsequently re-measured.
(iii) Derecognition
The Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or
have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid /
payable is recognised 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 a currently
enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets
and settle the liabilities simultaneously.
1.13 Fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset
or transfer the liability takes place either in the principal market for the asset or liability or in the absence of a principal market, in the
most advantageous market for the asset or liability.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value
hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
? Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
? Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or
indirectly observable.
? Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
1.14 Significant accounting judgements, estimates and assumptions
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 disclosures, and the disclosure of contingent
liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the
carrying amount of assets or liabilities affected in future periods.
(i) Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year,
are described below. The Company has based its assumptions and estimates on parameters available when the financial
statements are prepared. Existing circumstances and assumptions about future developments, however, may change due to
market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the
assumptions when they occur.
(a) Fair value measurement of financial instruments
"When the fair values 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 DCF model. 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.
(b) Useful life of property, plant and equipment
The estimated useful life of property, plant and equipment is based on a number of factors including the effects of
obsolescence, demand, competition and other economic factors (such as the stability of the industry and known technological
advances) and the level of maintenance expenditures required to obtain the expected future cash flows from the asset.
Useful life of the assets are determined in accordance with Schedule II of the Companies Act, 2013.
(c) Recoverable amount of property, plant and equipment
The recoverable amount of plant and equipment is based on estimates and assumptions regarding in particular the expected
market outlook and future cash flows associated with the PPE. Any changes in these assumptions may have a material
impact on the measurement of the recoverable amount and could result in impairment.
(d) Provisions and contingencies
The assessments undertaken in recognising provisions and contingencies have been made in accordance with Ind AS 37,
‘Provisions, Contingent Liabilities and Contingent Assets’. The evaluation of the likelihood of the contingent events has been
made on the basis of best judgement by management regarding the probability of exposure to potential outflow of economic
resources. Such estimation can change following unforeseeable developments.
(ii) Judgements
In the process of applying the accounting policies and principles, management has made the following judgements, which
have the significant effect on the amounts recognised in the financial statements:
(a) The Company has issued 10% Non-Cumulative, Non-Convertible, Redeemable Preference Shares of f10/- each. As per
terms of the instruments these are mandatorily redeemable for cash in 10 years from the date of issuance and dividends are
payable at the discretion of the entity before the redemption date.
1.15 Application of new Indian Accounting Standards
Application of new and revised Ind AS
All the Indian Accounting Standards issued and notified by the Ministry of Corporate Affairs under the Companies (Indian Accounting
Standards) Rules, 2015 (as amended) till the financial statements are authorized have been considered in preparing these financial
statements.
Standards/ Amendments issued but not yet effective
(i) Appendix B to Ind AS 21, Foreign currency transactions and advance consideration:
On March 28, 2018, Ministry of Corporate Affairs ("MCA") has notified the Companies (Indian Accounting Standards)
Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration
which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the
related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The
amendment will come into force from April 1,2018. The Company has evaluated the effect of this on the financial statements
and there is no impact on the Company.
(ii) Ind AS 115- Revenue from Contract with Customers:
On March 28, 2018, Ministry of Corporate Affairs ("MCA") has notified the Ind AS 115, Revenue from Contract with
Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of
promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature,
amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. The standard
permits two possible methods of transition:
- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period
presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application
(Cumulative catch - up approach)
1.16 CIRP Process
The company had gone through CIRP process, on 7th March, 2023 vide order no. IB-/263/ND/2023 and Mr. Tanveer llahi, an
Insolvency Professional having registration number IBBI/IPA-001/IP-P-02553/2021-2022/13874 was appointed as Interim
Resolution Professional vide the said order of Hon'ble NCLT.
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