3.12. Provisions and Contingent Liabilities
Provisions are recognized when the Company has a present obligation (legal or constructive) as a
result of a past event, an outflow of resources embodying economic benefits will probably be required
to settle the obligation, and a reliable estimate can be made of the amount of the 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 recognized as a finance cost.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the
existence of which will be confirmed only by the occurrence or nonoccurrence of one or more
uncertain future events not wholly within the control of the Company or a present obligation that
arises from past events where it is either not probable that an outflow of resources will be required
to settle the obligation or a reliable estimate of the amount cannot be made.
3.13. Cash flow statement
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the
effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash
receipts or payments. The cash flows from operating, financing, and investing activities of the
Company are segregated.
3.14. Earnings Per Share
Basic earnings per share is computed by dividing the net profit for the period attributable to the
equity shareholders of the Company by the weighted average number of equity shares outstanding
during the period. The weighted average number of equity shares outstanding during the period and
for all periods presented is adjusted for events, such as bonus shares, other than the conversion of
potential equity shares that have changed the number of equity shares outstanding, without a
corresponding change in resources.
To calculate diluted earnings per share, the net profit for the period attributable to equity
shareholders and the weighted average number of shares outstanding during the period is adjusted
for the effects of all dilutive potential equity shares.
3.15. Employee Benefits Defined contribution plans
Defined contribution plans
Contributions to defined contribution schemes such as employees' state insurance, labor welfare
fund, superannuation scheme, employee pension scheme, etc. are charged as an expense based on the
amount of contribution required to be made as and when services are rendered by the employees.
The company's provident fund contribution, in respect of certain employees, is made to a
government-administered fund and charged as an expense to the Statement of Profit and Loss. The
above benefits are classified as Defined Contribution Schemes as the Company has no further defined
obligations beyond the monthly contributions.
Defined benefit plans
The Company provides for retirement/post-retirement benefits in the form of gratuity, and
compensated absences, in respect of certain employees. All defined benefit plan obligations are
determined based on valuations, as at the Balance Sheet date, made by an independent actuary using
the projected unit credit method. The classification of the Company's net obligation into current and
non-current is as per the actuarial valuation report.
For defined benefit plans, the amount recognized as ‘Employee benefit expenses' in the Statement of
Profit and Loss is the cost of accruing employee benefits promised to employees over the year and
the costs of individual events such as past/future service benefit changes and settlements (such
events are recognized immediately in the Statement of Profit and Loss). The amount of net interest
expense calculated by applying the liability discount rate to the net defined benefit liability or asset
is charged or credited to ‘Finance costs' in the Statement of Profit and Loss. Any changes in the
liabilities over the year due to changes in actuarial assumptions or experience adjustments within the
plans are recognized immediately in ‘Other comprehensive income’ and subsequently not reclassified
to the Statement of Profit and Loss.
3.16. Financial instruments
Financial assets and liabilities are recognized when the Company becomes a party to the contractual
provisions of the instrument.
The Company derecognizes a financial asset only 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 entity. The Company derecognizes financial liabilities when, and
only when, the Company’s obligations are discharged, canceled or have expired.
A.Financial Assets
On initial recognition, a financial asset is recognized at fair value. In the case of financial assets that
are recognized at fair value through profit and loss (FVTPL), their transaction cost is recognized in
the statement of profit and loss. In other cases, the transaction cost is attributed to the acquisition
value of the financial asset. Financial assets are subsequently classified and measured at - 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 measured on initial recognition of a financial asset or financial
liability. In the case of Financial assets which are recognized at fair value through profit and loss
(FVTPL), their transaction cost is recognized in the statement of profit and loss. In other cases, the
transaction cost is attributed to the acquisition value of the financial asset. Financial assets are
subsequently classified and measured at
amortized cost fair value through other comprehensive income (FVOCI) fair value through profit and
loss (FVTPL)
Financial assets are not reclassified after their recognition, except during the period the Company
changes its business model for managing financial assets.
[a] Cash and cash equivalents
Cash and cash equivalents are cash, balances with bank and short-term (three months or less from the date
of acquisition], highly liquid investments that are readily convertible into cash and which are subject to an
insignificant risk of changes in value
[b] Trade Receivables and Loans
Trade receivables are initially recognized at fair value. Subsequently, these assets are held at amortized cost,
using the effective interest rate (EIR) method net of any expected credit losses. The EIR is the rate that
discounts estimated future cash income through the expected life of a financial instrument.
[c] Debt Instruments
Debt instruments are initially measured at amortized cost, fair value through other comprehensive income
C'FVOCr), or fair value through profit or loss ('FVTPL'] till derecognition based on [i] the company's business
model for managing the financial assets and (ii] the contractual cash flow characteristics of the financial asset.
[i] Measured at amortized cost:
Financial assets that are held within a business model whose objective is to hold financial assets
to collect contractual cash flows that are solely payments of principal and interest are
subsequently measured at amortized cost using the effective interest rate ('EIR'] method less
impairment, if any. The amortisation of EIR and loss arising from impairment, if any is recognised
in the Statement of Profit and Loss.
[ii] Measured at fair value through other comprehensive income (FVOCI):
Financial assets that are held within a business model whose objective is achieved by both, selling financial
assets and collecting contractual cash flows that are solely payments of principal and interest, are
subsequently measured at fair value through other comprehensive income. Fair value movements are
recognized in the other comprehensive income (OCI], Interest income is measured using the EIR method and
impairment losses, if any are recognized in the Statement of Profit and Loss. On derecognition, cumulative
gain or loss previously recognized in OCI is reclassified from the equity to 'other income’ in the Statement of
Profit and Loss.
[iii] Measured at fair value through profit or loss (FVTPL):
A financial asset not classified as either amortized cost or FVOCI, is classified as FVTPL. Such financial assets
are measured at fair value with all changes in fair value, including interest income and dividend income if
any, recognized as 'other income' in the Statement of Profit and Loss.
[d] Equity Instruments:
All investments in equity instruments classified under financial assets are initially measured at fair value, the
Company may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL.
The Company makes such an election on an instrument-by-instrument basis. Fair value changes on an equity
instrument are recognized as 'other income’ in the Statement of Profit and Loss unless the Company has
elected to measure such instrument at FVOCI. Fair value changes excluding dividends, on an equity
instrument measured at FVOCI are recognized in OCI. Amounts recognized in OCI are not subsequently
reclassified to the Statement of Profit and Loss. Dividend income on the investments in equity instruments is
recognized as 'other income’ in the Statement of Profit and Loss.
Impairment of Financial Asset
The Company applies the expected credit loss [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]
iii. Financial assets measured at fair value through other comprehensive income (FVTOCI]
In the case of trade receivables, the Company follows a simplified approach wherein an amount equal to
lifetime ECL is measured and recognized as a loss allowance.
In the 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 a 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 a 12-month ECL.
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 Company expects to receive (i.e., all cash shortfalls], discounted at the
original effective interest rate.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of
a financial asset. 12-month ECL is a portion of the lifetime ECL that results from default events that are
possible within 12 months from the reporting date.
ECL is measured in a manner that reflects 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.
As a practical expedient, the Company uses a provision matrix to measure lifetime ECL on its portfolio of trade
receivables. The provision matrix is prepared based on historically observed default rates over the expected
life of trade receivables and is adjusted for forward-looking estimates. At each reporting date, the historically
observed default rates and changes in the forward-looking estimates are updated.
ECL allowance recognized (or reversed] during the period is recognized as income/ expense in the Statement
of Profit and Loss under the head 'Other expenses'.
B.Financial Liabilities
Financial liabilities are initially measured at the amortized cost unless, at initial recognition, they are classified
as fair value through profit and loss. In the case of trade payables, they are initially recognized at fair value and
subsequently, these liabilities are held at amortized cost, using the effective interest rate method.
Subsequent measurement
Financial liabilities are subsequently measured at amortized cost using the EIR method. Financial liabilities
carried at fair value through profit or loss are measured at fair value with all changes in fair value recognized
in the Statement of Profit and Loss.
For and on behalf of the Board of Directors
PARAMOUNT COSMETICS (INDIA) LIMITED As per our report of the even date for I
PARY & CO.,
Chartered Accountants
Firm Reg. No. 007288C
Hiitesh T opiiwaalla
Director
(DIN 01603345)
RAKESH KUMAR JAIN
Partner
Membership No: 106109
Rajnish Matta Ankita Karnani UDIN:24106109BKHGYK2875
Chief Financial Officer Company Secretary & Compliance Officer
Place: Bangalore Place: Surat
Date:23/05/2024 Date : 23/05/2024
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