d) Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised if, as a result of a past event, the Company has a present legal or
constructive obligation that can be estimated reliably, and it is probable that an outflow of economic
benefits will be required to settle the obligation. Contingent liability is disclosed after careful
evaluation of facts, uncertainties and possibility of reimbursement unless the possibility of an outflow
of resource embodying economic benefit is remote. Contingent liabilities are not recognised but are
disclosed in notes. Contingent assets are not disclosed in the financial statements unless an inflow of
economic benefit is probable.
e ) Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is
recognised when the significant risk and rewards of ownership have been transferred to the customer,
recovery of the consideration is probable, the associated costs and possible return of goods can be
estimated reliably, there is no continuing management involvement with the goods to the degree
usually associated with the ownership and the amount of revenue can be measured reliably regardless
of when the payment is being made.
Interest and Dividend Income: Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the rate applicable. Dividend income is recognized when the
shareholders’ right to receive dividend is established.
f ) Employee Benefits
Short Term Employee Benefits
Short-term employee benefits are expenses as the related service is provided. A liability is recognised
for the amount expected to be paid if the Company has a present legal or constructive obligation to
pay this amount as a result of past service provided by the employee and the obligation can be
estimated reliably.
Post-Employment Benefits
Defined contribution plan
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed
contributions to a statutory authority and will have no legal or constructive obligation to pay further
amounts.
Retirement benefits in the form of Provident Fund and employee state insurance are a defined
contribution scheme and contributions paid/payable towards these funds are recognised as an expense
in the statement of profit and loss during the period in which the employee renders the related
service. There are no other obligations other than the contribution payable to the respective trusts.
Defined benefit plan
The Company provides for gratuity which is a defined benefit plan the liabilities of which is
determined based on valuation, as at the balance sheet date, made by the independent actuary using
the projected unit credit method. Re-measurement comprising of actuarial gains and losses, in respect
of gratuity are recognised in OCI (other comprehensive income), in the period in which they occur.
Re-measurement recognised in OCI (other comprehensive income) are not reclassified to the
Statement of Profit and Loss in Subsequent periods.
The classification of the company's obligation into current and non-current is as per the acturial
valuation report.
g ) Foreign Currency Transactions
Transactions in foreign currencies are translated into the Company's functional currency at the
exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign
currencies are translated into the functional currency at the exchange rate at the reporting date. Non¬
monetary assets and liabilities that are measured based on historical cost in a foreign currency are
translated at the exchange rate at the date of the transaction. Exchange differences are recognised in
Statement of profit & loss. In accordance with Ind-AS 101 "First Time Adoption of Indian
Accounting Standards", the Company has continued the policy of capitalisation of exchange
differences on foreign currency loans taken before the transition date.
h) Borrowing costs
Borrowing costs are interest and other costs (including exchange differences relating to foreign
currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred in
connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or
construction of an asset which necessarily take a substantial period of time to get ready for their
intended use are capitalised as part of the cost of that assets. Other borrowing costs are recognised as
an expenses in the period in which they are incurred.
i ) Income Tax
Income Tax expense comprises current and deferred tax. It is recognised in profit or loss except to the
extent that it relates to items recognised directly in Other Comprehensive Income. Current tax
comprises the expected tax payable or receivable on the taxable income or loss for the year after
taking credit of the benefits available under the Income Tax Act and any adjustment to the tax
payable or receivable in respect of previous years. It is measured using tax rates enacted or
substantively enacted at the reporting date. Deferred tax is recognised in respect of temporary
differences between the carrying amounts of assets and liabilities for financial reporting purposes and
the corresponding tax bases used for taxation purposes. Deferred tax assets include Minimum
Alternative Tax (MAT) paid in accordance with the tax laws, which gives rise to future economic
benefits in the form of adjustment of future income tax liability, is considered as an asset if there is
probable evidence that the Company will pay normal income tax in future. Accordingly MAT is
recognised as deferred tax asset in the Balance Sheet.
j ) Segment Reporting
The Company's business activity falls within a single segment viz. Sale of Precious and semi¬
precious stone. The segment has been identified by taking into account the nature of product, the
differing risks, the returns, the organisation structure and the internal reporting systems and the
manner in which operating results are reviewed by the Management.
k ) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand and short-term deposits with original
maturities of three months or less that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value.
l ) Cash flow statement
Cash flow statements are prepared in accordance with ” Indirect Method” as explained in the
Accounting Standard on Statement of Cash Flows ( Ind AS-7). The cash flows from regular revenue
generating, financing and investing activity of the Company are segregated.
m) Earning per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to
Equity Shareholders by the weighted average number of equity shares outstanding during the period.
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 effects of all dilutive potential equity shares.
n ) Investments in Subsidiaries
Investment in subsidiary Company is measured at cost less impairment as per Ind AS 27- Separate
Financial Statements. The Company reviews its carrying value of investments at cost or amortised
cost annually, or more frequently when there is indication for impairment. If the recoverable amount
is less than its carrying amount, the impairment loss is accounted for.
0) Intangible assets
1) Recognition and initial measurement
Intangible assets are stated at their cost of acquisition. Any trade discount and rebates are deducted in
arriving at the purchase price.
ii) Subsequent measurement (amortisation)
Intangible assets are amortized over their respective individual estimated useful life on Straight Line
Method basis commencing from the date, the asset is available to the company for its use.
iii) Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all its
intangible assets recognised as at April 1, 2017 measured as per previous GAAP and use that carrying
value as the deemed cost of the intangible assets.
p) 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 the Company becomes a party to the contractual provisions of the instruments.
Financial asset and financial liabilities are initially measured at fair value. Transaction cost which are
directly attributable to the acquisition or issue of financial instruments (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 cost
directly attributable to the acquisition of financial assets financial liabilities at fair value through
profit or loss are recognised immediately in profit or loss. Subsequently, financial instruments are
measured according to the category in which they are classified.
(i) Financial Assets
All purchases or sales of financial assets are recognised and derecognised on a trade date basis.
Regular way purchases or sales are purchases or sales of financial assets that require delivery of
assets within the time frame established by regulation or convention in the market place.
All recognised financial assets are subsequently measured in their entirely at either amortised cost or
fair value, depending on the classification of the financial assets.
Classification of financial assets
Classification of financial assets depends on the nature and purpose of the financial assets and is
determined at the time of initial recognition.
The Company classifies its financial assets in the following measurement categories:
• those to be measured subsequently at fair value (either through other comprehensive income, or
through profit or loss), and
• those measured at amortised cost
The classification depends on the entity’s business model for managing the financial assets and the
contractual terms of the cash flows.
A financial asset that meets the following two conditions is measured at amortised cost unless the
asset is designated at fair value through profit or loss under the fair value option:
• Business model test : the objective of the Company’s business model is to hold the financial asset to
collect the contractual cash flows.
• Cash flow characteristic test : the contractual term 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.
A financial asset that meets the following two conditions is measured at fair value through other
comprehensive income unless the asset is designated at fair value through profit or loss under the fair
value option:
• Business model test : the financial asset is held within a business model whose objective is achieved
by both collecting cash flows and selling financial assets.
• Cash flow characteristic test : the contractual term of the financial asset gives rise on specified dates
to cash flows that are solely payments of principal and interest on the principal amount outstanding.
All other financial assets are measured at fair value through profit or loss.
Investments in equity instrument at fair value through other comprehensive income (FVTOCI)
On initial recognition, the Company can make an irrevocable election (on an instrument by
instrument basis) to present the subsequent changes in fair value in other comprehensive income
pertaining to investments in equity instrument. This election is not permitted if the equity instrument
is held for trading. These elected investments are initially measured at fair value plus transaction
costs. Subsequently, they are measured at fair value with gains / losses arising from changes in fair
value recognised in other comprehensive income. This cumulative gain or loss is not reclassified to
profit or loss on disposal of the investments.
The Company has an equity investment in an entity which is not held for trading. The Company has
elected to measure this investment at amortised cost. Dividend, if any, on this investments is
recognised in profit or loss.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets that do not meet the amortised cost criteria or fair value through other comprehensive
income criteria are measured at fair value through profit or loss. A financial asset that meets the
amortised cost criteria or fair value through other comprehensive income criteria may be designated
as at fair value through profit or loss upon initial recognition if such designation eliminates or
significantly reduces a measurement or recognition inconsistency that would arise from measuring
assets and liabilities or recognising the gains or losses on them on different bases.
Income Recognition:
Interest income is recognised in the Statement of Profit and Loss using the effective interest method.
Dividend income is recognised in the Statement of Profit and Loss when the right to receive dividend
is established.
Impairment
The Company assesses at each reporting date whether a financial asset (or a group of financial
assets) such as investments, trade receivables, advances and security deposits held at amortised cost
and financial assets that are measured at fair value through other comprehensive income are tested for
impairment based on evidence or information that is available without undue cost or effort. Expected
credit losses are assessed and loss allowances recognised if the credit quality of the financial asset has
deteriorated significantly since initial recognition.
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying
amount of the assets.For debt securities at fair value through other comprehensive income, the loss
allowance is recognised in other comprehensive income and is not reduced from the carrying amount
of the financial asset in the balance sheet.
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent
that there is no realistic prospect of recovery. This is generally the case when the Company
determines that the trade receivable does not have assets or sources of income that could generate
sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are
written-off could still be subject to enforcement activities under the Company’s recovery procedures,
taking into account legal advice where appropriate. Any recoveries made are recognised in
standalone statement of profit and loss.
De-recognition of financial assets
A financial asset is derecognised only when
• The Company has transferred the rights to receive cash flows from the financial asset or
• Retains the contractual rights to receive the cash flows of the financial asset, but assumes a
contractual obligation to pay the cash flows to one or more recipients.
(ii) Financial liabilities and equity instruments
Classification of debt or equityDebt or equity instruments issued by the Company are classified as
either financial liabilities or as equity in accordance with the substance of the contractual
arrangements and the definitions of a financial liability and an equity instrument.Equity
instrumentsAn 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, net of direct issue costs.Financial liabilitiesBorrowings, trade payables and
other financial liabilities are initially recognised at the value of the respective contractual obligations.
They are subsequently 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. Financial liabilities are derecognised when the liability is extinguished, that is, when
the contractual obligation is discharged, cancelled and on expiry.
Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount is included in the Balance Sheet where
there is a legally enforceable right to offset the recognised amounts and there is an intention to settle
on a net basis or realise the asset and settle the liability simultaneously.
q) Leasing
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A
contract is, or contains, a lease if the contract conveys the right to control the use of an identified
asset for a period of time in exchange for consideration. To ssess whether a contract conveys the right
to control the use of an identified asset, the Company assess whether:
The Company recognises a right-of-use asset and a lease liability at the lease commencement date.
The right of use asset is intially measured at cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or before the commencement date, plus any initial
direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to
restore the underlying asset or the site on which it is located, less any lease incentive received.
The right of use asset is subsequently depreciated using the straight line method from the
commencement date to the end of the lease term. The estimated useful lives of right-of-use assets are
determined on the basis of remaining lease term. In addition, the right-of-use asset is periodically
reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at
the commencement date, discounted using the Company’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise the fixed payments,
including in-substance fixed payments.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured
when there is a change in future lease payments arising from a change in an index or rate, if there is a
change in Company’s estimate of the amount expected to be payable under a residual value
guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension
or termination option
When the lease liability is remeasured in this way, a orresponding adjustment is made to the carrying
amount of the right-of-use asset, or is are structured solely to increase in line with expected general
inflation to compensate for the lessor’s expected inflationary cost increases, such increases are
recognised in the year in which such benefits accrue. Contingent rentals arising under operating
leases are recognised as an expense in the period in which they are incurred.
Operating leases
Lease rental expenses from operating leases is generally recognised on a straight line basis over the
term of the relevant lease. Where the rentals If any specific borrowing remains outstanding after the
related asset is ready for its intended use, that borrowing is considered part of the funds that are
borrowed generally for calculating the capitalisation rate.
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