2.8 Provisions and Contingent liabilities
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources embodying economic benefits will 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.
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 non-occurrence 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.
2.9 Income Taxes & Deferred Taxes
Tax expense recognized in Standalone Statement of Profit and Loss comprises the sum of deferred tax and
current tax.
Current tax is determined as the tax payable in respect of taxable income for the year and is computed in
accordance with relevant tax regulations. Current income tax relating to items recognized outside profit or loss is
recognized outside profit or loss (either in other comprehensive income or in equity). Deferred tax is recognize
on temporary differences between the carrying amount of asset and liabilities in the financial statement and the
corresponding tax bases used in computation of taxable profit under Income Tax Act, 1961.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the
asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date. Deferred tax relating to items recognized outside profit or loss is
recognized outside profit or loss (either in other comprehensive income or in equity).
Deferred tax assets and deferred tax liabilities are off set, if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same
taxation authority.
2.10Cash and Cash Equivalents
Cash and cash equivalents are 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.
2.11 Functional & Presentation Currency
These Financial Statements are presented in Indian Rupees (INR), which is also Company’s Functional
Currency.
2.12 Earnings per share
The Company presents basic and diluted earnings per share (“EPS”) data for its equity shares.
Basic EPS is calculated by dividing the net profit for the period attributable to equity shareholders of the
Company by the weighted average number of equity shares outstanding during the period.
Diluted EPS is calculated by dividing the net profit for the period attributable to equity shareholders and the
weighted average number of equity shares outstanding for the effects of all dilutive potential equity shares.
2.13 Operating lease
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially remain with
the lesser, are recognized as operating lease. Operating lease payments are recognized on a straight line basis
over the lease term in the statement of profit and loss, unless the lease agreement explicitly states that increase
is on account of inflation.
2.14 Cash Flow Statement
Cash flows are reported using indirect method as set out in Ind AS -7 “Statement of Cash Flows”, whereby profit /
(loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the
Company are segregated based on the available information.
The net cash flow from operating activities is determined by adjusting net profit or loss for the effects of:
(i) Changes during the year in inventories and operating receivables and payables,
(ii) Non-cash items such as depreciation, provisions, deferred taxes, and unrealized foreign exchange
gains and losses, and
(iii) All other items for which the cash effects are on investing or financing cash flows
2.15 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.
(i) Financial assets:
Initial recognition and measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair
value through statement of profit and loss, transaction costs that are attributable to the acquisition of the financial
asset.
Financial assets are classified, at initial recognition, as financial assets measured at fair value or as financial
assets measured at amortized cost.
Subsequent Measurement
For purpose of subsequent measurement financial assets are classified in two broad categories: -
(i) Financial Assets at fair value
(ii) Financial assets at amortized cost
Where assets are measured at fair value, gains and losses are either recognized entirely in the statement of
profit and loss, or recognized in other comprehensive income.
A financial asset that meets the following two conditions is measured at amortized cost:
• 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 characteristics test:
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payment of principal and interest on the principal amount outstanding.
A financial asset that meets the following two conditions is measured at fair value through OCI:-
• Business Model Test:
The financial asset is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets.
• Cash flow characteristics test:
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payment of principal and interest on the principal amount outstanding.
All other financial assets are measured at fair value through profit and loss.
(ii) Financial Liabilities
All financial liabilities are initially recognized at fair value and, in the case of loans and borrowings and payables,
net of directly attributable transaction costs. Financial liabilities are classified as measured at amortized cost or
fair value through profit and loss (FVTPL).
A financial liability is classified as FVTPL if it is classified as held for trading, or it is a derivative or is designated as
such on initial recognition. Financial Liabilities at FVTPL are measured at fair value and net gain or losses,
including any interest expense, are recognized in statement of profit and loss.
Other financial liabilities are subsequently measured at amortized cost using the effective interest method.
Interest expense and foreign exchange gains and losses are recognized in statement of profit and loss. Any gain
or loss on de-recognition is also recognized in statement of profit and loss.
2.16 Fair Value Measurement
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:
(i) In the principal market for the asset or liability, or
(ii) In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or
a liability is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant that
would use the asset in its highest and best use.
All assets and liabilities for which fair value is measured or disclosed in the financial statements arecategorized
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.
For the purpose of fair value disclosures, the Company determines classes of assets and liabilities on the basis
of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained
above.
Note 20: Valuation of Inventory
There is no inventory held by company during the year.
Note 21: Loans and Advances
In the opinion of the Board of directors the value on realization of loans, advances and current assets in the ordinary
course of business is not less than the amount at which they are stated in the Balance Sheet and provisions for all known
liabilities has been made.
Company has given advances against purchase of property to various third parties during the previous years. Following
are the details of amount o/s as on 31.03.2024:
Note 23:
Balance of sundry debtors, creditors and loans & advances are subject to direct confirmations, reconciliations and
adjustments, which are made available.
Note 24: Discounting of security deposits for leases
Security deposits for leases have been recognized at discounted value and the difference between undiscounted and
discounted value has been recognized as ‘Prepaid expense for Rent’, which has been amortized over respective lease
term as rent expense under ‘Finance Cost’. The discounted value of the security deposits is increased over the period of
lease term by recognizing the notional interest income under ‘other income’.
Management has observed that the tenure of lease term of Security Deposit for rent expense has expired in the FY 2020¬
21. Hence, it has come to the original cost i.e., Rs. 5,00,000 in the F.Y.2020-21.
Reasons for Deviation in Ratios for more than 25% as compared to the preceding year:
Current Ratio
During the Current Year, Loans and Advances against purchase of property, etc. has been recovered from third parties.
Thus, there is decline in Non-Current Assets and increase in Current Assets (Cash & Cash Equivalents) and therefore
leading to rise in current ratio.
Return on Equity
The ratio has improved significantly due to better performance by the company. This is because of growth in gross profit by
approx. 25% and reduction in other expenses by 60% during the current financial year, resulting in rise of Net Profit after
Tax by 45% and therefore provides better return to Equity Shareholders.
Net Capital Turnover Ratio
There has been increase in Revenue From Operation by around 50% as compared to the preceding year due to which the
ratio has improved and thereby resulting in Higher Net Capital turnover Ratio.
Return on Equity and Return on Capital Employed Ratio
There is drastic reduction in other expenses of the company. This is majorly due to reduction in management &
consultancy fees by around 90%, but decrease in gross profit results into decrease in net profit of the company. Hence,
the net profit ratio and return on capital employed has fallen..
As per our Report of even date attached
For g. K. Kedia & Co. For Decorous Investment & Trading Co. Ltd.
Chartered Accountants
Raj Kumar Gupta Amit Gupta
wTd & CFO Director
Kanishka Agarwal DIN: 00074532 DIN: 00074483
Partner
M No 544129 Preetika Mishra-A32490
Place: New Delhi Company Secretary cum Compliance Officer
Date : 21.05.2024
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