x. Provision, 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.
The amount recognized as a provision is the best estimate of the consideration required to settle the present
obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the
obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its
carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a
third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and
the amount of the receivable can be measured reliably.
Onerous contracts
Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous
contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting
the obligations under the contract exceed the economic benefits expected to be received from the contract.
Restructurings
A restructuring provision is recognised when the Company has developed a detailed formal plan for the
restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting
to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring
provision includes only the direct expenditures arising from the restructuring, which are those amounts that are
both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity.
Contingent liabilities acquired in a business combination
Contingent liabilities (if any) acquired in a business combination are initially measured at fair value at the
acquisition date. At the end of subsequent reporting periods, such contingent liabilities are measured at the higher
of the amount that would be recognised in accordance with Ind AS 37 and the amount initially recognized less
cumulative amortization.
xi. Employee Benefits
i. Short Term employee benefits
Short term employee benefits settled with in twelve months of receiving employee services such as
salary/wages/bonus and exgratia are recognized as an expense at the undiscounted amount in the Statement of
Profit and Loss of the year in which the related service is rendered by employees.
ii. Post- employment benefits
a. Provident and family pension fund
The eligible employees of the Company are entitled to receive post-employment benefits in respect of
provident and family fund in which both the employee and the Company make monthly contributions
at a specified percentage of the covered employee’s salary .Both employee’s and Company’s
contributions are made to Regional Provident Fund Commissioner (RPFC) and the employer’s
contributions are charged to the Statement of profit and loss as incurred.
b. National Pension Scheme (NPS)
Certain employees of the Company have opted to subscribe and contribute to National Pension
Scheme (NPS), a defined contribution plan administered by the Government of India. Individual
employees can determine the amount to be contributed towards NPS. The Company’s contribution to
NPS for the year is charged as an expense in the Statement of profit and loss when services are
rendered by the employees and based on the amount of contribution required to be made.
Obligations for contributions to defined contribution plan are expensed as an employee benefits
expense in the statement of profit and loss in period in which the related service is provided by the
employee. Prepaid contributions are recognised as an asset to the extent that a cash refund or a
reduction in future payments is available.
c. Gratuity
The Company has an obligation towards gratuity, a defined retirement plan, covering eligible
employees. The plan provides a lump sum payment to vested employees at retirement, death, and
incapacitation or on termination of employment of an amount based on the respective employees’
salary and the tenure of employment with the Company. Liabilities with regard to the Gratuity Plan
are determined by actuarial valuation, performed by an independent actuary, at each balance sheet
date using the projected unit credit method. Actuarial gains and losses for the gratuity liability are
recognized full in the period in which they occur through other comprehensive income.
xii. Lease
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116.
Identification of a lease requires significant judgement. The Company uses significant judgement in assessing the
lease term.
For short-term and low value leases, the Company recognises the lease payments as an operating expense on a
straight-line basis over the lease term.
The Company lease asset classes primarily consist of leases for premise. The Company assesses whether a
contract contains a lease, at inception of a contract. 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 assess
whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
(i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the
lease and
(iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the company recognizes a right-of-use asset (“ROU”) and a
corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of
twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the
company recognizes the lease payments as an operating expense on a straight-line basis over the term of the
lease.
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. The company recognises right-of-use asset representing its right to use the
underlying asset for the lease term at the lease commencement date. The cost of the right-of use asset measured
at inception shall comprise of the amount of the initial measurement 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 be incurred by the lessee in dismantling and removing the underlying asset or restoring the underlying
asset or site on which it is located. The right-of-use assets is subsequently measured at cost less any accumulated
depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability.
The right-of-use assets is depreciated using the straight -line method from the commencement date over the lease
term.
The c ompany measures the lease liability at the present value of the lease payments that are not paid at the
commencement date of the lease. The lease payments are discounted using the incremental borrowing rate. Lease
liabilities are remeasured with a corresponding adjustment to the related right of use asset if the company
changes its assessment if whether it will exercise an extension or a termination option. The estimated useful lives
of right-of-use assets are determined on the same basis as those of the underlying property and equipment.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been
classified as financing cash flows.
xiii. Earning per Equity Share
Basic earnings per equity share are 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 calculation of Diluted earnings per share, the net profit or loss for the period attributable to
equity shareholders and the weighted number of equity shares outstanding during the period are adjusted for the
effects of all potentially dilutive equity shares.
xiv. Foreign Currency Transactions
The functional currency for the Company is determined as the currency of the primary economic environment in
which it operates. For the Company, the functional currency is the local currency of the country in which it
operates, which is INR.
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing
rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in Statement of Profit
and Loss except to the extent of exchange differences which are regarded as an adjustment to interest costs on
foreign currency borrowings that are directly attributable to the acquisition or construction of qualifying assets
which are capitalized as cost of assets.
Non-monetary items that are measured in terms of historical cost in a foreign currency are recorded using the
exchange rates at the date of the transaction. Non-monetary items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on
translation of nonmonetary items measured at fair value is treated in line with the recognition of the gain or loss
on the change in fair value of the item (i.e. translation differences on items whose fair value gain or loss is
recognised in Other Comprehensive Income or Statement of Profit and Loss are also recognised in Other
Comprehensive Income or Statement of Profit and Loss, respectively).
In case of an asset, expense or income where a non-monetary advance is paid/received, the date of transaction is
the date on which the advance was initially recognised. If there were multiple payments or receipts in advance,
multiple dates of transactions are determined for each payment or receipt of advance consideration.
In preparing the financial statements of the Company, transactions in currencies other than the entity’s functional
currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions.
At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the
rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies
are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that
are measured in terms of historical cost in a foreign currency are not retranslated.
Treatment of exchange differences
The exchange differences on monetary items are recognised in Profit or Loss in the period in which they arise
xv. Dividend and interest income.
Dividend income and interest income
Dividend income from investments is recognised when the shareholder’s right to receive payment has been
established (provided that it is probable that the economic benefits will flow to the Company and the amount of
income can be measured reliably). Interest income from a financial assets is recognised when it is probable that
the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest
income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to that asset’s net carrying amount on initial recognition.
xvi. Cash flow statement
Cash flows are reported using indirect method, whereby Profit/(loss) after tax reported under Statement of Profit
and loss is adjusted for the effects of transactions of noncash 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 available information.
xvii. Financial instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual
provisions of the instruments.
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 fi nancial 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 profit or loss.
Investment in subsidiaries
A subsidiary is an entity controlled by the Company. Control exists when the Company has power over the
entity, is exposed, or has rights to variable returns from its involvement with the entity and has the ability to
affect those returns by using its power over the entity. Power is demonstrated through existing rights that give the
ability to direct relevant activities, those which significantly affect the entity’s returns. Investments in
subsidiaries are carried at cost less impairment. Cost comprises price paid to acquire the investment and directly
attributable cost.
Investment in associates
An associate is an entity over which the Company has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee but is not control or joint control over
those policies.
The investments in associates are carried at cost less impairment. The cost comprises price paid to acquire the
investment and directly attributable cost.
T ransition to Ind AS
The Company had elected to continue with the carrying value of all of its equity investments as of 1 April, 2015
(transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the
transition date.
Financial assets
All regular way purchases or sales of financial assets are recognized and derecognized 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 marketplace.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value,
depending on the classification of the financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortised cost (except for debt
instruments that are designated as at fair value through profit or loss on initial recognition):
• The asset is held within a business model whose objective is to hold assets in order to collect contractual cash
flows; and
• The contractual terms of the instrument give rise on specified dates to cash flows that are solely Payments of
principal and interest on the principal amount outstanding.
Debt instruments that meet the following conditions are subsequently measured at fair value through other
comprehensive income (except for debt instruments that are designated as at fair value through profit or loss on
initial recognition):
• The asset is held within a business model whose objective is achieved both by collecting contractual cash flows
and selling financial assets; and
• The contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Interest income is recognised in profit or loss for FVTOCI debt instruments. For the purposes of recognising
foreign exchange gains and losses, FVTOCI debt instruments are treated as financial assets measured at
amortised cost. Thus, the exchange differences on the amortised cost are recognised in profit or loss and other
changes in the fair value of FVTOCI financial assets are recognised in other comprehensive income and
accumulated under the heading of ‘Reserve for debt instruments through other comprehensive income’. When
the investment is disposed of, the cumulative gain or loss previously accumulated in this reserve is reclassified to
profit or loss.
All other financial assets are subsequently measured at fair value.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating
interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated
future cash receipts (including all fees and points paid or received that form an integral part of the effective
interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument,
or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified
as at FVTPL. Interest income is recognised in profit or loss and is included in the “Other income”.
Investments in equity instruments at 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
instruments. This election is not permitted if the equity investment 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 and losses arising from changes in fair value recognised in other comprehensive income and accumulated
in the ‘Reserve for equity instruments through other comprehensive income’. The cumulative gain or loss is not
reclassified to profit or loss on disposal of the investments.
A financial asset is held for trading if:
• It has been acquired principally for the purpose of selling it in the near term; or
• On initial recognition it is part of a portfolio of identified financial instruments that the Company manages
together and has a recent actual pattern of short-term profit-taking; or
• It is a derivative that is not designated and effective as a hedging instrument or a financial guarantee.
Financial assets at fair value through profit or loss (FVTPL)
Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably elects on initial
recognition to present subsequent changes in fair value in other comprehensive income for investments in
equity instruments which are not held for trading.
Debt instruments that do not meet the amortised cost criteria or FVTOCI criteria (see above) are measured at
FVTPL. In addition, debt instruments that meet the amortised cost criteria or the FVTOCI criteria but are
designated as at FVTPL are measured at FVTPL.
A financial asset that meets the amortised cost criteria or debt instruments that meet the FVTOCI criteria may
be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a
measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognizing
the gains and losses on them on different bases.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or
losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss
incorporates any dividend or interest earned on the financial asset and is included in the ‘Other income’.
Dividend on financial assets at FVTPL is recognised when the Company’s right to receive the dividends is
established, it is probable that the economic benefits associated with the dividend will flow to the entity, the
dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be
measured reliably.
Impairment of financial assets
The Company applies the expected credit loss model for recognizing impairment loss on financial assets
measured at amortised cost, lease receivables, trade receivables and other contractual rights to receive cash or
other financial assets and financial guarantees not designated as at FVTPL. For trade receivables or any
contractual right to receive cash or another financial asset that result from transactions that are within the scope
of Ind AS 115, the Company always measures the loss allowance at an amount equal to lifetime expected credit
losses. Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the
Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is
computed based on a provision matrix which takes into account historical credit loss experience and adjusted
for forward-looking information.
Derecognition of financial assets
The Company derecognizes 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. If the Company neither transfers nor retains substantially all the risks and rewards of ownership
and continues to control the transferred asset, the Company recognises its retained interest in the asset and an
associated liability for amounts it may have to pay. If the Company retains substantially all the risks and
rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset
and also recognizes a collateralized borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the
sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in
other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would
have otherwise been recognised in profit or loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to
repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial
asset between the part it continues to recognize under continuing involvement, and the part it no longer
recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference
between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration
received for the part no longer recognised and any cumulative gain or loss allocated to it that had been
recognised in other comprehensive income is recognised in profit or loss if such gain or loss would have
otherwise been recognised in profit or loss on disposal of that financial asset. A cumulative gain or loss that had
been recognised in other comprehensive income is allocated between the part that continues to be recognised
and the part that is no longer recognised on the basis of the relative fair values of those parts.
Foreign exchange gains and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and
translated at the spot rate at the end of each reporting period. For foreign currency denominated financial assets
measured at amortised cost and FVTPL, the exchange differences are recognised in profit or loss except for
those which are designated as hedging instruments in a hedging relationship.
Financial Liabilities:
Classification as debt or equity
Debt and 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 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 a Company entity are recognised at the proceeds received, net
of direct issue costs.
Repurchase of the Company’s own equity instruments is recognised and deducted directly in equity. No gain or
loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity
instruments.
Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at
FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or
when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and
commitments issued by the Company to provide a loan at below-market interest rate are measured in
accordance with the specific accounting policies set out below.
a) Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either contingent consideration
recognised by the Company as an acquirer in a business combination to which Ind AS 103 applies or is held for
trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
• It has been incurred principally for the purpose of repurchasing it in the near term; or
• On initial recognition it is part of a portfolio of identified financial instruments that the Company manages
together and has a recent actual pattern of short-term profit-taking; or
• It is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading or contingent consideration recognised by
the Company as an acquirer in a business combination to which Ind AS 103 applies, may be designated as at
FVTPL upon initial recognition if:
• Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would
otherwise arise;
• The financial liability forms part of a group of financial assets or financial liabilities or both, which is
managed and its performance is evaluated on a fair value basis, in accordance with the Company’s risk
management or investment strategy, and information about the grouping is provided internally on that basis; or
• It forms part of a contract containing one or more embedded derivatives, and Ind AS 109 permits the entire
combined contract to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement
recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on
the financial liability and is included in the ‘Other income’.
However, for non-held-for-trading financial liabilities that are designated as at FVTPL, the amount of change
in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is
recognised in other comprehensive income, unless the recognition of the effects of changes in the liability’s
credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss, in
which case these effects of changes in credit risk are recognised in profit or loss. The remaining amount of
change in the fair value of liability is always recognised in profit or loss. Changes in fair value attributable to a
financial liability’s credit risk that are recognised in other comprehensive income are reflected immediately in
retained earnings and are not subsequently reclassified to profit or loss.
b) Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised
cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are
subsequently measured at amortised cost are determined based on the effective interest method. Interest
expense that is not capitalized as part of costs of an asset is included in the ‘Finance costs’. The effective
interest method is a method of calculating the amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future
cash payments (including all fees and points paid or received that form an integral part of the effective interest
rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or
(where appropriate) a shorter period, to the net carrying amount on initial recognition.
c) Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the
end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost
of the instruments and are recognised in ‘Other income’. The fair value of financial liabilities denominated in a
foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting
period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of
the fair value gains or losses and is recognised in profit or loss.
d) Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company’s obligations are
discharged, cancelled or have expired. An exchange between with a lender of debt instruments with
substantially different terms is accounted for as an extinguishment of the original financial liability and the
recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing
financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an
extinguishment of the original financial liability and the recognition of a new financial liability. The difference
between the carrying amount of the financial liability derecognized and the consideration paid and payable is
recognised in profit or loss.
xviii. 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 capitalization.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Capitalization of Borrowing Cost ceases when the qualifying asset get ready for it's intended use.
xix. Operating Cycle
Based on the nature of activities of the Company and the normal time between acquisition of assets and their
realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the
purpose of classification of its assets and liabilities as current and noncurrent.
xx. Insurance claims
Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent
that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.
xxi. Recent Accounting pronouncements
On 23rd March, 2022, the Ministry of Corporate Affairs (MCA) has notified Companies (Indian Accounting
Standards) Amendment Rules, 2022. This notification has resulted into amendments in the following existing
accounting standards which are applicable to the Company from 1st April, 2022.
i. Ind AS 101- First time adoption of Indian Accounting Standards
ii. Ind AS 103 - Business Combinations
iii. Ind AS 109 - Financial Instruments
iv. Ind AS 16 - Property, Plant and Equipment
v. Ind AS 37 - Provisions, Contingent Liabilities and Contingent Assets
vi. Ind AS 41 - Agriculture Application of above standards are not expected to have any significant impact on
the Company’s financial statements.
Note 40
The Company has invoked the arbitration against NSDL E Governance Infrastructure Limited and claiming Rs. 7529.20 Lakhs and NSDL E Governance Infrastructure Ltd. Claimed Rs. 2854.43
Lakhs via its counter claim against the company. The Arbitration award was received on 11th August 2022 and not being satisfied, the company filed an appeal before the Hon’ble Bombay High
Court against the Said arbitration award. As a result of Prolong negotiations, both the parties agreed at a final sum of Rs. 934.98 Lakh payable by NSDL E Governance infrastructure Ltd (Now
Known as Protean eGov Technologies Ltd.) to the company and same was Consentend by a settlement dated October 3, 2024 before The Hon’ble Bombay High Court.
Note 41
The Bank guarantee of Rs. 1 cr. is recoverable from MCGM and accounted as recoverable in the books of accounts of the company. The writ filed by the company in the said matter is pending for
disposal in Bombay High Court.
Note 42
The Exceptional Item of expenditure amounting to Rs. 592.26 lakhs represents the sum payable to a vendor as per the consent terms of commercial dispute determined under arbitration through
legal process.
ALANKIT LIMITED
Notes to the Financial Statements for the year ended March 31, 2025
44 (A) Financial instruments
(i) Fair values hierarchy
Financial assets and financial liabilities measured at fair value in the statement of financial position are classified into three Levels of a fair value hierarchy. The three levels are defined based on the observability of significant
Level 1: Quoted prices (unadjusted) in active markets for financial instruments.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data rely as little as possible on entity specific
estimates.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
44 (B) Financial risk management
The Company’s activities expose it to market risk, liquidity risk and credit risk. The Company's board of directors has overall responsibility for the establishment and oversight of the Company's risk management framework.
This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements.
1) Credit risk
Credit risk is the risk that a counterparty fails to discharge an obligation to the company. The company is exposed to this risk for various financial instruments, for example by granting loans and receivables to customers, placing
deposits, etc. The company’s maximum exposure to credit risk is limited to the carrying amount of following types of financial assets.
- cash and cash equivalents,
- trade receivables,
- loans & receivables carried at amortised cost, and
- deposits with banks
Credit risk management
Credit risk rating
The Company assesses and manages credit risk based on internal credit rating system, continuously monitoring defaults of customers and other counterparties, identified either individually or by the company, and incorporates
this information into its credit risk controls. Internal credit rating is performed for each class of financial instruments with different characteristics. The Company assigns the following credit ratings to each class of financial
assets based on the assumptions, inputs and factors specific to the class of financial assets.
Cash & cash equivalents and bank deposits
Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits and accounts in different banks.
Trade receivables
Company's trade receivables are considered of high quality and accordingly no life time expected credit losses are recognised on such receivables.
Otherfinancial assets measured at amortised cost
Other financial assets measured at amortized cost includes advances to employees. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously, while at the same
time internal control system in place ensure the amounts are within defined limits.
2) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the
nature of the business, the Company maintains flexibility in funding by maintaining availability under committed facilities.
Management monitors rolling forecasts of the Company’s liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the entity
operates. In addition, the Company’s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios
against internal and external regulatory requirements and maintaining debt financing plans.
3) Market risk
a) Interest rate risk
The Company is not exposed to changes in market interest rates as all of the borrowings are at fixed rate of interest. Also the Company’s fixed deposits are carried at amortised cost and are fixed rate deposits. They are therefore
not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.
b) Price risk
Exposure
The Company’s exposure to price risk arises from investments held and classified as FVTPL. To manage the price risk arising from investments in mutual funds and equity investment, the Company diversifies its portfolio of
assets.
44('C) Capital management
The Company’ s capital management objectives are
- to ensure the Company’s ability to continue as a going concern
- to provide an adequate return to shareholders
Management assesses the Company’s capital requirements in order to maintain an efficient overall financing structure. This takes into account the subordination levels of the Company’s various classes of debt. The Company
manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.
Note 45
In opinion of the management, the current assets, loans and advances are expected to realise the amount at which they are stated, if realised
in the ordinary course of business and provision of known liabilities have adequately made in the accounts.
Note 46
Figures for previous year have been regrouped / rearranged wherever considered necessary.
Note 47
Figures have been rounded off to the nearest Rupees in Lakh
For Kanodia Sanyal & Associates sd/- sd/- sd/-
Chartered Accountants Ankit Agarwal Ashok Kumar Sinha Meenu Agrawal
FRN No.008396N Managing Director Director Director
DIN:01191951 DIN:08812305 DIN:10679504
sd/-
Namrata Kanodia
Partner sd/- sd/- sd/-
M. No. 402909 Preeti Chadha Gaurav Maheshwari Sakshi Thapar
Place : New Delhi Director Chief Financial Officer Company Secretary
Date :22-05-2025 DIN:06901521
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