I. PROVISIONS
Provisions are recognised 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. When the Company expects some or
all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a
separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented
in the statement of profit and loss net of any reimbursement.
J. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost less accumulated depreciation and where applicable accumulated
impairment losses.
The Cost of an item of Property, plant and equipment comprises:
a. its purchase price including import duties and nonrefundable purchase taxes after deducting trade discounts and
rebates
b. any attributable expenditure directly attributable for bringing an asset to the location and the working condition
for its intended use and
c. the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located,
the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the
item during a particular period for purposes other than to produce inventories during that period.
The Company has elected to continue with the carrying value of all its PPE recognised as on April 1, 2015 measured
as per the previous GAAP and use that carrying value as its deemed cost as on transition date.
Depreciation is provided on Straight Line Method on the basis of useful lives of such assets specified in Schedule II to
the Companies Act, 2013 except the assets costing H 5000/- or below on which depreciation is charged @ 100%.
Depreciation is calculated on pro-rata basis.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is
classified as capital advances under other non-current assets and the cost of assets not put to use before such date
are disclosed under 'Capital work-in-progress'.
Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable that future
economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably.
Repairs and maintenance costs are recognized in net profit in the statement of profit and loss when incurred. The
cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of
the asset and the resultant gains or losses are recognized in the statement of profit and loss. Assets to be disposed
off are reported at the lower of the carrying value or the fair value less cost to sell. Depreciation is recognised so as
to write off the cost of assets (other than freehold land and properties under construction) less their residual values
over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation
method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for
on a prospective basis
Intangible assets
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation
and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful
lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the
effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful
lives that are acquired separately are carried at cost less accumulated impairment losses.
The Company has elected to continue with the carrying value of all its intangible assets recognised as on April 1, 2015
measured as per the previous GAAP and use that carrying value as its deemed cost as on transition date.
De-recognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or
disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between
the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is
derecognised.
Impairment of tangible and intangible assets other than goodwill
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets
to determine whether there is any indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the
Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a
reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual
cash-generating units, or otherwise they are allocated to the smallest Company of cash-generating units for which a
reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment
at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset for which the estimates of future
cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss been recognised for the
asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or
loss.
K. CONTINGENT LIABILITIES
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the
occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present
obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the
obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised
because it cannot be measured reliably. The contingent liability is not recognised in books of account but its existence
is disclosed in financial statements.
L. FINANCIAL INSTRUMENTS
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
Financial Assets
Initial recognition and measurement:
The Company recognizes a financial asset in its Balance Sheet when it becomes party to the contractual provisions of
the instrument. All financial assets are recognized initially at fair value, plus in the case of financial assets not recorded
at fair value through profit or loss ("FVTPL"), transaction costs that are attributable to the acquisition of the financial
asset.
Where the fair value of a financial asset at initial recognition is different from its transaction price, the difference
between the fair value and the transaction price is recognized as a gain or loss in the Statement of Profit and Loss at
initial recognition if the fair value is determined through a quoted market price in an active market for an identical
asset (i.e. level 1 input) or through a valuation technique that uses data from observable markets (i.e. level 2 input).
In case the fair value is not determined using a level 1 or level 2 input as mentioned above, the difference between
the fair value and transaction price is deferred appropriately and recognized as a gain or loss in the Statement of
Profit and Loss only to the extent that such gain or loss arises due to a change in factor that market participants take
into account when pricing the financial asset.
However, trade receivables that do not contain a significant financing component are measured at transaction price.
Subsequent measurement
Financial assets carried at amortised cost (AC)
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective
interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium and fees or
costs that are an integral part of the EIR. The EIR amortization is included in finance income in the Statement of Profit
and Loss. The losses arising from impairment are recognised in the Statement of Profit and Loss.
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.
Financial assets at fair value through profit or loss (FVTPL)
A financial asset which is not classified in any of the above categories are measured at FVTPL.
Equity instruments:
All equity investments within the scope of Ind-AS 109 are measured at fair value. Such equity instruments which are
held for trading are classified as FVTPL. For all other such equity instruments, the Company decides to classify the
same either as FVOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. The
classification is made on initial recognition and is irrevocable.
Derecognition of financial assets:
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is
derecognized (i.e. removed from the Company's balance sheet) when any of the following occurs:
- The contractual rights to the cash flows from the asset expires;
- The Company transfers its contractual rights to receive cash flows of the financial asset and has substantially
transferred all the risks and rewards of ownership of the financial asset.
- The Company neither transfers nor retains substantially all risk and rewards of ownership and does not retain control
over the financial asset.
In cases where Company has neither transferred nor retained substantially all of the risks and rewards of the financial
asset, but retains control of the financial asset, the Company continues to recognize such financial asset to the extent
of its continuing involvement in the financial asset. In that case, the Company also recognizes an associated liability.
The financial asset and the associated liability are measured on a basis that reflects the rights and obligations that the
Company has retained. 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.
Impairment of financial assets:-
In accordance with Ind AS 109, the Company uses 'Expected Credit Loss' (ECL) model, for evaluating impairment of
financial assets other than those measured at fair value through profit and loss (FVTPL).
Expected credit losses are measured through a loss allowance at an amount equal to:
- The 12-months expected credit losses (expected credit losses that result from those default events on the financial
instrument that are possible within 12 months after the reporting date); or
- Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life
of the financial instrument).
For trade receivables Company applies 'simplified approach' which requires expected lifetime losses to be recognised
from initial recognition of the receivables.
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 entity 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 are a portion of the lifetime ECL which result from default events that are possible
within 12 months from the reporting date.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the
Statement of Profit and Loss under the head 'Other expenses'.
Financial Liabilities
Initial recognition and measurement:
The Company recognizes a financial liability in its Balance Sheet when it becomes party to the contractual provisions
of the instrument. All financial liabilities are recognized initially at fair value minus, in the case of financial liabilities
not recorded at fair value through profit or loss (FVTPL), transaction costs that are attributable to the acquisition of
the financial liability.
Where the fair value of a financial liability at initial recognition is different from its transaction price, the difference
between the fair value and the transaction price is recognized as a gain or loss in the Statement of Profit and Loss at
initial recognition if the fair value is determined through a quoted market price in an active market for an identical
asset (i.e. level 1 input) or through a valuation technique that uses data from observable markets (i.e. level 2 input).
In case the fair value is not determined using a level 1 or level 2 input as mentioned above, the difference between
the fair value and transaction price is deferred appropriately and recognized as a gain or loss in the Statement of
Profit and Loss only to the extent that such gain or loss arises due to a change in factor that market participants take
into account when pricing the financial liability.
Subsequent measurement:-
All financial liabilities of the Company are subsequently measured at amortized cost using the effective interest
method, Except For trade and other payables maturing within one year from the balance sheet date, the carrying
amounts approximate fair value due to the short maturity of these instruments.
Under the effective interest method, the future cash payments are exactly discounted to the initial recognition value
using the effective interest rate. The cumulative amortization using the effective interest method of the difference
between the initial recognition amount and the maturity amount is added to the initial recognition value (net of
principal repayments, if any) of the financial liability over the relevant period of the financial liability to arrive at the
amortized cost at each reporting date. The corresponding effect of the amortization under effective interest method
is recognized as interest expense over the relevant period of the financial liability. The same is included under finance
cost in the Statement of Profit and Loss.
Derecognition of financial liabilities :-
Financial liabilities are derecognised when these are extinguished, that is when the obligation is discharged, cancelled
or has expired. The difference between the carrying amount of the financial liability derecognized and the
consideration paid is recognized in the Statement of Profit and Loss.
Offsetting financial instruments:-
Financial assets and liabilities are offset and the net amount is reported 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. The legally enforceable right must not be contingent on future events
and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of
the Company or the counterparty.
M. FAIR VALUE MASURMENRT
The Company measures financial instruments at fair value in accordance with the accounting policies mentioned
above. 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 assets or Liabilities or
- In the absence of a Principal market, in the most advantageous market for the assets or liability
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized
within the fair value hierarchy that categorizes into three levels, described as follows, the inputs to valuation
techniques used to measure value. The fair value hierarchy gives the highest priority to quoted prices in active
markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3
inputs).
Level 1 — quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 — inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly
Level 3 — inputs that are unobservable for the asset or liability
N. IMPAIRMENT OF NON-FINANCIAL ASSETS
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any
indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset's
recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating units (CGU) fair
value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset. Unless the
asset does not generate cash inflows that are largely independent of those from other assets or Company's assets.
When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and
is written down to its recoverable amount.
The objective of IND AS 36 is to ensure that the assets are carried at no more than their recoverable amount. However
since the company is under CIR Process, estimation of recoverable amount can be done only after the receipt of the
Resolution Plan. In view of the same, realisability of economic value of the fixed assets cannot be determined pending
completion of the CIRP.
O. CASH AND CASH EQUIVALENTS
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits which
are subject to an insignificant risk of changes in value.
P. INVENTORIES
Inventories are valued at cost or net realizable value, whichever is lower. The cost in respect of the various items of
inventory is computed as under:
In case of raw materials at weighted average cost plus direct expenses. The cost includes cost of purchase and
other costs incurred in bringing the inventories to their present location and condition.
In case of stores and spares at weighted average cost plus direct expenses. The cost includes cost of purchase and
other costs incurred in bringing the inventories to their present location and condition.
In case of work in progress at raw material cost plus conversion costs depending upon the stage of completion.
In case of finished goods at raw material cost plus conversion costs, packing cost, non recoverable indirect taxes (if
applicable) and other overheads incurred to bring the goods to their present location and condition.
In case of by-products at estimated realizable value.
Net realizable value is the estimated selling price in ordinary course of business, less estimated costs of completion
and the estimated costs necessary to make the sale.
Q. EMPLOYEE BENEFITS
Defined Contribution Plan:
Contribution to provident fund is accounted on accrual basis with corresponding contribution to recognized fund.
Defined Benefit Plan:
Gratuity
The Company pays gratuity to the employees whoever has completed five years of service with the Company at the
time of resignation/superannuation. The gratuity is paid @15 days salary for every completed year of service as per
the Payment of Gratuity Act 1972.
The gratuity liability amount is contributed to the approved gratuity fund formed exclusively for gratuity payment to
the employees. The gratuity fund has been approved by respective IT authorities.
The liability in respect of gratuity and other post-employment benefits is calculated using the Projected Unit Credit
Method and spread over the period during which the benefit is expected to be derived from employees' services.
All expenses represented by current service cost, past service cost, if any, and net interest on the defined benefit
liability (asset) are recognized in the Statement of Profit and Loss. Remeasurements of the net defined benefit liability
(asset) comprising actuarial gains and losses and the return on the plan assets (excluding amounts included in net
interest on the net defined benefit liability/asset), are recognized in Other Comprehensive Income. Such
remeasurements are not reclassified to the Statement of Profit and Loss in the subsequent periods.
The Company presents the above liability/(asset) as current and non-current in the balance sheet as per actuarial
valuation by the independent actuary; however, the entire liability towards gratuity is considered as current as the
Company will contribute this amount to the gratuity fund within the next twelve months.
Leave Encashment
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and entitlements to Annual leave that are
expected to be settled wholly within 12 months after the end of the period in which the employees render the
related service are recognised in respect of employees' services up to the end of the reporting period and are
measured at the amounts expected to be paid when the liabilities are settled.
There is Different policy for leave encashment at different location as below
For Bangalore:
A worker can accumulate total EL up to 30 days. Workers who have accumulations in excess of 15 EL's as on 31st of
December each year will be entitled for leave encashment for the excess over 15 ELs in that Financial Year. This excess
leave encashment will be paid to workers before the end of that financial year. EL of upto 15 days shall be carried
forward to next calendar year. Leave Encashment will be paid on gross salary to workers.
For staff category Accumulated EL over and above 15 EL's if not availed will be lapsed. At the time of resignation
/termination /retirement, the balance EL will be paid on Basic salary & DA as on last working day up to 15EL's only in
their Full & Final Settlement.
For all other location:
Company does not follow the said policy for Leave Encashment or any other pension plans/schemes. All the unused
leaves outstanding as on 31st March gets lapsed and does not get accumulated.
R. EARNINGS PER SHARE
Basic earnings per equity share are computed by dividing the net profit attributable to the equity holders of the
Company by the weighted average number of equity shares outstanding during the period. Diluted earnings per
equity share is computed by dividing the net profit attributable to the equity holders of the Company by the weighted
average number of equity shares considered for deriving basic earnings per equity share and also the weighted
average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.
The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually
issued at fair value (i.e. the average market value of the outstanding equity shares). Dilutive potential equity shares
are deemed converted as of the beginning of the period, unless issued at a later date. Dilutive potential equity shares
are determined independently for each period presented.
S. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
In the application of the Company's accounting policies, which are described as stated above, the Board of Directors
of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets
and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based
on historical experience and other factors that are considered to be relevant. Actual results may differ from these
estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only the period of the revision and
future periods if the revision affects both current and future periods.
Key sources of uncertainty.
In the application of the Company accounting policies, the management of the Company is required to make
judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the
revision and future periods if the revision affects both current and future periods.
The following are the areas of estimation uncertainty and critical judgements that the management has made in the
process of applying the Company's accounting policies and that have the most significant effect on the amounts
recognised in the financial statements:
Defined benefit plans:
The cost of the defined benefit plan and other post-employment benefits and the present value of such obligation
are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ
from actual developments in the future. These include the determination of the discount rate, future, salary increases,
mortality rates and future pension increases. Due to the complexities involved in the valuation and its long- term
nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed
at each reporting date.
Useful lives of depreciable tangible assets and intangible assets:
Management reviews the useful lives of depreciable/ amortisable assets at each reporting date. As at March 31, 2024
management assessed that the useful lives represent the expected utility of the assets to the Company.
Fair Value measurements and valuation processes:
Some of the Company's assets and liabilities are measured at fair value for financial reporting purposes. The board of
directors of the Company approves the fair values determined by the Chief Financial Officer of the Company including
determining the appropriate valuation techniques and inputs for fair value measurements.
In estimating the fair value of an asset or liability, the Company uses market-observable data to the extent is
available. Where Level 1 inputs are not available, the Company engages third party qualified valuers to perform the
valuation. The Chief Financial Officer works closely with the qualified external valuers to establish appropriate
valuation techniques and inputs to the model.
Information about the valuation techniques and inputs used in determining the fair value of various assets and
liabilities are disclosed in note 29.
Contingent Liability:
In ordinary course of business, the Company faces claims by various parties. The Company annually assesses such
claims and monitors the legal environment on an ongoing basis, with the assistance of external legal counsel,
wherever necessary. The Company records a liability for any claims where a potential loss is probable and capable
ofbeing estimated and discloses such matters in its financial statements, if material. For potential losses that are
considered possible, but not probable, the Company provides disclosures in the financial statements but does not
record a liability in its financial statements unless the loss becomes probable.
Income Tax:
The Company's tax jurisdiction is India. Significant judgements are involved in determining the provision for income
taxes including judgement on whether tax positions are probable of being sustained in tax assessments. A tax
assessment can involve complex issues, which can only be resolved over extended time periods
Inventory:
Management has carefully estimated the net realizable values of inventories, taking into account the most reliable
evidence available at each reporting date. The future realization of these inventories may be affected by market
driven changes.
T. BASIS OF SELECTION AND CHANGE IN ACCOUNTING POLICY
Accounting policies are the specific principles, bases, conventions, rules and practices applied by an entity
inpreparing and presenting financial statements.
An entity shall select and apply its accounting policies consistently for similar transactions, other events and
conditions, unless an INDAS specifically requires or permits categorization of items for which different policies
maybe appropriate . If an Ind AS requires or permits such categorization , an appropriate accounting policy shall
be selected and applied consistently to each category.
An entity shall change an accounting policy only if the change :
(a) Is required by an Ind AS; or
(b) results in the financial statements providing reliable and more relevant information about the effects
oftransactions, other events or conditions on the entity's financial position, financial performance or
cashflows.
Applying changes in accounting policies
(a) an entity shall account for a change in accounting policy resulting from the initial application of an Ind AS
inaccordance with the specific transitional provisions, if any, in that Ind AS; and
(b) when an entity changes an accounting policy upon initial application of an Ind AS that does not include
specific transitional provisions applying to that change, or changes an accounting policy voluntarily, it
shall apply the change retrospectively.
U. APPLICATION OF NEW ACCOUNTING PRONOUNCEMENTS
Ministry of Corporate Affairs ("MCA") through Companies (Indian Accounting Standards) Amendment Rules,
2019and Companies (Indian Accounting Standards) Second Amendment Rules, 2019 notifies new standard or
amendments to the standards. There is no such new notification which would be applicable from April 1, 2024
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