Notes to Accounts of K&R Rail Engineering Ltd.

Mar 31, 2023

Provisions And Contigent liabilty

A provision is recognized 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. If the effect of the time value of money is material, provisions are
determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability. Where discounting is used,
the increase in the provision due to the passage of time is recognized as a finance cost.

3.17 Contingent liabilities & contingent
assets

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation
that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a
present obligation in respect of which the likelihood of outflow of resources is remote, no provision or
disclosure is made.

Contingent assets are not recognised in the financial statements. However, contingent assets are assessed
continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related
income are recognised in the period in which the change occurs.

³.¹⁸ Financial instruments

b. Recognition and Initial recognition

The Company recognizes financial assets and financial liabilities when it becomes a party to the
contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value on
initial recognition, except for trade receivables which are initially measured at transaction price.
Transaction costs that are directly attributable to the acquisition or issues of financial assets and financial
liabilities that are not at fair value through profit or loss, are added to the fair value on initial recognition.

A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value
through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue.
a. Classification and Subsequent measurement
Financial assets

On initial recognition, a financial asset is classified as measured at

- amortised cost;

- FVTPL

(All amounts Lakhs in Indian Rupees (?), except share data and where otherwise stated)

Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the
Company changes its business model for managing financial assets.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not
designated as at FVTPL:

- the asset is held within a business model whose objective is to hold assets to collect contractual cash
flows; 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.

All financial assets not classified as measured at amortised cost as described above are measured at
FVTPL. On initial recognition, the Company may irrevocably designate a financial asset that otherwise
meets the requirements to be measured at amortised cost at FVTPL if doing so eliminates or significantly
reduces an accounting mismatch that would otherwise arise.

Financial assets: Business model assessment

The Company makes an assessment of the objective of the business model in which a financial asset is
held at a portfolio level because this best reflects the way the business is managed and information is
provided to management. The information considered includes:

- the stated policies and objectives for the portfolio and the operation of those policies in practice. These
include whether management’s strategy focuses on earning contractual interest income, maintaining a
particular interest rate profile, matching the duration of the financial assets to the duration of any related
liabilities or expected cash outflows or realising cash flows through the sale of the assets;

- how the performance of the portfolio is evaluated and reported to the Company’s management;

- the risks that affect the performance of the business model (and the financial assets held within that
business model) and how those risks are managed;

- how managers of the business are compensated - e.g. whether compensation is based on the fair value of
the assets managed or the contractual cash flows collected; and the frequency, volume and timing of sales
of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not
considered sales for this purpose, consistent with the Company’s continuing recognition of the assets.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair
value basis are measured at FVTPL.

Financial assets: Assessment whether contractual cash flows are solely payments of principal and interest
For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial
recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk
associated with the principal amount outstanding during a particular period of time and for other basic
lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Company
considers the contractual terms of the instrument. This includes assessing whether the financial asset
contains a contractual term that could change the timing or amount of contractual cash flows such that it
would not meet this condition. In making this assessment, the Company considers:

- contingent events that would change the amount or timing of cash flows;

- terms that may adjust the contractual coupon rate, including variable interest rate features;

- prepayment and extension features; and

- terms that limit the Company’s claim to cash flows from specified assets (e.g. non- recourse features).

A prepayment feature is consistent with the solely payments of principal and interest criterion if the
prepayment amount substantially represents unpaid amounts of principal and interest on the principal
amount outstanding, which may include reasonable additional compensation for early termination of the
contract. Additionally, for a financial asset acquired at a significant discount or premium to its contractual
par amount, a feature that permits or requires prepayment at an amount treated as consistent with this
criterion if the fair value of the prepayment feature is insignificant at initial recognition.

Financial assets: Subsequent measurement and gains and losses

Financial assets at FVTPL: These assets are subsequently measured at fair value. Net gains and losses,
including any interest or dividend income, are recognised in profit or loss.

Financial assets at amortised cost: These assets are subsequently measured at amortised cost using the
effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign
exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on
derecognition is recognised in profit or loss.

Financial liabilities: Classification, Subsequent measurement and gains and losses

Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is
classified as at FVTPL if it is classified as held- for- trading, or it is a derivative or it is designated as such
on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses,
including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently
measured at amortised cost using the effective interest method. Interest expense and foreign exchange
gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in
profit or loss.

b. Derecognition
Financial assets

The Company derecognises a financial asset when the contractual rights to the cash flows from the
financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in
which substantially all of the risks and rewards of ownership of the financial asset are transferred or in
which the Company neither transfers nor retains substantially all of the risks and rewards of ownership
and does not retain control of the financial asset.

If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but
retains either all or substantially all of the risks and rewards of the transferred assets, the transferred
assets are not derecognised.

Financial liabilities

That substantially represents the contractual par amount plus accrued (but unpaid) contractual interest
(which may also include reasonable additional compensation for early termination) is
The Company derecognises a financial liability when its contractual obligations are discharged or
cancelled, or expire.

The Company also derecognises a financial liability when its terms are modified and the cash flows under
the modified terms are substantially different. In this case, a new financial liability based on the modified
terms is recognised at fair value. The difference between the carrying amount of the financial liability
extinguished and the new financial liability with modified terms is recognised in profit

D. Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the balance sheet
when and only when, the Company currently has a legally enforceable right to set off the amounts and
it intends either to settle them on a net basis or to realise the asset and settle the liability
simultaneously.

E. Impairment

The Company recognises loss allowances for expected credit losses on financial assets measured at
amortised cost;

At each reporting date, the Company assesses whether financial assets carried at amortised cost and
debt securities at fair value through other comprehensive income (FVOCI) are credit impaired. A
financial asset is ‘credit- impaired’ when one or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have occurred.

Evidence that a financial asset is credit- impaired includes the following observable data:

- significant financial difficulty of the borrower or issuer;

- the restructuring of a loan or advance by the Company on terms that the Company would not
consider otherwise;

- it is probable that the borrower will enter bankruptcy or other financial reorganisation; or

- the disappearance of an active market for a security because of financial difficulties.

The Company measures loss allowances at an amount equal to lifetime expected credit losses, except
for the following, which are measured as 12 month expected credit losses:

- debt securities that are determined to have low credit risk at the reporting date; and- other debt
securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected
life of the financial instrument) has not increased significantly since initial recognition.

Loss allowances for trade receivables are always measured at an amount equal to lifetime expected
credit losses.

Lifetime expected credit losses are the expected credit losses that result from all possible default events
over the expected life of a financial instrument.

12-month expected credit losses are the portion of expected credit losses that result from default events
that are possible within 12 months after the reporting date (or a shorter period if the expected life of the
instrument is less than 12 months).

In all cases, the maximum period considered when estimating expected credit losses is the maximum
contractual period over which the Company is exposed to credit risk.

When determining whether the credit risk of a financial asset has increased significantly since initial
recognition and when estimating expected credit losses, the Company considers reasonable and
supportable information that is relevant and available without undue cost or effort. This includes both
quantitative and qualitative information and analysis, based on the Company’s historical experience
and informed credit assessment and including forward- looking information.

Measurement of expected credit losses

Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured
as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the
Company in accordance with the contract and the cash flows that the Company expects to receive).
Presentation of allowance for expected credit losses in the balance sheet

Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying
amount of the assets.

Write-off

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 in order to comply with the Company’s procedures for recovery of
amounts due.

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Mar 31, 2014

1. Share Capital

Terms/rights attached to equity shares

The company has only one class of equity shares having a par value of' 10 per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution wilt be in proportion to the number of equity shares held by the shareholders.

2. Contingent Liabilities not provided for: NIL (NIL)

3. In the Current Financial year i.e 2012-13, the name of the Company has been changed from M/s Gupta Carpets International Limited to M/s Axis Rail India Limited and the main objects of the Memorandum of Association of the Company has been altered to include the new line of business i.e. Rail Infra Projects.

4 There are no separate reportable segments under Accounting Standard -17- "Segment Reporting".

5. The company had been providing for the Sales tax liability as per the return filed with the Sales Tax Department Additional Liability, if any, arising at the time of assessment, shall be provided at the time of arising of such liability. However, as per the information & explanations given to us, no sale or purchase was undertaken by the company during the year on which sales tax / vat laws are applicable.

6 Gratuity and other post Employment Benefit Plans(AS-15):

According to the information and explanations given to us, the company did not employ any worker/ staff during the year under consideration & hence company is not at all required to make any provision for leave encashment, gratuity & other retirement benefits on acturial basis as required under section 211(3A), 211 (3B) AND 211(3C) of the Companies Act read with Accounting standards issued by the ICAI.

In terms of Accounting Standard (AS 22), Accounting for Taxes on Income the Company had determined deferred tax asset as on 31 03.2014. However same has not been recognized in view of uncertainty of future taxable income.

8 In view of the administrative and functional activities confirmation of Balances are obtained from all the debtors & creditors and also for loans and advances.

9 As per the Accounting Standard -18 ''Related Party Disclosures'' issued by the institute of The Chartered Accountants of India, The names of the related Parties are given below:

a) Subsidiaries' NIL

b) Joint Ventures : NIL

c) Details of Related Parties Key Management Personnel :

10 Investments :

The company has made investments amounting to NIL (previous year Nil) during the year.

11. Figures are rounded off to the nearest of Rupees and the previous year

figures are regrouped/recasted and rearranged wherever considered necessary.

12. The company has forfeited 33,00,000 fully convertible warrants issued earlier to the persons belonging to non promoter group at an exercise price of Rs. 10 each convertible into equal number of Equity shares within a period of 18 months during the financial year.

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Mar 31, 2013

1 average number of equity shares outstanding during the year.

For calculating the diluted earning per share the net profit or loss for the period attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted to the effect of all dilutive potential equity shares.

2. Contingent Liabilities not provided for: NIL (NIL)

3. In the Current Financial year i.e. 2012-13, the name of the Company has been changed from M/s Gupta Carpets International Limited to M/s Axis Rail India Limited and the main objects of the Memorandum of Association of the Company has been altered to include the new line of business i.e. Rail Infra Projects.

4. There are no separate reportable segments under Accounting Standard -17- "Segment Reporting".

5. The company had been providing for the Sales tax liability as per the return filed with the Sales Tax Department. Additional Liability, if any, arising at the time of assessment, shall be provided at the time of arising of such liability. However, as per the information & explanations given to us, no sale or purchase was undertaken by the company during the year on which sales tax / vat laws are applicable.

6. Gratuity and other post Employment Benefit Plans(AS-15):

I According to the information and explanations given to us, the company did not employ any worker/ staff during the year under consideration & hence company is not at all required to make any provision for leave encashment, gratuity & other retirement benefits on acturial basis as required under section 211(3A), 211 (3B) AND 211(3C) of the Companies Act read with Accounting standards issued by thelCAI.

7. In terms of Accounting Standard (AS 22), ''Accounting for Taxes on Income '', the Company had determined deferred tax asset as on 31.03.2013. However same has not been recognized in view of uncertainty of future taxable income.

8. In view of the administrative and functional activities confirmation of Balances are obtained from all the debtors & creditors and also for loans and advances.

9 The Unsecured loan of bank of Maharashtra is settled in OTS (One Time Settlement) Scheme by payment as evidenced by No Due Certificate issued by Bank vide letter dated 19.09.2011

10 As per the Accounting Standard -18 "Related Party Disclosures" issued by the institute of The Chartered Accountants of India, The names of the related Parties are given below:

a) Subsidiaries: NIL

I)) Joint Ventures : NIL

c) Details of Related Parties Key Management Personnel :

11 Investments :

The company has made investments amounting to NIL (previous year Nil) during the year.

12. I Figures are rounded off to the nearest of Rupees and the previous year figures are regrouped/recasted and rearranged wherever considered necessary.

13. Vs/ith effect from August 23, 2012, the Register Office of the Company gets shifted from the State of Punjab to the State of Andhra Pradesh.

14. On July 18, 2012, the Company has made allotment of 33,00,000 Fully Convertible Warrants to the person belonging to non-promoter category at an exercise price of Rs. 10/- each convertible into equal number of equity shares within a period of 18 months.

15. The allotment was made with the objective of meeting working capital requirements for the new line of business

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Mar 31, 2008

1. Contingent Liabilities not provided for: NIL (NIL)

2. Despite huge loss resulted in complete erosion of worth of the Company, resulting in business of the company having suffered irreparably the accounts for the year have been prepared on the assumption of "Going Concern". This reflects adversely upon the true & fair view of the accounts. The company did not have any significant involvement in the operations of its main object i.e manufacturing of Carpets. No significant business activity was carried out during the year. There are no separate reportable segments under Accounting Standard -17 - "Segment Reporting".

3. Sales tax liability has been provided for as per the return filed with the Sales Tax Department. Additional Liability, if any, arising at the time of assessment, shall be provided at the time of arising of such liability.

4.Income, the Company had determined deferred tax asset as on 31.03.2008. However same has not been recognized in view of uncertainty of future taxable income.

5 In view of the administrative and functional constraints confirmation of Balances are not obtained from debtors /creditors and also for loans and advances In the opinion of Board of Directors "Current Assets, Loans and Advances" have been Valued on realization in ordinary course of business, at least, equal to the amount at which they have been stated in the Balance Sheet.

6 a) Interest upto the financial year ended 31.03.2008 (from 1.04.1997) remains unprovided for and unchanged in respect of the credit facilities availed from Bank of Maharastra, Amritsar on account of the fact the account has been classified as NPA by the Bank. The amount of Interest not so provided by the Company remains unascertained. The Bankers have initiated legal proceedings against the Company but efforts are being made to arrive at a Settlement with the Bankers.

b) No provision has been made for Liability arising in respect proportionate Special Import Licence Valuing Rs. 20.02 Lacs. (Last Year Rs. 20.02 Lacs) to be surrendered to Asstt. Director of Foreign Trade consequent on Discount/rebate given to the foreign buyers. The same is unascertained.

7 An amount of Rs. 3.56 Lacs (Last Year Rs. 3.56 Lacs) received as duty drawbacks from the Govt in respect of exports made in earlier years is not shown as income but is being shown as liability in view of the company being obliged to refund the same on account of Discounts/rebates allowed to the foreign buyers.

8 As per the Accounting Standard -18 "Related Party Disclosures" issued by the institute of The Chartered Accountants of India, The names of the related Parties are given below:

Names of Related Parties Key Management Personnel:

i) Sh. Raman Gupta

ii) Sh. Rajesh Gupta

However, during the year, no transactions were carried out with them.

9. Figures are rounded off to the nearest of Rupees and the previous year figures are regrouped/recasted and rearranged wherever considered necessary.