Accounting Policies of Heads UP Ventures Ltd. Company

Mar 31, 2025

3 Summary of Significant Accounting Policies

This note provides a list of the significant accounting policies adopted in the preparation of
these standalone financial statements. These policies have been consistently applied to all
the years presented, unless otherwise stated.

A Use of Estimates

The preparation of financial statements in conformity with Ind AS requires management to
make certain estimates and assumptions that affect the reported amounts of revenues,
expenses, assets and liabilities (including contingent liabilities) and the accompanying
disclosures. The management believes that the estimates used in preparation of the financial
statements are prudent and reasonable. Future results could differ due to these estimates
and differences between the actual results and the estimates are recognised in the periods in
which the results are known / materialized.

B Significant Estimates and assumptions are required in particular for

(i) Recognition of deferred tax assets

A deferred tax asset is recognised for all the deductible temporary differences to the extent
that it is probable that taxable profit will be available against which the deductible
temporary difference can be utilised. The management assumes that taxable profits will be
available while recognising deferred tax assets.

(ii) Impairment of Non Financial Assets:

The Company assesses at each reporting date as to whether there is any indication that any
property, plant and equipment and intangible assets may be impaired. If any such
indication exists the recoverable amount of an asset is estimated to determine the extent of
impairment, if any. An impairment loss is recognised in the Statement of Profit and Loss to
the extent, asset''s carrying amount exceeds its recoverable amount.

C Inventories

Inventories are valued at the lower of cost and the net realisable value estimated by the
management after providing for obsolescence and other losses, where considered necessary.

D Property, Plant and Equipment

Property, Plant and Equipments are stated at cost of acquisition less accumulated
depreciation and impairment in value, if any. Cost comprises the purchase price and any
other attributable cost of bringing the asset to its working condition for its intended use.
Subsequent costs have been included in the asset''s carrying amount as recognised as a
separate asset, as a appropriate only when it is probable future benefits associated with the
item will flow to the entity and the cost can be measured reliably.

Depreciation is provided using straight line method, pro-rata for the period of use, based on
the respective useful lives as mentioned under Schedule II of the Act. Leasehold land and
improvements are depreciated over the estimated useful life, or the remaining period of
lease from the date of capitalisation, whichever is shorter.

Gains or losses arising from derecognition of a property, plant and equipment are measured
as the difference between the net disposal proceeds and the carrying amount of the asset
and are recognised in the Statement of Profit and Loss when the asset is derecognised.

E Foreign Currency Transactions:

The Company''s financial statements are presented in Indian Rupees [Rs.], which is the
functional and presentation currency.

₍ The transactions in foreign currencies are translated into functional currency at the rates of
'''' exchange prevailing on the dates of transactions.

Foreign Exchange gains and losses resulting from settlement of such transactions and from
the translation of monetary assets and liabilities denominated in foreign currencies at the
year end exchange rates are recognised in the Statement of Profit and Loss. However,
'' '' foreign currency differences arising from the translation of certain equity instruments where
the Company had made an irrevocable election to present in OCI subsequent changes in the
fair value are recognised in OCI.

Foreign exchange differences regarded as adjustments to borrowing costs are presented in

(iii) the Statement of Profit and Loss within finance costs. All other foreign exchange gains and
losses are presented in the Statement of Profit and Loss on a net basis.

F Financial Instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a
financial liability or equity instrument of another entity.

A. Financial Assets

i. Initial recognition and measurement

All financial assets and liabilities are initially recognized at fair value. Transaction costs that
are directly attributable to the acquisition or issue of financial assets and financial liabilities,
which are not at fair value through profit or loss, are adjusted to the fair value on initial
recognition. Purchase and sale of financial assets are recognised using trade date
accounting.

ii. Subsequent measurement

a) Financial assets carried at amortised cost (AC)

A financial asset is measured at amortised cost if it is held within a business model whose
objective is to hold the asset in order 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.

b) 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.

c) 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.

iii Impairment of financial assets

The impairment provisions for financial assets are based on assumptions about risk of
default and expected cash loss rates. The Company uses judgement in making these
assumptions and selecting the inputs to the impairment calculation, based on Company''s
past history, existing market conditions as well as forward looking estimates at the end of
each reporting period.

B. Financial Liabilities

i) . Initial recognition and measurement

All financial liabilities are recognized at fair value and in case of loans, net of directly
attributable cost. Fees of recurring nature are directly recognised in the Statement of Profit
and Loss as finance cost.

ii) . Subsequent measurement

Financial liabilities are carried at amortized cost using the effective interest method.

C. Derecognition of financial instruments

The Company derecognizes a financial asset when the contractual rights to the cash flows
from the financial asset expire or it transfers the financial asset and the transfer qualifies for
derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is
derecognized from the Company''s Balance Sheet when the obligation specified in the
contract is discharged or cancelled or expires.

G Segment reporting

Operating segments are reported in a manner consistent with the internal reporting
provided to the chief operating decision maker. The company is reported at an overall level
and hence there are no reportable segment as per Ind AS 108.

H Leases

The Company assesses at contract inception whether a contract is, or contains, a lease. That
is, if the contract conveys the right to control the use of an identified asset for a period of
time in exchange for consideration.

Company as a lessee

The Company applies a single recognition and measurement approach for all leases, except
for short-term leases and leases of low-value assets. The Company recognises lease
liabilities to make lease payments and right-of-use assets representing the right to use the
underlying assets.

i) Right of use assets

The Company recognises right-of-use assets at the commencement date of the lease (i.e., the
date the underlying asset is available for use). Right-of-use assets are measured at cost, less
any accumulated depreciation and impairment losses, and adjusted for any remeasurement
of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Right-of-use assets are depreciated
on a straight-line basis over the lease term. The right of use assets are also subject to
impairment.

ii) Lease liabilities

At the commencement date of the lease, the Company recognises lease liabilities measured
at the present value of lease payments to be made over the lease term. The lease payments
are fixed payments. In calculating the present value of lease payments, the Company uses
its incremental borrowing rate at the lease commencement date because the interest rate
implicit in the lease is not readily determinable. After the commencement date, the amount
of lease liabilities is increased to reflect the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease liabilities is remeasured if there is
a modification, a change in the lease term, a change in the lease payments (e.g., changes to
future payments resulting from a change in an index or rate used to determine such lease
payments) or a change in the assessment of an option to purchase the underlying asset.

iii) Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition exemption to its short-term leases
(i.e., those leases that have a lease term of 12 months or less from the commencement date
and do not contain a purchase option). It also applies the lease of low-value assets
recognition exemption that are considered to be low value.

Lease payments on short-term leases and leases of low value assets are recognised as
expense on a straight-line basis over the lease term.

I Borrowing Costs

Borrowing costs consist of interest and other borrowing costs that are incurred in
(i) connection with the borrowing of funds. Other borrowing costs include ancillary charges at
the time of acquisition of a financial liability, which is recognised as per EIR method.

Borrowing costs also include exchange differences to the extent regarded as an adjustment
to the borrowing costs.

Borrowing costs that are directly attributable to the acquisition/ construction of a qualifying
.... asset are capitalised as part of the cost of such assets, up to the date the assets are ready for
'' '' their intended use. All other borrowing costs are recognised in profit or loss in the period in
which they are incurred.

J Revenue Recognition

Revenue from sale of products is recognised when the control on the goods have been
transferred to the customer. The performance obligation in case of sale of product is
satisfied at a point in time i.e., when the material is shipped to the customer or on delivery
to the customer, as may be specified in the contract.

Other Income is accounted on accrual basis except Dividend Income, Interest on
Government Bonds and Interest on Income Tax Refunds which are accounted on cash basis.

K Earnings Per Share

Basic earnings per share is calculated by dividing the net profit or loss attributable to equity
holders of the company .after deducting preference dividends and attributable taxes. by the
weighted average number of equity shares outstanding during the period.

Partly paid equity shares are treated as a fraction of an equity share to the extent that they
are entitled to participate in dividends relative to a fully paid equity share during the
reporting period. The weighted average number of equity shares outstanding during the
period is adjusted for events such as bonus issue, bonus element in a rights issue, share
split, and reverse share split .consolidation of shares. that have changed the number of
equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period
attributable to equity shareholders of the parent company and the weighted average
number of shares outstanding during the period are adjusted for the effects of all dilutive
potential equity shares.

L Cash and cash equivalents

Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and
short-term deposits with an original maturity of three months or less, that are readily
convertible to a known amount of cash and subject to an insignificant risk of changes in
value.

M Trade and other payables

These amounts represent liabilities for goods and services provided to the company prior to
the end of the financial year which are unpaid. The amounts are unsecured and are usually
paid within 30 days of recognition. Trade and other payables are presented as current
liabilities unless payment is not due within 12 months after the reporting period. They are
recognised initially at their fair value and subsequently measured at amortised cost using
the effective interest (EIR) method.

N Taxes on Income

Tax expense comprises of current income tax and deferred tax.

(i) Current Taxation

Current income tax assets and liabilities are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively enacted, at the reporting
date where the Company operates and generates taxable income.

Current tax items, relating to items recognised outside the statement of profit and loss, are
recognised in correlation to the underlying transaction either in OCI or directly in equity.
Management periodically evaluates positions taken in the tax returns with respect to
situations in which applicable tax regulations are subject to interpretation and establishes
provisions where appropriate. Provision for current tax is recognised based on the
estimated tax liability computed after taking credit for allowances and exemption in
accordance with the Income Tax Act, 1961.

Current tax assets and liabilities are offset where the Company has a legally enforceable
right to offset and intends either to settle on a net basis, or to realize the asset and settle the
liability simultaneously.

(ii) Deferred Taxation

Deferred tax is provided using the balance sheet approach on temporary differences
between the tax bases of assets and liabilities and their carrying amounts in the financial
statements at the reporting date. Deferred tax relating to items recognised outside profit or
loss is recognised outside profit or loss (either in Other Comprehensive Income or in
equity).

Deferred tax assets are recognised for all deductible temporary differences, the carry
forward of unused tax credits and any unused tax losses to the extent it is probable that
these assets can be realised in future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in
the year when the asset is realised or the liability is settled, based on tax rates (and tax laws)
that have been enacted or substantively enacted at the reporting date. Deferred tax assets
and liabilities are offset where a legally enforceable right exists to offset current tax assets
and liabilities and the deferred taxes relate to the same taxable entity and the same taxation
authority.

Deferred tax includes MAT tax credit. the Company reviews such tax credit asset at each
reporting date to assess its recoverability.

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Mar 31, 2024

B. Summary of significant accounting policies

a) Revenue recognition
Sale of goods

The Company derives revenues primarily from sale
of traded goods.

Effective April 1, 2018, the Company has applied Ind
AS 115 ''Revenue from Contracts with Customers''
which establishes a comprehensive framework for
determining whether, how much and when revenue
is to be recognised. Ind AS 115 replaces Ind AS 18
''Revenue'' There is no impact of the adoption of the
new standard on the financial statements of the
Company.

Revenue is recognised on satisfaction of
performance obligation upon transfer of control
of products to end customers in an amount that
reflects the consideration the Company expects
to receive in exchange for those products. The
performance obligations in our contracts are
fulfilled at the time of delivery.

Revenue is measured based on transaction price
which is fair value of the consideration received
or receivable, after deduction of any discounts,
sales incentives / schemes and any taxes or duties
collected on behalf of the government such as
goods and services tax, etc.

Export Benefits

Export incentives (i.e. duty drawback and DEPB
license) are recognized in the year on the basis
of claims submitted to the appropriate authorities
provided there is no uncertainty to expect ultimate
collection at the time of making the claim.

Interest income

For all interest bearing financial assets measured at
amortized cost, interest income is recorded using
the effective interest rate (EIR). EIR is the rate that
exactly discounts the estimated future cash receipts
over the expected life of the financial instrument or
a shorter period, where appropriate, to the gross
carrying amount of the financial asset.

b) Property, plant and equipment

i. Recognition and measurement

Items of property, plant and equipment

(PPE) are stated at acquisition cost, net of
accumulated depreciation and accumulated
impairment losses, if any. The cost of an item
of PPE comprises its purchase price, including
import duties and other non-refundable taxes
or levies, borrowing costs if any and any
directly attributable cost of bringing the asset
to its working condition for its intended use.
Any trade discounts and rebates are deducted
in arriving at the purchase price.

Expenditure/income during construction period
is included under Capital work in progress, and
the same is allocated to the respective PPE on
the completion of their construction. Advances
given towards acquisition or construction of
PPE outstanding at each reporting date are
disclosed as Capital Advances under "Other
non-current assets"''

If significant parts of an item of property, plant
and equipment have different useful lives, then
they are accounted for as separate items (major
components) of property, plant and equipment.

ii. Subsequent expenditure

Subsequent expenditure is capitalised only
when it increases the future economic benefits
embodied in the specific asset to which it
relates. All other expenditure is recognised in
the Statement of Profit and Loss as incurred.

iii. Depreciation

Depreciation is provided on a pro-rata basis
on the straight line method (''SLM'') as per the
useful life prescribed under Schedule II of the
Companies Act, 2013, which, in management''s
opinion, reflect the estimates useful economic
lives of fixed assets.

Leasehold improvements are amortized over
the lease term. Depreciation for the year is
recognised in the Statement of Profit and Loss.

The following table gives the useful life of
different Property, plant and equipment as per
Schedule II:

iv. De-recognition

An item of property, plant and equipment
is eliminated from the standalone financial
statement on disposal or when no further
benefit is expected from its use and disposal.

Losses arising from retirement or gains or
losses arising from disposal of fixed assets
which are carried at cost are recognised in the
Statement of Profit and Loss.

v. Impairment of property, plant and equipment

The carrying values of assets at each Balance
Sheet date are reviewed for impairment if any
indication of impairment exists.

c) Intangible assets

i. Recognition and measurement

I ntangible assets are recognized only when it
is probable that the future economic benefits
that are attributable to the assets will flow to
the Company and the cost of such assets can
be measured reliably. Intangible assets that are
acquired by the Company are measured initially
at cost. After initial recognition, an intangible
asset is carried at its cost less any accumulated
amortisation and any accumulated impairment
loss. All costs relating to the acquisition are
capitalized.

ii. Subsequent expenditure

Subsequent expenditure is capitalised only
when it increases the future economic benefits
from the specific asset to which it relates.

iii. Amortisation

Intangible assets are amortised over their
estimated useful lives, from the date that they
are available for use based on the expected
pattern of consumption of economic benefits
of the asset.

The useful lives are reviewed by the
management at each financial year-end and
revised, if appropriate. In case of a revision, the
unamortized depreciable amount is charged
over the revised remaining useful life.

Amortisation for the year is recognised in the
Statement of Profit and Loss.

iv. De-recognition

An intangible asset is de-recognised on
disposal or when no future economic benefits
are expected from its use and disposal. Losses
arising from retirement and gains or losses
arising from disposal of an intangible asset are
measured as the difference between the net
disposal proceeds and the carrying amount of
the asset and are recognised in the Statement
of Profit and Loss.

v. Impairment of intangible assets

Intangible assets that have an indefinite useful
life are not subject to amortisation and are tested
annually for impairment, or more frequently if
events or changes in circumstances indicate
that they might be impaired. Other assets
are tested for impairment whenever events
or changes in circumstances indicate that
the carrying amount may not be recoverable.
Management periodically assesses using,

external and internal sources, whether there is
an indication that an asset may be impaired.

An impairment loss is recognised if the carrying
amount of an asset exceeds its recoverable
amount. The recoverable amount is higher
of the asset''s net selling price or value in use,
which means the present value of future cash
flows expected to arise from the continuing
use of the asset and its eventual disposal. The
impairment loss is recognized as an expense
in the Statement of Profit and Loss, unless the
asset is carried at revalued amount, in which
case any impairment loss of the revalued asset
is treated as a revaluation decrease to the extent
a revaluation reserve is available for that asset.

An impairment loss for an asset is reversed
if, and only if, the reversal can be related
objectively to an event occurring after the
impairment loss was recognized. The carrying
amount of an asset is increased to its revised
recoverable amount, provided that this amount
does not exceed the carrying amount that
would have been determined (net of any
accumulated amortization or depreciation) had
no impairment loss been recognized for the
asset in prior years. In case of revalued assets,
such reversal is not recognized.

d) Leases

The Company assesses whether a contract
contains a lease, at the inception of the
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 identified
asset;

ii. t he Company has substantially all of the
economic benefits from the use of the
asset through the period of lease; and

iii. the Company has the right to direct the use
of the asset.

As a lessee

The Company will recognize a right-of-use
asset ("ROU") and a lease liability at the
lease commencement date if any. The ROU
is initially measured at cost, which comprises
the initial amount of the lease liability adjusted
for any lease payments made at or before the
commencement date, plus any initial direct
costs incurred and an estimate of costs to
dismantle and remove the underlying asset or
to restore the underlying asset or the site on
which it is located, less any lease incentives
received.

Certain lease arrangements include the option
to extend or terminate the lease before the end
of the lease term. The right-of-use assets and
lease liabilities include these options when
it is reasonably certain that the option will be
exercised.

The ROU is subsequently depreciated using the
straight-line method from the commencement
date to the end of the lease term.

The lease liability is initially measured at the
present value of the lease payments that are not
paid at the commencement date, discounted
using the interest rate implicit in the lease
or, if that rate cannot be readily determined,
the Company''s incremental borrowing rate.
Generally, the Company uses its incremental
borrowing rate as the discount rate.

Lease payments included in the measurement
of the lease liability comprises fixed payments,
including in-substance fixed payments,
amounts expected to be payable under a
residual value guarantee and the exercise price
under a purchase option that the Company is
reasonably certain to exercise, lease payments
in an optional renewal period if the Company
is reasonably certain to exercise an extension
option.

The lease liability is subsequently measured
at amortised cost using the effective interest
method. It is remeasured when there is a change
in future lease payments arising from a change
in an index or rate, if there is a change in the
Company''s estimate of the amount expected to
be payable under a residual value guarantee,
or if Company changes its assessment of
whether it will exercise a purchase, extension
or termination option.

When the lease liability is remeasured in this
way, a corresponding adjustment is made to
the carrying amount of the ROU, or is recorded
in Statement of Profit or Loss if the carrying
amount of the ROU has been reduced to zero.

Lease Liabilities are presented in ''Financial
Liabilities'' and the ''ROU Asset'' is presented
separately in the Balance Sheet. Lease
payments are classified as financing activities
in the Statement of Cash Flows.

Short-term leases and leases of low-value
assets

The Company has elected not to recognise
ROU and lease liabilities for short term leases
that have a lease term of 12 months or lower
and leases of low value assets. The Company
recognises the lease payments associated
with these leases as an expense over the lease
term. The related cash flows are classified as
Operating activities in the Statement of Cash
Flows.

As a Lessee
Operating Leases

Lease rentals are charged or recognised in the
Statement of Profit and Loss on a straight-line
basis over the lease term, except where the
payments are structured to increase in line
with expected general inflation to compensate
for the expected inflationary cost increase.

Finance Leases

Assets held under finance leases are
recognised as assets of the Company at their
fair value at the inception of the lease or, if
lower, at the present value of the minimum
lease payments. The corresponding liability
to the lessor is included in the Balance Sheet
as a finance lease obligation. Lease payments
are apportioned between finance charges
and reduction of the lease obligation so as
to achieve a constant rate of interest on the
remaining balance of the liability. Finance
charges are charged to the Statement of Profit
and Loss.

e) Inventories

Inventories comprise of stock in trade which are
carried at the lower of cost and net realizable
value. Cost is determined on first in first out
("FIFO") basis.

Cost of stock in trade comprises of all costs
of purchase, duties, taxes (other than those
subsequently recoverable from tax authorities)
and all other costs incurred in bringing
the inventory to their present location and
condition.

Net realizable value is the estimated selling
price in the ordinary course of business, less
the estimated costs necessary to make the
sale.

f) Foreign currency transactions and
translations

Transactions denominated in foreign currency
are recorded at the exchange rate prevailing on
the date of transactions. Exchange differences
arising on foreign exchange transactions
settled during the period are recognized in the
Statement of Profit and Loss of the year.

Monetary assets and liabilities in foreign
currency, which are outstanding as at the
year-end, are translated at the year-end at
the closing exchange rate and the resultant
exchange differences are recognized in the
Statement of Profit and Loss. Non-monetary
foreign currency items are carried at cost.

g) Financial instruments

A financial instrument is any contract that
gives rise to a financial asset of one entity

and a financial liability or equity instrument of
another entity.

i. Financial assets

Classification

The Company shall classify financial
assets as subsequently measured at
amortised cost, fair value through other
comprehensive income or fair value
through profit or loss on the basis of its
business model for managing the financial
assets and the contractual cash flow
characteristics of the financial asset.

Initial recognition and measurement

Financial assets are recognised when the
Company becomes a party to a contract
that gives rise to a financial asset of one
entity or equity instrument of another entity.
Financial assets are initially measured
at fair value. Transaction costs that are
directly attributable to the acquisition or
issue of financial assets, other than those
designated as fair value through profit or
loss (FVTPL), are added to or deducted
from the fair value of the financial assets,
as appropriate, on initial recognition.
Transaction costs directly attributable to
the acquisition of financial assets at FVTPL
are recognised immediately in Statement
of Profit and Loss.

Measurement of fair values

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 of the asset or
liability; or

- in the absence of a principal market, in
the most advantageous market for the
asset 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 financial
assets into three levels. As described
as follows, these levels are based on the
inputs to valuation techniques used to
measure fair value. The fair value hierarchy
gives highest priority to quoted prices
in active markets for identical assets
or liabilities (Level 1 inputs) and lowest

priority to unobservable inputs (level 3
inputs).

Level 1: Fair value based on quoted,
unadjusted prices on active markets

Level 2: Fair value based on parameters for
which directly or indirectly quoted prices
on active market are available

Level 3: Fair value based on parameters for
which there is no observable market data

The Company recognises transfers
between levels of the fair value hierarchy
at the end of the reporting period during
which the change has occurred.

Subsequent measurement

The Company classifies financial assets as
subsequently measured at amortised cost,
fair value through other comprehensive
income ("FVOCI") or fair value through
profit or loss ("FVTPL") on the basis of
following:

- The entity''s business model for
managing the financial assets and

- The contractual cash flow
characteristics of the financial asset.

Amortised cost

A financial asset shall be classified and
measured at amortised cost if both of the
following conditions are met:

- The financial asset is held within a
business model whose objective is to
hold financial assets in order 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.

De-recognition

A financial asset (or, where applicable,
a part of a financial asset or part of a
Company of similar financial assets) is
primarily de-recognised (i.e. removed from
the Company''s Balance Sheet) when:

i. The rights to receive cash flows from
the asset have expired, or

ii. The Company has transferred its
rights to receive cash flows from the
asset or has assumed an obligation
to pay the received cash flows in full
without material delay to a third party
under a ''pass-through'' arrangement;
and either

(a) The Company has transferred

substantially all the risks and
rewards of the asset, or

(b) The Company has neither
transferred nor retained
substantially all the risks and
rewards of the asset, but has
transferred control of the asset.

When the Company has transferred
its rights to receive cash flows from an
asset or has entered into a pass-through
arrangement, it evaluates if and to what
extent it has retained the risks and
rewards of ownership. When it has neither
transferred nor retained substantially
all of the risks and rewards of the asset,
nor transferred control of the asset, the
Company continues to recognize the
transferred asset to the extent of the
Company''s continuing involvement. In that
case, the Company also recognises an
associated liability. The transferred asset
and the associated liability are measured
on a basis that reflects the rights and
obligations that the Company has retained.

Continuing involvement that takes the
form of a guarantee over the transferred
asset is measured at the lower of the
original carrying amount of the asset and
the maximum amount of consideration that
the Company could be required to repay.

Impairment of financial assets

Financial assets of the Company comprise
of trade receivable and other receivables
consisting of debt instruments such as
security deposits and bank balance. Trade
and other receivables are recognised
initially at fair value and subsequently
measured at amortised cost using the
effective interest method, less provision
for impairment. An impairment loss for
trade and other receivables is established
when there is objective evidence that the
Company will not be able to collect all
amounts due according to the original
terms of the receivables. Impairment
losses if any, are recognised in Statement
of Profit and Loss for the year.

The Company recognises loss allowance
using expected credit loss model for
financial assets which are not measured at
Fair Value Through Profit or Loss. Expected
credit losses are weighted average of credit
losses with the respective risks of default
occurring as the weights. Credit loss 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 Company expects
to receive, discounted at original effective

rate of interest. For Trade receivables, the
Company measures loss allowance at an
amount equal to lifetime expected credit
losses. The Company computes expected
credit loss allowance based on a provision
matrix which takes into account historical
credit loss experience and adjusted for
forward-looking information.

ii. Financial liabilities
Classification

The Company classifies all financial
liabilities as subsequently measured
at amortised cost, except for financial
liabilities at fair value through profit or loss.

Initial recognition and measurement

All financial liabilities are recognised
initially at fair value and, in the case of
loans and borrowings and payables, net of
directly attributable transaction costs.

Loans and borrowings

After initial recognition, interest-bearing
loans and borrowings are subsequently
measured at amortised cost using the EIR
method. Gains and losses are recognised
in Statement of Profit and Loss when the
liabilities are derecognized. Amortised
cost is calculated by taking into account
any discount or premium on acquisition
and fees or costs that are an integral part
of the EIR. The EIR amortisation is included
as finance costs in the Statement of Profit
and Loss.

De-recognition

A financial liability is de-recognised
when the obligation under the liability is
discharged or cancelled or expires. When
an existing financial liability is replaced
by another from the same lender on
substantially different terms, or the terms
of an existing liability are substantially
modified, such an exchange or modification
is treated as the de-recognition of the
original liability and the recognition
of a new liability. The difference in the
respective carrying amounts is recognised
in the Statement of Profit and Loss.

Offsetting of financial instruments

Financial assets and financial liabilities
are offset and the net amount is
reported in the Balance Sheet if there
is a currently enforceable legal right to
offset the recognised amounts and there
is an intention to settle on a net basis, to
realize the assets and settle the liabilities
simultaneously.

h) Employee benefits

Short-term employee benefits

Employee benefits payable wholly within
twelve months of rendering the service are
classified as short-term employee benefits.
These benefits include salaries and wages,
bonus and ex-gratia. The undiscounted amount
of short-term employee benefits expected to
be paid in exchange for the employee service
is recognized as an expense as the related
service is rendered by the employee. A liability
is recognised for the amount expected to be
paid if the Company has a present legal or
constructive obligation to pay this amount as a
result of past service provided by the employee
and the obligation can be estimated reliably.

Post-employment benefits

Defined contribution plans

A defined contribution plan is a post¬
employment benefit plan under which an entity
pays specified contributions to a separate
entity and has no obligation to pay any further
amounts. The Company makes specified
monthly contributions towards employee
provident fund to Government administered
provident fund scheme which is a defined
contribution plan. The Company''s contribution
to Provident Fund, ESIC and Labour Welfare
Fund are recognised as an expense in the
Statement of Profit and Loss during the period
in which the employee renders related service.

Defined Benefit Plan

The Company''s gratuity benefit scheme is a
defined benefit plan covering eligible employees
in accordance with the Payment of Gratuity
Act, 1972. The Company''s net obligation in
respect of the defined benefit plan is calculated
by estimating the amount of future benefit
that employees have earned in return for their
service in the current and prior periods; that
benefit is discounted to determine its present
value. Any unrecognized past service costs and
the fair value of any assets are deducted. The
calculation of the Company''s obligation under
the plans is performed annually by a qualified
actuary using the projected unit credit method
at the Balance Sheet date.

Re-measurement of the net defined benefit
liability, which comprise actuarial gains and
losses, are recognised immediately in other
comprehensive income (OCI). The service
and interest cost related to defined benefit
plans are recognised in employee benefits in
the Statement of Profit and Loss. When the
benefits of a plan are improved, the portion of
the increased benefit related to past service
by employees is recognised in the Statement
of Profit and Loss on a straight line basis over

the average period until the benefits become
vested. The Company recognises gains and
losses on the curtailment or settlement of a
defined benefit plan when the curtailment or
settlement occurs.

i) Taxation

Income-tax expense comprise current tax
(i.e. amount of tax for the period determined
in accordance with the income-tax law) and
deferred tax charge or credit if the (reflecting
the tax effects of timing differences between
accounting income and taxable income for the
period). It is recognised in Statement of Profit
and Loss except to the extent that it relates to
items recognised directly in equity or in OCI.

Current tax

Current tax is measured at that amount
expected to be paid to (recovered from) the
taxation authorities, on the taxable income or
loss determined in accordance with Income
Tax Act, 1961 and includes any adjustment
to the tax payable or receivable in respect of
previous years.

Deferred tax

Deferred tax is provided, on all temporary
differences at the reporting date between
the tax bases of assets and liabilities and
their carrying amounts for financial reporting
purposes. Deferred tax assets and liabilities are
measured at the tax rates that are expected to
be applied to the temporary differences when
they reverse, based on the laws that have
been enacted or substantively enacted at the
reporting date. Tax relating to items recognised
directly in equity or OCI is recognised in equity
or OCI and not in the Statement of Profit and
Loss. A deferred tax asset is recognized to the
extent that it is probable that future taxable
profits will be available against which the
temporary difference can be utilised. Deferred
tax assets are reviewed at each reporting date
and are reduced to the extent that it is no
longer probable that future taxable profits will
be available.

j) Impairment of non-financial asset (excluding
inventories and deferred tax assets)

Non-financial assets are subject to impairment
tests whenever events or changes in
circumstances indicate that their carrying
amount may not be recoverable. Where
the carrying value of an asset exceeds its
recoverable amount (i.e. the higher of value in
use and fair value less costs to sell), the asset is
written down accordingly.

Where it is not possible to estimate the
recoverable amount of an individual asset, the
impairment test is carried out on the smallest

group of assets to which it belongs for which
there are separately identifiable cash flows; its
cash generating units (''CGUs'').

k) Earnings per share

Basic and diluted earnings per share are
computed by dividing the net profit attributable
to equity shareholders for the year, by the
weighted average number of equity shares
outstanding during the year.

Diluted earnings per share adjusts the figures
used in the determination of basic earnings per
share to take into account:

i. the after income tax effect of interest and
other financing costs associated with
dilutive potential equity shares, and

ii. the weighted average number of additional
equity shares that would have been
outstanding assuming the conversion of
all dilutive potential equity shares.

l) Borrowing costs

Borrowing costs are interest and other costs
related to borrowing that the Company incurs
in connection with the borrowing of funds and
is measured with reference to the effective
interest rate applicable to the respective
borrowing. Borrowing costs include interest
costs measured at Effective Interest Rate (EIR)
and exchange differences arising from foreign
currency borrowings to the extent they are
regarded as an adjustment to the interest cost.
Ancillary borrowing costs are amortised over
the tenure of the loan.

Borrowing costs that are attributable to
acquisition or construction of qualifying assets
are capitalized as a part of cost of such assets
till the time the asset is ready for its intended
use. A qualifying assets is the one that
necessarily takes substantial period of time to
get ready for intended use. Other borrowing
costs are recorded as an expense in the year
in which they are incurred. Ancillary borrowing
costs are amortised over the tenure of the loan.

---

Mar 31, 2018

1A. Basis of preparation

a) Statement of compliance

These financial statements of the Company for the year ended 31 March, 2018 along with comparative financial information for the year 31 March, 2017 and Opening Balance Sheet as at April 1, 2016 have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the ‘Ind AS’) as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 (‘Act’) read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant provisions of the Act.

The financial statements for the year ended 31 March 2018 are the first year the Company has prepared in accordance with Ind AS and are covered by Ind AS 101, first-time adoption of Indian Accounting Standards. The transition to Ind AS has been carried out from the accounting principles generally accepted in India (“Indian GAAP”) which is considered as the “Previous GAAP” for purposes of Ind AS 101. An explanation of how the transition to Ind AS has affected the Company’s equity and its net profit is provided in Note 45.

The financial statements have been prepared on accrual and going concern basis. The accounting policies are applied consistently to all the periods presented in the financial statements, including the preparation of the opening Ind AS Balance Sheet as at 1st April, 2016 being the ‘date of transition to Ind AS’.

The financial statements of the Company for the year ended 31st March, 2018 were approved for issue in accordance with the resolution of the Board of Directors on 28 May 2018.

b) Historical cost convention

The financial statements have been prepared on a historical cost basis, except for the following:

- certain financial assets and liabilities that are measured at fair value;

- defined benefit plans - net defined benefit obligation measured at present value of benefits payable

c) Functional and presentation currency

I tems included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The financial statements are presented in Indian Rupee (‘), which is the Company’s functional and presentation currency. All amounts disclosed in the financial statements and notes have been rounded off to the nearest Lakh as per the requirement of Division II of Schedule III to the Companies Act, 2013, unless otherwise stated.

d) Critical accounting judgments and key sources of estimation uncertainty

The preparation of the financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Uncertainty about these assumptions and estimates could result in outcomes that require material adjustments to the carrying amount of assets or liabilities affected in future periods. The Company continually evaluates these estimates and assumptions based on the most recently available information. Revisions to accounting estimates are recognized prospectively in the Statement of Profit and Loss in the period in which the estimates are revised and in any future periods affected. The Management believes that the estimates used in preparation of the Financial Statements are prudent and reasonable. .

The areas involving critical estimates and judgments are:

i. Property, plant and equipment :

Determination of the estimated useful lives of property, plant and equipment and the assessment of components of the cost that may be capitalised. Useful lives of tangible assets are based on the life prescribed in Schedule II of the Companies Act, 2013. In cases, where the useful lives are different from that prescribed in Schedule II, they are based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers’ warranties and maintenance support. Assumptions also need to be made, when the Company assesses, whether an asset may be capitalised and which components of the cost of the asset may be capitalised.

ii. Valuation of inventories

Valuation of inventories, comprising the stock-in-trade at every reporting period end. Net realizable value of inventories is estimated basis the selling price in the ordinary course of business, less the estimated costs necessary to make the sale.

iii. Defined benefit obligations :

The obligation arising from defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends in salary escalation and vested future benefits and life expectancy. The discount rate is determined based on the prevailing market yields of Indian Government Securities as at the Balance Sheet Date for the estimated term of the obligations.

iv. Deferred tax assets:

A deferred tax asset is recognised for all the deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised

v. Provisions and contingencies:

The recognition and measurement of other provisions are based on the assessment of the probability of an outflow of resources, past experience and circumstances known at the balance sheet date.

vi. Financial instruments:

All financial instruments are required to be measured at fair value on initial recognition. In case of financial instruments which are required to be subsequently measured at amortised cost, interest is accrued using the effective interest rate. Rate of interest is estimated basis the prevailing market interest rate or the rate applicable to the company on any other financial instrument.

e) Classification of assets and liabilities

All assets and liabilities are classified into current and noncurrent.

Assets

An asset is classified as current when it satisfies any of the following criteria:

i. it is expected to be realized in, or is intended for sale or consumption in, the Company’s normal operating cycle;

ii. it is held primarily for the purpose of being traded;

iii. it is expected to be realized within twelve months after the reporting date; or

iv. it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.

Current assets include the current portion of non-current financial assets.

All other assets are classified as non-current.

Liabilities

A liability is classified as current when it satisfies any of the following criteria:

i. i t is expected to be settled in the Company’s normal operating cycle;

ii. it is held primarily for the purpose of being traded;

iii. i t is due to be settled within twelve months after the reporting date; or

iv. the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Current liabilities include the current portion of non-current financial liabilities.

All other liabilities are classified as non-current.

Operating cycle

Based on the nature of services and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current -non-current classification of assets and liabilities.

1B. Summary of significant accounting policies

a) Revenue recognition

Sale of goods

Revenue is recognised to the extent it is probable that economic benefits will flow to the Company, the revenue can be reliably measured and no significant uncertainty as to the measurability and collectability exists.

Revenue from sale of goods in the ordinary activities is recognized when all significant risks and rewards of their ownership are transferred to the customer and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods and regarding the collection. The amount recognized as revenue is exclusive of sales tax and goods and services tax and is net of returns, trade discounts and rebates.

Export incentives are recognized in the year on the basis of claims submitted to the appropriate authorities provided there is no uncertainty to expect ultimate collection at the time of making the claim.

Interest income

For all interest bearing financial assets measured at amortized cost, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset.

b) Property, Plant and Equipment

i. Recognition and Measurement

Items of property, plant and equipment (PPE) are stated at acquisition cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost of an item of PPE comprises its purchase price, including import duties and other non-refundable taxes or levies, borrowing costs if any and any directly attributable cost of bringing the asset to its working condition for its intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Expenditure/ Income during construction period is included under Capital Work-in-Progress, and the same is allocated to the respective PPE on the completion of their construction. Advances given towards acquisition or construction of PPE outstanding at each reporting date are disclosed as Capital Advances under “Other non-current Assets”.

If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.

ii. Subsequent expenditure

Subsequent expenditures related to an item of property, plant and equipment are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.

iii. Transition to Ind AS

On transition to Ind AS, the Company has elected to continue with the carrying value of all its property, plant and equipment recognized in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as the deemed cost as at the transition date pursuant to the exemption under Ind AS 101..

iv. Depreciation

Depreciation is provided on a pro-rata basis on the written down value method (‘WDV’) as per the useful life prescribed under Schedule II of the Companies Act, 2013, which, in management’s opinion, reflect the estimates useful economic lives of fixed assets.

Leasehold improvements are amortized over the lease term. Depreciation for the year is recognised in the Statement of Profit and Loss.

The following table gives the useful life of different Property, plant and equipment as per Schedule II:

v. De-recognition

An item of property, plant and equipment is eliminated from the financial statement on disposal or when no further benefit is expected from its use and disposal.

Losses arising from retirement or gains or losses arising from disposal of fixed assets which are carried at cost are recognised in the statement of profit and loss.

vi. Impairment of property, plant and equipment

The carrying values of assets at each balance sheet date are reviewed for impairment if any indication of impairment exists.

c) Intangible assets

i. Recognition and Measurement

I ntangible assets are recognized only when it is probable that the future economic benefits that are attributable to the assets will flow to the Company and the cost of such assets can be measured reliably. Intangible assets that are acquired by the Company are measured initially at cost. After initial recognition, an intangible asset is carried at its cost less any accumulated amortisation and any accumulated impairment loss. All costs relating to the acquisition are capitalized.

ii. Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits from the specific asset to which it relates.

iii. Transition to Ind AS

On transition to Ind AS, the Company has elected to continue with the carrying value of all its intangible assets recognized as at 1 April 2016 (transition date) measured as per the previous GAAP and use that as its deemed cost as at date of transition.

iv. Amortisation

I ntangible assets are amortised over their estimated useful lives, from the date that they are available for use based on the expected pattern of consumption of economic benefits of the asset. The Company’s intangible assets comprise of computer software which are being amortised over their estimated useful life of three years.

The useful lives are reviewed by the management at each financial year-end and revised, if appropriate. In case of a revision, the unamortized depreciable amount is charged over the revised remaining useful life.

Amortisation for the year is recognised in the statement of profit and loss.

v. De-recognition

An intangible asset is de-recognised on disposal or when no future economic benefits are expected from its use and disposal. Losses arising from retirement and gains or losses arising from disposal of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss.

vi. Impairment of Intangible assets

I ntangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Management periodically assesses using, external and internal sources, whether there is an indication that an asset may be impaired.

An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is higher of the asset’s net selling price or value in use, which means the present value of future cash flows expected to arise from the continuing use of the asset and its eventual disposal. The impairment loss is recognized as an expense in the Statement of Profit and Loss, unless the asset is carried at revalued amount, in which case any impairment loss of the revalued asset is treated as a revaluation decrease to the extent a revaluation reserve is available for that asset.

An impairment loss for an asset is reversed if, and only if, the reversal can be related objectively to an event occurring after the impairment loss was recognized. The carrying amount of an asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years. In case of revalued assets, such reversal is not recognized.

d) Leases

Assets acquired under leases other than finance leases are classified as operating leases. The total lease rentals (including scheduled rental increases) in respect of an asset taken on operating lease are charged to the Statement of Profit and Loss on a straight line basis over the lease term (including the rent free period) unless the payments to lessor are structured to increase in line with expected general inflation to compensate for the lessor’s expected inflationary cost increases. Initial direct costs of leasehold improvement incurred specifically for an operating lease are deferred and charged to the Statement of Profit and Loss over the lease term.

e) Inventories

Inventories comprise of stock-in-trade which are carried at the lower of cost and net realizable value. Cost is determined on first in first out (“FIFO”) basis.

Cost of stock-in-trade comprises of all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventory to their present location and condition.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs necessary to make the sale.

f) Foreign currency transactions

Transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date of transactions. Exchange differences arising on foreign exchange transactions settled during the period are recognized in the statement of profit and loss of the period.

Monetary assets and liabilities in foreign currency, which are outstanding as at the year-end, are translated at the year-end at the closing exchange rate and the resultant exchange differences are recognized in the statement of profit and loss. Non-monetary foreign currency items are carried at cost.

g) Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

i. Financial assets Classification

The Company shall classify financial assets as subsequently measured at amortised cost, fair value through other comprehensive income or fair value through profit or loss on the basis of its business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.

Initial recognition and measurement

Financial assets are recognised when the Company becomes a party to a contract that gives rise to a financial asset of one entity or equity instrument of another entity. Financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets, other than those designated as fair value through profit or loss (FVTPL), are added to or deducted from the fair value of the financial assets, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets at FVTPL are recognised immediately in statement of profit and loss.

Measurement of fair values

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 of the asset or liability; or

- in the absence of a principal market, in the most advantageous market for the asset 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 financial assets into three levels. As described as follows, these levels are based on the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and lowest priority to unobservable inputs (level 3 inputs).

Level 1: Fair value based on quoted, unadjusted prices on active markets

Level 2: Fair value based on parameters for which directly or indirectly quoted prices on active market are available

Level 3: Fair value based on parameters for which there is no observable market data

The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Subsequent Measurement

The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income (“FVOCI”) or fair value through profit or loss (“FVTPL”) on the basis of following:

- The entity’s business model for managing the financial assets and

- The contractual cash flow characteristics of the financial asset.

Amortised Cost

A financial asset shall be classified and measured at amortised cost if both of the following conditions are met:

- The financial asset is held within a business model whose objective is to hold financial assets in order 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.

De-recognition

A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognised (i.e. removed from the Company’s balance sheet) when:

i. The rights to receive cash flows from the asset have expired, or

ii. The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either

(a) The Company has transferred substantially all the risks and rewards of the asset, or

(b) The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company’s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.

Impairment of financial assets

Financial assets of the Company comprise of trade receivable and other receivables consisting of debt instruments such as security deposits and bank balance. Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. An impairment loss for trade and other receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables. Impairment losses if any, are recognised in statement of profit and loss for the period.

ii. Financial liabilities Classification

The Company classifies all financial liabilities as subsequently measured at amortised cost, except for financial liabilities at fair value through profit or loss.

Initial recognition and measurement

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in statement of profit and loss when the liabilities are derecognized. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.

De-recognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.

h) Employee benefits

i. Short-term employee benefits

Employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. These benefits include salaries and wages, bonus and ex-gratia. The undiscounted amount of short-term employee benefits expected to be paid in exchange for the employee service is recognized as an expense as the related service is rendered by the employee. A liability is recognised for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

ii. Post-employment benefits

Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays specified contributions to a separate entity and has no obligation to pay any further amounts. The Company makes specified monthly contributions towards employee provident fund to Government administered provident fund scheme which is a defined contribution plan. The Company’s contribution to Provident Fund, ESIC and Labour Welfare Fund are recognised as an expense in the Statement of Profit and Loss during the period in which the employee renders related service.

Defined Benefit Plan

The Company’s gratuity benefit scheme is a defined benefit plan covering eligible employees in accordance with the Payment of Gratuity Act, 1972. The Company’s net obligation in respect of the defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognized past service costs and the fair value of any assets are deducted. The calculation of the Company’s obligation under the plans is performed annually by a qualified actuary using the projected unit credit method at the balance sheet date.

Re-measurement of the net defined benefit liability, which comprise actuarial gains and losses, are recognised immediately in other comprehensive income (OCI). The service and interest cost related to defined benefit plans are recognised in employee benefits in the statement of profit and loss. When the benefits of a plan are improved, the portion of the increased benefit related to past service by employees is recognised in the Statement of Profit and Loss on a straight line basis over the average period until the benefits become vested. The Company recognises gains and losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs.

i) Taxation

I ncome-tax expense comprise current tax (i.e. amount of tax for the period determined in accordance with the income-tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period). It is recognised in statement of profit and loss except to the extent that it relates to items recognised directly in equity or in OCI.

Current tax

Current tax is measured at that amount expected to be paid to (recovered from) the taxation authorities, on the taxable income or loss determined in accordance with Income Tax Act, 1961 and includes any adjustment to the tax payable or receivable in respect of previous years.

Deferred tax

Deferred tax is provided, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets and liabilities are measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted at the reporting date. Tax relating to items recognised directly in equity or OCI is recognised in equity or OCI and not in the Statement of Profit and Loss. A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that future taxable profits will be available.

j) Earnings per share (‘EPS’)

Basic and diluted earnings per share are computed by dividing the net profit attributable to equity shareholders for the year, by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

i. t he after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

ii. t he weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.

k) Borrowing costs

Borrowing costs are interest and other costs related to borrowing that the Company incurs in connection with the borrowing of funds and is measured with reference to the effective interest rate applicable to the respective borrowing. Borrowing costs include interest costs measured at Effective Interest Rate (EIR) and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Ancillary borrowing costs are amortised over the tenure of the loan.

Borrowing costs that are attributable to acquisition or construction of qualifying assets are capitalized as a part of cost of such assets till the time the asset is ready for its intended use. A qualifying assets is the one that necessarily takes substantial period of time to get ready for intended use. Other borrowing costs are recorded as an expense in the year in which they are incurred. Ancillary borrowing costs are amortised over the tenure of the loan.

l) Provisions, Contingent liabilities and Contingent assets

Provisions are recognized when the Company recognizes that it has a present obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount can be reasonably estimated. Provisions are measured at the present value of managements best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to passage of time is recognised as interest expense.

Provision in respect of loss contingencies relating to claims, litigation, assessment, fines, penalties, etc. are recognised when it is probable that a liability has been incurred and the amount can be estimated reliably

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. When 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.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources would be required to settle the obligation, the provision is reversed.

Contingent assets are not recognized in financial statements.

m) Cash and Cash equivalents

Cash and cash equivalents comprise cash-in-hand and cash on deposits with banks and financial institutions. The Company considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amount of cash to be cash equivalents

n) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.

The Executive Director and Chief Executive Officer assesses the financial performance and position of the Company, and makes strategic decisions. He is identified as being the chief operating decision maker for the Company. The Company has only one business segment, which is trading in garments and company generates revenue majorly from Domestic sales along with some export sales. Accordingly, the amounts appearing in these financial statements relate to this one business segment.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment assets include all operating assets used by the business segment and consist principally of fixed assets, trade receivables and inventories. Segment liabilities include operating liabilities pertaining to the segment.

Segment revenue, segment results, segment assets and segment liabilities include the respective amounts identifiable to each segment as also the amount allocable on a reasonable basis.

Segment assets and liabilities that cannot be allocated between the segments are shown as part of unallocated assets and liabilities respectively. Income and expenses relating to the enterprise as a whole and not allocable on a reasonable basis to business segment are reflected as unallocated income and expense