A Oneindia Venture
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Accounting Policies of International Gemological Institute Ltd. Company
Mar 31, 2026
4.1 Property, plant and equipment, CWIP and depreciation
Property, plant and equipment are stated at cost,
net of accumulated depreciation and accumulated
impairment losses, if any. Such cost includes the
cost of replacing part of the plant and equipment and
borrowing costs for long-term construction projects if
the recognition criteria are met. When significant parts
of plant and equipment are required to be replaced at
intervals, the Company depreciates them separately
based on their specific useful lives. Likewise, when a
major inspection is performed, its cost is recognised in
the carrying amount of the plant and equipment as a
replacement if the recognition criteria are satisfied. All
other repair and maintenance costs are recognised in
profit or loss as incurred.
Capital work in progress is stated at cost, net of
accumulated impairment loss, if any. Capital work-
in progress comprises cost of the property, plant and
equipment (including related expenses), that are not
yet ready for their intended use at the reporting date.
Subsequent costs are included in the asset''s
carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the item will flow to
the Company and the cost of the item can be measured
reliably. The carrying amount of any component
accounted for as a separate asset is derecognised
when replaced. All other repairs and maintenance are
charged to Standalone Statement of Profit and Loss
during the year in which they are incurred.
The Company depreciates property, plant and
equipment over their estimated useful lives as specified
in the Schedule II of the Companies Act, 2013 using
the straight line method. The estimated useful lives of
assets are as follows:
Precious stones and laboratory master sets are not
being depreciated.
Where parts of an item of property, plant and equipment
have different useful lives, the cost of that item is
allocated on a reasonable basis among the parts and
each part is depreciated separately. Residual values,
useful lives and the depreciation method are reviewed,
and adjusted if appropriate, at least at end of financial
year.
De-recognition: An item of property, plant and
equipment including any significant part initially
recognised is derecognised upon disposal or when no
future economic benefits are expected from its use or
disposal. Any gain or loss on disposal or retirement
recognised in profit or loss in the year the asset is
derecognised is the difference between the net sales
proceeds and the carrying amount of the relevant
asset.
Other intangible assets acquired separately are
measured on initial recognition at cost. Other intangible
assets with finite lives are subsequently amortised over
the useful economic life and assessed for impairment
whenever there is an indication that the intangible asset
may be impaired. The amortisation period for other
intangible asset with a finite useful life are reviewed at
least at each financial year end.
The estimated useful lives of other intangible assets
are as follows:
An other intangible asset is derecognised upon disposal
(i.e., at the date the recipient obtains control) or when
no future economic benefits are expected from its use
or disposal. Any gain or loss arising upon derecognition
of the asset (calculated as the difference between the
net disposal proceeds and the carrying amount of the
asset) is included in the Standalone Statement of Profit
and Loss when the asset is derecognised.
4.3 Investment in subsidiaries
"The company has elected to recognise its investments
in subsidiaries companies at cost in accordance with
the option available in Ind AS 21, '' Separate Financial
Statements''.
The company''s investments in its subsidiaries
companies is accounted at cost less impairement, if any
The Company reviews its carrying value of investments
carried at cost annually, or more frequently when there
is indication for impairment. If the recoverable amount
is less than its carrying amount, the impairment loss is
recorded in the Standalone Statement of Profit and Loss.
When an impairment loss subsequently reverses, the
carrying amount of the Investment is increased to the
revised estimate of its recoverable amount, so that the
increased carrying amount does not exceed the cost
of the Investment. A reversal of an impairment loss is
recognised immediately in the Standalone Statement
of Profit and Loss.
4.4 Foreign Currency Transactions(a) Functional and presentation currency
Items included in the standalone financial statements
are measured using the currency of the primary
economic environment in which the entity operates
(''the functional currency''). The standalone financial
statements are presented in Indian rupee (Rs.), which
is the Company''s functional and presentation currency.
On initial recognition, all foreign currency transactions
are recorded by applying to the foreign currency
amount the exchange rate between the functional
currency and the foreign currency at the date of the
transaction. Gains/Losses arising out of fluctuation
in foreign exchange rate between the transaction date
and settlement date are recognised in the Standalone
Statement of Profit and Loss.
All monetary assets and liabilities in foreign currencies
are restated at the year end at the exchange rate
prevailing at the year end and the exchange differences
are recognised in the Standalone Statement of Profit
and Loss.
Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated
using the exchange rates at the dates of the initial
transactions.
The Company''s lease asset classes primarily consist of
leases for land and buildings. 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.
The Company recognises lease liabilities to make lease
payments and right-of-use assets representing the
right to use the underlying assets for all leases, except
for short-term leases and leases of low-value 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
shorter of the lease term and the estimated useful
lives of the assets as follows:
If ownership of the leased asset transfers to
the Company at the end of the lease term or the
cost reflects the exercise of a purchase option,
depreciation is calculated using the estimated
useful life of the asset. In such cases, the Company
reviews the estimated residual values and expected
useful lives of assets at least annually. The right-of-
use assets are subject to impairment annually.
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 include
fixed payments (including in-substance fixed
payments) less any lease incentives receivable,
variable lease payments that depend on an index
or a rate, and amounts expected to be paid under
residual value guarantees. The lease payments
also include the exercise price of a purchase
option reasonably certain to be exercised by
the Company and payments of penalties for
terminating the lease, if the lease term reflects
the Company exercising the option to terminate.
Variable lease payments that do not depend on an
index or a rate are recognised as expenses (unless
they are incurred to produce inventories) in the
period in which the event or condition that triggers
the payment occurs.
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). Lease payments on
short-term leases are recognised as expense on a
straight-line basis over the lease term.
Lease payments and receipts under operating
leases are recognised as an expense and income
respectively, on a straight line basis in the
statement of profit and loss over the lease term
except where the lease payments are structured
to increase in line with expected general inflation.
As at the end of each financial year, the carrying amounts
of PPE, Intangible assets and Right-of-use assets are
reviewed to determine whether there is any indication
that those assets have suffered an impairment loss.
If such indication exists, PPE, Intangible assets and
Right-of-use assets are tested for impairment so as to
determine the impairment loss, if any.
Impairment loss is recognised when the carrying
amount of an asset exceeds its recoverable amount.
Recoverable amount is determined:
(i) i n the case of an individual asset, at the higher of
the fair value less costs of disposal and the value-
in-use; and
(ii) in the case of a cash generating unit (the smallest
identifiable group of assets that generates
independent cash flows), at the higher of the cash
generating unit''s fair value less costs of disposal
and the value-in-use.
(The amount of value-in-use is determined as the
present value of estimated future cash flows from the
continuing use of an asset, which may vary based on
the future performance of the Company and from its
disposal at the end of its useful life. For this purpose,
the discount rate (post-tax) is determined based on
the weighted average cost of capital of the company
suitably adjusted for risks specified to the estimated
cash flows of the asset).
i f recoverable amount of an asset (or cash generating
unit) is estimated to be less than its carrying amount,
such deficit is recognised immediately in the Statement
of Profit and Loss as impairment loss and the carrying
amount of the asset (or cash generating unit) is reduced
to its recoverable amount.
When an impairment loss recognised earlier is subject
to full or partial reversal, the carrying amount of the
asset (or cash generating unit), is increased to the
revised estimate of its recoverable amount, such that
the increased carrying amount does not exceed the
carrying amount that would have been determined
had no impairment loss is recognised for the asset
(or cash generating unit) in prior years. A reversal of
an impairment loss is recognised immediately in the
Statement of Profit and Loss.
Security deposits are initially recognised at fair value
and subsequently measured at amortised cost. Any
difference between the initial fair value and the nominal
amount is included as a component of operating lease
income and recognised on a straight-line basis over the
lease term.
4.8 Revenuea) Revenue from grading and certification services
The Company recognises revenue from grading and
certification of diamonds, coloured stones and jewelry
which is measured at a point in time upon satisfaction of
the performance obligation, when the report/certificate
in relation to completion of such activities is generated
and is ready to be issued to the customer. There are no
significant activities undertaken between the time that
the report is generated and the time that the customer
obtains the report. Revenue is measured based on the
transaction price, which is the consideration, adjusted
for discounts or rebates, if any, as specified in the
contract with the customer. Revenue is recognised
exclusive of taxes.
b) Revenue from educational courses
Revenue from providing gemological education on
sorting and grading of gems, diamond and jewelry
is recognised over a period of time as and when the
educational course is completed.
c) Revenue from sale of traded goods
Revenue from the sale of traded goods is recognised
at the point in time when control of the goods is
transferred to the customer.
4.9 Other Incomea) Interest income
i nterest income is accounted for on an accrual basis
using the effective interest method by applying the
rate that exactly discounts the estimated future cash
receipts through the expected life of the financial
instrument or a shorter period, when appropriate, to the
net carrying amount of the financial asset.
4.10 Contract BalancesContract assets and contract liabilities
A contract asset is the right to consideration in
exchange for goods or services transferred to the
customer when that right is conditioned on something
other than the passage of time, for example, billings
require certification by the customer. Upon receipt
of such certification from a customer, the amount
recognised as contract assets is reclassified to trade
receivables. Contract assets are subject to impairment
assessment on the same basis as financial assets that
are within the scope of Ind AS 109.
A contract liability is the obligation to transfer goods
or services to a customer for which the Company has
received consideration (or an amount of consideration
is due) from the customer. Contract liabilities are
recognised as revenue when the Company performs
under the contract (i.e. transfers control of the related
goods or services to the customer).
The Company measures financial instruments at fair
value at each balance sheet date.
Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. The fair value measurement is
based on the presumption that the transaction to sell
the asset or transfer the liability takes place either:
⢠In the principal market for the asset or liability
Or
⢠i n the absence of a principal market, in the most
advantageous market for the asset or liability
The principal or the most advantageous market must
be accessible by the Company at the measurement
date.
The fair value of an asset or a liability is measured
using the assumptions that market participants would
use when pricing the asset or liability, assuming that
market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes
into account a market participant''s ability to generate
economic benefits by using asset in its highest and
best use or by selling it to another market participant
that would use asset in its highest and best use.
The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs and
minimising the use of unobservable inputs.
All assets and liabilities, for which fair value is measured
or disclosed in the standalone financial statements, are
categorised within the fair value hierarchy, described
as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:
Level 1 â Quoted (unadjusted) market prices in active
markets for identical assets or liabilities
Level 2 â Valuation techniques for which the lowest level
input that is significant to the fair value measurement
is directly or indirectly observable
Level 3 â Valuation techniques for which the lowest level
input that is significant to the fair value measurement
is unobservable
For assets and liabilities that are recognised in the
standalone financial statements at fair value on a
recurring basis, the Company determines whether
transfers have occurred between levels in the
hierarchy by re-assessing categorisation (based on
the lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting
period.
4.12 Financial instruments - initial recognition and
subsequent measurement
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.
Initial recognition and measurement
Financial assets are classified at initial recognition,
and subsequently measured at amortised cost,
fair value through other comprehensive income,
or fair value through profit or loss.
The classification of financial assets at initial
recognition depends on the financial asset''s
contractual cash flow characteristics and the
Company''s business model for managing them.
With the exception of trade receivables that do
not contain a significant financing component or
for which the Company has applied the practical
expedient, the Company initially measures a
financial asset at its fair value plus, in the case of
a financial asset not at fair value through profit
or loss, transaction costs. As the Company''s
rent and other trade receivables do not contain a
significant financing component or for which the
Company has applied the practical expedient, they
are measured at the transaction price determined
under Ind AS 115.
In order for a financial asset to be classified
and measured at amortised cost or fair value
through other comprehensive income (OCI), it
needs to give rise to cash flows that are ''solely
payments of principal and interest (SPPI)'' on the
principal amount outstanding. This assessment is
referred to as the SPPI test and is performed at an
instrument level. Financial assets with cash flows
that are not SPPI are classified and measured at
fair value through profit or loss, irrespective of the
business model.
The Company''s business model for managing
financial assets refers to how it manages its
financial assets in order to generate cash flows.
The business model determines whether cash
flows will result from collecting contractual
cash flows, selling the financial assets, or both.
Financial assets classified and measured at
amortised cost are held within a business model
with the objective to hold financial assets in
order to collect contractual cash flows, while
financial assets classified and measured at fair
value through other comprehensive income are
held within a business model with the objective
of both holding to collect contractual cash flows
and selling. Financial assets which are not held
within the aforementioned business models are
classified and measured at fair value through
profit or loss.
Financial assets measured at amortised cost
The Company measures financial assets at amortised
cost if both of the following conditions are met:
⢠The financial asset is held within a business
model with the objective 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.
Financial assets at amortised cost are
subsequently measured using the effective
interest (EIR) method and are subject to
impairment. Gains and losses are recognised
in profit or loss when the asset is derecognised,
modified or impaired.
The Company''s financial assets at amortised cost
includes trade receivables, loans to related parties,
security deposit and financial assets included in
other receivables.
Financial assets designated at fair value through
OCI (equity investments)
Upon initial recognition, the Company can elect
to classify irrevocably its equity investments
as equity instruments designated at fair value
through OCI when they meet the definition of
equity under Ind AS 32 Financial Instruments:
Presentation and are not held for trading. The
classification is determined on an instrument-by¬
instrument basis.
Gains and losses on these financial assets are
never recycled in profit or loss. Dividends are
recognised as other income in profit or loss when
the right of payment has been established, it is
probable that the economic benefits associated
with the dividend will flow to the Company and
the amount of the dividend can be measured
reliably, except when the Company benefits from
such proceeds as a recovery of part of the cost of
the financial asset, in which case, such gains are
recorded in other comprehensive income. Equity
investments designated at fair value through
other comprehensive income are not subject to
impairment assessment.
Financial assets measured at fair value through
profit or loss (FVTPL)
Financial assets at fair value through profit or loss
include financial assets held for trading, financial
assets designated upon initial recognition at fair
value through profit or loss, or financial assets
mandatorily required to be measured at fair value.
Financial assets are classified as held for trading
if they are acquired for the purpose of selling or
repurchasing in the near term. Financial assets
with cash flows that are not solely payments of
principal and interest are classified and measured
at fair value through profit or loss, irrespective of
the business model. Notwithstanding the criteria
for debt instruments to be classified at amortised
cost or at fair value through OCI, as described
above, debt instruments may be designated at fair
value through profit or loss on initial recognition
if doing so eliminates, or significantly reduces, an
accounting mismatch.
Financial assets at fair value through profit or loss
are carried in the financial statement at fair value
with net changes in fair value recognised in profit
or loss.
This category includes equity investments which
the Company had not irrevocably elected to
classify at fair value through other comprehensive
income. Dividends on equity investments
classified as financial assets at fair value profit
or loss are also recognised as other income in
profit or loss when the right of payment has been
established, it is probable that the economic
benefits associated with the dividend will flow to
the Company and the amount of the dividend can
be measured reliably.
Derecognition
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 statement of
financial position) when:
⢠The rights to receive cash flows from the
asset have expired
Or
⢠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.
Impairment of financial assets
General approach
ECLs are recognised in two stages. For credit
exposures for which there has not been a
significant increase in credit risk since initial
recognition, ECLs are provided for credit losses
that result from default events that are possible
within the next 12 months (a 12-month ECL). For
those credit exposures for which there has been
a significant increase in credit risk since initial
recognition, a loss allowance is required for credit
losses expected over the remaining life of the
exposure, irrespective of the timing of the default
(a lifetime ECL).
At each reporting date, the Company assesses
whether the credit risk on a financial instrument
has increased significantly since initial recognition.
When making the assessment, the Company
compares the risk of a default occurring on the
financial instrument as at the reporting date with
the risk of a default occurring on the financial
instrument as at the date of initial recognition
and considers reasonable and supportable
information that is available without undue cost
or effort, including historical and forward looking
information.
Simplified approach
For trade receivables and contract assets, that
do not contain a significant financing component,
the Company applies a simplified approach in
calculating ECLs. Therefore, the Company does
not track changes in credit risk, but instead
recognises a loss allowance based on lifetime
ECLs at each reporting date (i.e., a loss allowance
for credit losses expected over the remaining
life of the exposure, irrespective of the timing
of the default). The Company has established
a provision matrix that is based on its historical
credit loss experience, adjusted for forward¬
looking factors specific to the debtors and the
economic environment.
Initial recognition and measurement
The Company recognises a financial liability
when it first becomes a party to the contractual
rights and obligations in the contract. All financial
liabilities are initially recognised at fair value,
minus (in the case of a financial liability that is
not at FVTPL) transaction costs that are directly
attributable to issuing the financial liability.
Financial liabilities measured at amortised cost
Financial liabilities are measured at amortised
cost, using the effective interest method unless
the Company opted to measure a liability at
FVTPL. Financial liabilities included in trade and
other payables, borrowings and other financial
liabilities. 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 effective interest rate. The effective
interest rate amortisation is included in finance
costs in profit or loss.
Financial assets measured at fair value through
profit or loss (FVTPL)
Financial liabilities at FVTPL are measured at fair
value and net gains and losses, including any
interest expense, are recognised in profit or loss.
Derecognition
A financial liability is derecognised when the
obligation under the liability is discharged,
cancelled or expires.
iii) Classification as debt or equity
Debt and equity instruments are classified as either
financial liabilities or as equity in accordance with
the substance of the contractual arrangements
and the definitions of a financial liability and an
equity instrument.
iv) Offsetting of financial instruments
Financial assets and financial liabilities are offset
and the net amount is reported in the statement of
financial position 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 realise the assets and settle the liabilities
simultaneously.
4.13 Employee benefits(i) Short-term employee benefits
Employee benefits payable wholly within twelve
months of receiving employee services 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 to be paid in exchange for
employee services is recognised as an expense as
the related service is rendered by employees.
(ii) Long-term employment benefits(A) Defined contribution plan
The Company''s contribution to provident
fund and employee state insurance scheme
are considered as defined contribution plan
and are recognised as an expense in the
Statement of Profit and Loss based on the
amount of contribution required to be made
as and when services are rendered by the
employees. The Company has no further
obligations under these plans beyond its
monthly contributions.
The Company''s gratuity benefit scheme
is a defined benefit plan and it is funded.
The Company''s net obligation in respect
of gratuity benefit scheme 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, and the fair value of any plan assets is
deducted.
The present value of the obligation under
such defined benefit plan is determined
based on actuarial valuation at the balance
sheet date by an independent actuary using
the Projected Unit Credit Method, which
recognises each period of service as giving
rise to additional unit of employee benefit
entitlement and measures. The obligation
is measured at the present value of the
estimated future cash flows. The discount
rates used for determining the present
value of the obligation under defined benefit
plan, are based on the market yields on
Government securities as at the balance
sheet date. Actuarial gains and losses are
recognised in the Other comprehensive
income.
Compensated absences which are not
expected to occur within twelve months
after the end of the year in which the
employee renders the related services are
recognized as a liability at the present value
of the other long-term employment benefits
which is determined at each balance sheet
date based on an actuarial valuation by an
independent actuary using the Projected Unit
Credit Method. Actuarial gains and losses
are recognized in full in statement of profit
and loss during the year in which they occur.
(iii) Share Based Payments
Equity-settled transactions
Equity-settled share-based payments to
employees are measured by reference to the fair
value of the equity instruments at the grant date.
The fair value determined at the grant date of the
equitysettled share-based payments, is charged to
statement of profit and loss on a systematic basis
over the vesting period of the option, based on the
Company''s estimate of equity instruments that
will eventually vest, with a corresponding increase
in other equity. At the end of each reporting period,
the Company revises its estimate of the number
of equity instruments expected to vest. The
impact of the revision of the original estimates, if
any, is recognised in the Statement of Profit and
Loss such that the cumulative expense reflects
the revised estimate, with a corresponding
adjustment to share based payment reserve.
Income tax expenses comprises of current tax
expenses and deferred tax charge / credit.
Current income tax assets and liabilities are measured
at the amount expected to be recovered from or paid
to 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 income tax relating to items recognised directly
in other comprehensive income or equity is recognised
in other comprehensive income or in equity and not in
the statement of profit or loss. Management periodically
evaluates positions taken in tax returns with respect
to situations in which applicable tax regulations are
subject to interpretation and establishes provisions
where appropriate.
Deferred tax is provided using the liability method on
temporary differences between the tax bases of assets
and liabilities and their carrying amounts for financial
reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable
temporary differences, except:
(i) When the deferred tax liability arises from the
initial recognition of goodwill or an asset or liability
in a transaction that is not a business combination
and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss and
does not give rise to equal taxable and deductible
temporary differences;
(ii) In respect of taxable temporary differences
associated with investments in subsidiaries,
associates and interests in joint ventures, when
the timing of the reversal of the temporary
differences can be controlled and it is probable
that the temporary differences will not reverse in
the foreseeable future.
Deferred tax assets are recognised for all deductible
temporary differences, the carry forward of unused
tax credits and any unused tax losses. Deferred tax
assets are recognised to the extent that it is probable
that taxable profit will be available against which
the deductible temporary differences, and the carry
forward of unused tax credits and unused tax losses
can be utilised, except:
(i) When the deferred tax asset relating to the
deductible temporary difference arises from
the initial recognition of an asset or liability in a
transaction that is not a business combination
and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss and
does not give rise to equal taxable and deductible
temporary differences;
(ii) In respect of deductible temporary differences
associated with investments in subsidiaries,
associates and interests in joint ventures, deferred
tax assets are recognised only to the extent that
it is probable that the temporary differences will
reverse in the foreseeable future and taxable profit
will be available against which the temporary
differences can be utilised.
The carrying amount of deferred tax assets is reviewed
at each reporting date and reduced to the extent that it
is no longer probable that sufficient taxable profit will
be available to allow all or part of the deferred tax asset
to be utilised. Unrecognised deferred tax assets are re¬
assessed at each reporting date and are recognised to
the extent that it has become probable that future taxable
profits will allow the deferred tax asset to be recovered.
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 deferred tax liabilities are offset
if and only if the Company has a legally enforceable right
to set off current tax assets and current tax liabilities
and the deferred tax assets and deferred tax liabilities
relate to income taxes levied by the same taxation
authority on either the same taxable entity or different
taxable entities which intend either to settle current tax
liabilities and assets on a net basis, or to realise the
assets and settle the liabilities simultaneously, in each
future period in which significant amounts of deferred
tax liabilities or assets are expected to be settled or
recovered.
4.15 Cash and Cash Equivalents
Cash and cash equivalent in the balance sheet comprise
cash at banks, 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.
The Company recognises a liability to make cash
distributions to equity holders when the distribution
is authorised and the distribution is no longer at the
discretion of the Company. As per the corporate laws
in India, a distribution is authorised when it is approved
by the shareholders. A corresponding amount is
recognised directly in equity.
Inventories are carried at the lower of the cost and
net realisable value after providing for obsolescence
and other losses where considered necessary. Cost of
Inventories comprises all cost of purchase and other
cost incurred in bringing inventories to their present
location and condition. Cost is determined on fi rst-in-
first-out basis.
Net realisable value is the estimated selling price in
the ordinary course of business, less estimated costs
of completion and the estimated costs necessary to
make the sale.
Dec 31, 2024
1. CORPORATE INFORMATION
International Gemmological Institute (India) Limited (formerly known as International Gemmological Institute (India) Private Limited) (the "Company") is a public limited company domiciled in India, with its registered office situated at 702, The Capital, G Block BKC, Bandra Kurla Complex, Bandra East, Mumbai, Maharashtra 400051 and having corporate identification number (CIN) U46591 MH1999PLC118476.
The Company is primarily engaged in the business of Certification of diamonds, gemstones, jewellery and related education with comprehensive analysis and clear documentation for consumers. The Company is also operating laboratories and offices in Mumbai, Kolkata, New Delhi, Thrissur, Jaipur, Surat, Chennai, Ahmedabad, Hyderabad, Coimbatore, Indore, Pune, Chandigarh and Bangalore. The Company also has school on Gemmology at various locations and offers a variety of courses designed for professionals and consumer enthusiasts.
The Standalone Financials Statements are approved for issue by the Audit Committee and the Board of Directors at their respective meetings conducted on 28th February, 2025.
These standalone financial statements (financial statementsâ) of the Company have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the ''Ind ASâ) as notified by Ministry of Corporate Affairs (''MCAâ) under Section 133 of the Companies Act, 2013 (''the Actâ) read with the Companies (Indian Accounting Standards) Rules, 2015, as amended (from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III), as applicable to the standalone financial statements and other relevant provisions of the Act. The Company has uniformly applied the accounting policies during the years presented, except mentioned otherwise.
The Standalone financial statements have been prepared on an going concern basis and under the historical cost convention, except for the certain assets and liabilities which have been measures at fair value (refer accounting policy regarding financial instruments).
All amounts included in the Standalone financial statements are reported in Indian rupees (in Rs Million) except share and per share data, unless otherwise stated. Amount presented as "0" are non-zero numbers
rounded off in Rs Million. Due to rounding off, the numbers presented throughout the document may not add up precisely to the totals and percentages may not precisely reflect the absolute figures.
3. MATERIAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of standalone financial statements in conformity with Ind AS requires management, where necessary, to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised.
The key assumptions concerning future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.
3.2 Provision for expected credit losses of trade receivables and contract assets
The Company uses past data and experience based on Companyâs historical default rates to measure the ECL on trade receivables. Based on evaluation carried out and to the best estimate of management, historical loss sufficiently covers expected loss as well as future contingencies. Adjustment for forward looking factors are not considered significant, hence no adjustment for forward looking factors is made.
3.3 Defined benefit plans (gratuity benefits and other post employee benefit expense benefit)
The cost of the defined benefit gratuity plan and other post-employment benefits and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate; future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
3.4 Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded, cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
3.5 Estimates related to Share-based payments
Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them.
3.6 Leases - Estimating the incremental borrowing rate and lease term
The Company cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities. IBR is the rate of interest that the Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. IBR therefore reflects what the Company ''would have to payâ, which requires estimation when no observable rates are available. The Company estimates the IBR using observable inputs (such as market interest rates).
The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The Company has several lease contracts that include extension and termination options. The Company applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Company reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate.
3.7 Impairment of investments in subsidiaries
The Company reviews its carrying value of investments carried at cost (net of impairment, if any) annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for in the standalone statement of profit and loss.
4. SUMMARY OF MATERIAL ACCOUNTING POLICIES4.1 Current versus non-current classification
The Company presents assets and liabilities in the statement of financial position based on current/non-current classification. An asset is treated as current when it is:
⢠Expected to be realised or intended to be sold or consumed in the normal operating cycle
⢠Held primarily for the purpose of trading
⢠Expected to be realised within twelve months after the reporting period
Or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
⢠It is expected to be settled in the normal operating cycle
⢠It is held primarily for the purpose of trading
⢠I t is due to be settled within twelve months after the reporting period
Or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. The terms of the liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.
Based on the nature of activities of the Company and the time between the acquisition of assets for processing and their realisation in Cash or cash equivalents, the Company has ascertained its normal operating cycle as 12 months for the purpose of Current/Non-current classification of assets and liabilities.
4.2 Property, plant and equipment, CWIP and depreciation
Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.
Capital work in progress is stated at cost, net of accumulated impairment loss, if any. Capital work-in progress comprises cost of the property, plant and equipment (including related expenses), that are not yet ready for their intended use at the reporting date.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to Standalone Statement of Profit and Loss during the year in which they are incurred.
The Company depreciates property, plant and equipment over their estimated useful lives as specified in the Schedule II of the Companies Act, 2013 using the straight line method. The estimated useful lives of assets are as follows:
|
Asset Category |
Useful Life (In years) |
|
Buildings |
60 |
|
Furniture and Fixtures |
10 |
|
Computers/servers |
3-6 |
|
Office Equipment |
5 |
|
Electric Installations |
10 |
|
Vehicles |
8 |
|
Plant & Machinery |
10-15 |
|
Leasehold Improvement |
10 |
Precious stones and laboratory master sets are not being depreciated.
Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, atleast at end of financial year.
De-recognition: An item of property, plant and equipment including any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in profit or loss in the year the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset.
Other intangible assets acquired separately are measured on initial recognition at cost. Other intangible assets with finite lives are subsequently amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period for other intangible asset with a finite useful life are reviewed at least at each financial year end.
The estimated useful lives of other intangible assets are as follows:
Asset Category Useful Life (In years)
Computer software 5
An other intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising upon derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the
asset) is included in the Standalone Statement of Profit and Loss when the asset is derecognised.
4.4 Investment in subsidiaries
A subsidiary is an entity that is controlled by another entity. The Companyâs investments in its subsidiaries is accounted at cost less impairment.
The Company reviews its carrying value of investments carried at cost annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is recorded in the Standalone Statement of Profit and Loss.
When an impairment loss subsequently reverses, the carrying amount of the Investment is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the cost of the Investment. A reversal of an impairment loss is recognised immediately in Standalone Statement of Profit or Loss.
4.5 Foreign Currency Transactions
(a) Functional and presentation currency
Items included in the standalone financial statements are measured using the currency of the primary economic environment in which the entity operates (''the functional currencyâ). The financial statements are presented in Indian rupee (Rs.), which is the Companyâs functional and presentation currency.
On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the transaction. Gains/ Losses arising out of fluctuation in foreign exchange rate between the transaction date and settlement date are recognised in the Standalone Statement of Profit and Loss.
All monetary assets and liabilities in foreign currencies are restated at the year end at the exchange rate prevailing at the year end and the exchange differences are recognised in the Standalone Statement of Profit and Loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
The Companyâs lease asset classes primarily consist of leases for land and buildings. 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.
The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets for all leases, except for short-term leases and leases of low-value 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 shorter of the lease term and the estimated useful lives of the assets.
I f ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. In such cases, the Company reviews the estimated residual values and expected useful lives of assets at least annually. The right-of-use assets are subject to impairment annually.
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 include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by
the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.
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). Lease payments on short-term leases are recognised as expense on a straight-line basis over the lease term.
Lease payments and receipts under operating leases are recognised as an expense and income respectively, on a straight line basis in the statement of profit and loss over the lease term except where the lease payments are structured to increase in line with expected general inflation.
Security deposits are initially recognised at fair value and subsequently measured at amortised cost. Any difference between the initial fair value and the nominal amount is included as a component of operating lease income and recognised on a straight-line basis over the lease term.
a) Revenue from grading and certification services
The Company recognises revenue from grading and certification of diamonds, coloured stones and jewellery which is measured at a point in time upon satisfaction of the performance obligation, when the report/certificate in relation to completion of such activities is generated and is ready to be issued to the customer. There are no significant activities undertaken between the time that the report is generated and the time that the customer obtains the report. Revenue is measured based on the transaction price, which is the consideration, adjusted for discounts or rebates, if any, as specified in the contract with the customer. Revenue is recognised exclusive of taxes.
b) Revenue from educational courses
Revenue from providing gemological education on sorting and grading of gems, diamond and jewellery is recognised over a period of time as and when the educational course is completed.
c) Revenue from sale of traded goods
Revenue from the sale of traded goods is recognised at the point in time when control of the goods is transferred to the customer.
a) Interest income
Interest income is accounted for on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts through the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset.
Contract assets and contract liabilities
A contract asset is the right to consideration in exchange for goods or services transferred to the customer when that right is conditioned on something other than the passage of time, for example, billings require certification by the customer. Upon receipt of such certification from a customer, the amount recognised as contract assets is reclassified to trade receivables. Contract assets are subject to impairment
assessment on the same basis as financial assets that are within the scope of Ind AS 109.
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. Contract liabilities are recognised as revenue when the Company performs under the contract (i.e. transfers control of the related goods or services to the customer).
The Company measures financial instruments at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
⢠In the principal market for the asset or liability Or
⢠I n the absence of a principal market, in the most advantageous market for the asset or liability The principal or the most advantageous market must be accessible by the Company at the measurement date.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using asset in its highest and best use or by selling it to another market participant that would use asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities, for which fair value is measured or disclosed in the standalone financial statements, are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable For assets and liabilities that are recognised in the standalone financial statements at fair value on a recurring basis, the Company determines whether transfers have occurred between leve ls in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
4.12 Financial instruments - initial recognition and subsequent measurement
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
i) Financial Assets
Initial recognition and measurement
Financial assets are classified at initial recognition, and subsequently measured at amortised cost, fair value through other comprehensive income, or fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial assetâs contractual cash flow characteristics and the Company''s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient, the Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. As the Company''s rent and other trade receivables do not contain a significant financing component or for which the Company has applied the practical expedient, they are measured at the transaction price determined under Ind AS 115.
In order for a financial asset to be classified and measured at amortised cost or fair value through other comprehensive income (OCI), it needs to give rise to cash flows that are ''solely payments of principal and interest (SPPI)'' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an
instrument level. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.
The Companyâs business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows, while financial assets classified and measured at fair value through other comprehensive income are held within a business model with the objective of both holding to collect contractual cash flows and selling. Financial assets which are not held within the aforementioned business models are classified and measured at fair value through profit or loss.
Subsequent measurement
Financial assets measured at amortised cost
The Company measures financial assets at amortised cost if both of the following conditions are met:
⢠The financial asset is held within a business model with the objective 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.
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The Companyâs financial assets at amortised cost includes trade receivables, loans to related parties, security deposit and financial assets included in other receivables.
Financial assets designated at fair value through OCI (equity investments)
Upon initial recognition, the Company can elect to classify irrevocably its equity investments as equity instruments designated at fair value
through OCI when they meet the definition of equity under Ind AS 32 Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument-byinstrument basis.
Gains and losses on these financial assets are never recycled in profit or loss. Dividends are recognised as other income in profit or loss when the right of payment has been established, it is probable that the economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably, except when the Company benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in other comprehensive income. Equity investments designated at fair value through other comprehensive income are not subject to impairment assessment.
Financial assets measured at fair value through profit or loss (FVTPL)
Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortised cost or at fair value through OCI, as described above, debt instruments may be designated at fair value through profit or loss on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.
Financial assets at fair value through profit or loss are carried in the financial statement at fair value with net changes in fair value recognised in profit or loss.
This category includes equity investments which the Company had not irrevocably elected to classify at fair value through other comprehensive income. Dividends on equity investments classified as financial assets at fair value profit or loss are also recognised as other income in profit or loss when the right of payment has been established, it is probable that the economic benefits associated
with the dividend will flow to the Company and the amount of the dividend can be measured reliably.
Derecognition
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 Companyâs statement of financial position) when:
⢠The rights to receive cash flows from the asset have expired
Or
⢠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-throughâ 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.
General approach
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
At each reporting date, the Company assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information that is available without undue cost or effort, including historical and forward looking information.
Simplified approach
For trade receivables and contract assets, that do not contain a significant financing component, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date (i.e., a loss allowance for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default). The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forwardlooking factors specific to the debtors and the economic environment.
The Company recognises a financial liability when it first becomes a party to the contractual rights and obligations in the contract. All financial liabilities are initially recognised at fair value, minus (in the case of a financial liability that is not at FVTPL) transaction costs that are directly attributable to issuing the financial liability. Financial liabilities are measured at amortised cost, using the effective interest method unless the Company opted to measure a liability at FVTPL. A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. Financial liabilities included in trade and other payables, borrowings and other financial liabilities. 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 effective interest rate. The effective interest rate amortisation is included in finance costs in profit or loss.
Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss.
iii) Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
iv) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the statement of
financial position 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 realise the assets and settle the liabilities simultaneously.
(i) Short-term employee benefits
Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus and ex-gratia. The undiscounted amount of shortterm employee benefits to be paid in exchange for employee services is recognised as an expense as the related service is rendered by employees.
(ii) Long-term employment benefits
(A) Defined contribution plan
The Companyâs contribution to provident fund and employee state insurance scheme are considered as defined contribution plan and are recognised as an expense in the Statement of Profit and Loss based on the amount of contribution required to be made as and when services are rendered by the employees. The Company has no further obligations under these plans beyond its monthly contributions.
(B) Defined benefit plan
The Companyâs gratuity benefit scheme is a defined benefit plan and it is funded. The Companyâs net obligation in respect of gratuity benefit scheme 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, and the fair value of any plan assets is deducted.
The present value of the obligation under such defined benefit plan is determined based on actuarial valuation at the balance sheet date by an independent actuary using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures. The obligation is measured at the present value of the estimated future cash flows. The discount
rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date. Actuarial gains and losses are recognised in the Other comprehensive income.
(C) Compensated absences
Compensated absences which are not expected to occur within twelve months after the end of the year in which the employee renders the related services are recognised as a liability at the present value of the other long-term employment benefits which is determined at each balance sheet date based on an actuarial valuation by an independent actuary using the Projected Unit Credit Method. Actuarial gains and losses are recognised in the Other comprehensive income.
(iii) Share Based Payments Equity-settled transactions
Equity-settled share-based payments to employees are measured by reference to the fair value of the equity instruments at the grant date. The fair value determined at the grant date of the equitysettled share-based payments, is charged to statement of profit and loss on a systematic basis over the vesting period of the option, based on the Companyâs estimate of equity instruments that will eventually vest, with a corresponding increase in other equity. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in the Statement of Profit and Loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to share based payment reserve.
Income tax expenses comprises of current tax expenses and deferred tax charge/credit.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to 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 income tax relating to items recognised directly in other comprehensive income or equity is recognised in other comprehensive income or in equity and not in the statement of profit or loss. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
(i) When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss and does not give rise to equal taxable and deductible temporary differences;
(ii) In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:
(i) When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss and does not give rise to equal taxable and deductible temporary differences;
(ii) In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
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 deferred tax liabilities are offset if and only if the Company has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
4.15 Cash and Cash Equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks, 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.
The Company recognises a liability to make cash distributions to equity holders when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
Inventories are carried at the lower of the cost and net realisable value after providing for obsolescence and other losses where considered necessary. Cost of Inventories comprises all cost of purchase and other cost incurred in bringing inventories to their present location and condition. Cost is determined on first-infirst-out basis.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
4.18 Provisions and contingenciesProvisions: A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of time value of money is material).
Contingent Liability: A contingent liability is
(a) a possible obligation arising from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity or
(b) a present obligation that arises from past events but is not recognised because;
- '' it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or
- the amount of the obligation cannot be measured with sufficient reliability.
The Company does not recognise a contingent liability but discloses the same as per the requirements of Ind AS 37.
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
4.20 Segment reportingThe operating segments have been identified based on the conditions specified in paragraph 5 to Ind AS 108, i.e. an operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Companyâs Chief Operating Decision Maker ("CODM") to make decisions for which discrete financial information is available that is evaluated regularly by the CODM, in deciding how to allocate resources and assessing performance.
5. RECENT ACCOUNTING PRONOUNCEMENTS Standard issued that are not yet effective:The Company has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.
1. Ind AS 117 Insurance Contracts - Ind AS 117Insurance Contracts is a comprehensive new accounting standard for insurance contracts covering recognition and measurement as well as presentation and disclosure requirements for insurance arrangements. Ind AS 117 replaces Ind AS 104 Insurance Contracts. Ind AS 117 applies to all types of insurance contracts and reinsurance contracts regardless of the type of entities that issues them as well as to certain guarantees and financial instruments with discretionary participation features; a few scope exceptions will apply. Ind AS 117 is based on a general model, supplemented by:
⢠A specific adaptation for contracts with direct participation features (the variable fee approach)
⢠A simplified approach (the premium allocation approach) mainly for short-duration contracts
The application of Ind AS 117 would not have any material impact on the Companyâs Standalone financial statements as the Company has not entered any contracts in the nature of insurance contracts covered under Ind AS 117.
2. Amendment to Ind AS 116 Leases - Lease Liability in a Sale and Leaseback - The amendment specifies the requirements that a seller-lessee
uses in measuring the lease liability arising in a sale and leaseback transaction, to ensure the seller-lessee does not recognise any amount of the gain or loss that relates to the right of use it retains.
The amendment is effective for annual reporting periods beginning on or after 1st April, 2024 and must be applied retrospectively to sale and leaseback transactions entered into after the date of initial application of Ind AS 116. The amendment would not have a material impact on the Company''s standalone financial statements.
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