Accounting Policies of Mercantile Ventures Ltd. Company

Mar 31, 2018

SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1.1 Company Overview

Mercantile Ventures Limited ( MVL) is a public limited company incorporated and domiciled in India and has its registered office at Chennai, Tamilnadu India. The Company has its primary listing on the BSE Limited in India.

1.2 Basis of Preparation of Financial Statements

These financial statements are prepared in accordance with Indian Accounting Standard (Ind AS), under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values, the provisions of the Companies Act , 2013 (‘the Act’) (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued there after.

Effective April 1, 2018, the Company has adopted all the Ind AS standards and the adoption was carried out in accordance with Ind AS 101 First time adoption of Indian Accounting Standards, with April 1, 2016 as the transition date. The transition was carried out from Indian Accounting principles generally accepted in India as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAp), which was the previous GAAR Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

The year end figures are taken from the source and rounded to the nearest digits.

1.3 Use of Estimates

The preparation of the financial statements in conformity with Ind AS requires the management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.

1.4 Cash Flow Statement

Cash Flows are reported using the indirect method whereby profit/loss before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the company are segregated based on the available information.

1.5 Critical Accounting Estimates

A) Revenue recognition

Revenue is recognised on accrual method on rendering of services when the signficiant terms of the arrangement are enforceable, services have been delivered and collectability is reasonably assured.

a. Revenue recognition from rent is recognised based on the agreement entered with the customers

b. Reimbursement of expenses in respect of Repairs & Maintenance, Electricity Charges & Fuel charges were accounted on accrual basis.

c. Interest income is recognised based on accrual basis

d. other Income were accounted on accrual basis

e. Dividend income shall be recognised when the share holder’s right to receive payments is established. In respect of the investmnet in preference Shares, dividend income is recognised based on the right to receive based on contractual obligations.

B) Expenditure

Expenses are accounted on accrual basis and provisions are made for all known losses and liabilities

C) Property, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset’s expected useful life and the expected residual value at the end of its life on straight line method. The useful lives and residual values of Company’s assets are determined by the management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.

1.6 Property, Plant and Equipment

The land and properties of the company are stated at fair value and depreciation provided on straight line method over the estimated useful lives of the assets. property, plant and equipment are stated at cost, less accumulated depreciation and impairment, if any. Costs directly attributable to acquisition are capitalized until the property, plant and equipment are ready for use, as intended by the management. The Company depreciates property, plant and equipment over their estimated useful lives using the Straight line method.

Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial year end. Amounts paid towards the acquisition of property, plant and equipment outstanding at each Balance Sheet date and cost of property, plant, and equipment not ready for intended use before such date are disclosed under capital work-in-progress. Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. Repairs and maintenance costs are recognized in the Statement of Profit and Loss when incurred. The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset and the resultant gains or losses are recognized in the Statement of Profit and Loss. Assets to be disposed off are reported at the lower of the carrying value or the fair value less cost to sell.

1.7 Impairment

property, plant and equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the CGU (Cash Generating Unit) to which the asset belongs.

If such assets are considered to be impaired, the impairment to be recognized in the Statement of Profit and Loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is adjusted to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated depreciation) had no impairment loss been recognized for the asset in prior years.

1.8 Financial Instruments

1 Initial recognition

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

2. (i) Financial assets carried at at amortized 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.

(ii) They are presented as current assets except for those maturing later than 12 months after the reporting date which are presented as non-current assets. Financial assets are measured initally at fair value plus transaction costs and subsequently carried at amortized cost using the effective interest method less any impairmnet loss.

(iii) Financial assets at amortised cost are represented by trade receivables, security depsoits, cash and cash equivalents, employee and other advances and eligible current and non-current assets.

(iv) Cash and cash equivalents comprise cash on hand and in banks.

3. Financial assets at fair value through other comprehensive income

A financial asset is subsequently measured at fair value through other comprehensive income 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. The Company has made an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model. Further, in cases where the Company has made an irrevocable election based on its business model, for its investments which are classified as equity instruments, the subsequent changes in fair value are recognized in other comprehensive income.

4. Financial assets at fair value through profit or loss:

A financial asset which is not classified in any of the above categories are subsequently fair valued through profit or loss.

5. Financial liabilities:

Financial liabilities are subsequently carried at amortized cost using the effective interest method, except for contingent consideration recognized in a business combination which is subsequently measured at fair value through profit or loss. For trade and other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.

1.9 Employee benefit

Gratuity: In accordance with the Payment of Gratuity Act, 1972, the company provides payment to eligible employees, at retirement or termination of employment based on the last drawn salary and years of employment with the company. Compensated absences: the employees of the company are entitled to compensated absences. the employees can carry forward a portion of the unutilized accumulated compensated absences and utilize it in future periods or receive cash at the end of each financial year.

1.10 Foreign Currency Transactions

There are no such transactions in the current financial year.

1.11 Segment Reporting

the main business of the company is that of lease of immovable properties which is the only business segment for the current period.

1.12. Income tax

Income tax comprises current and deferred tax. Income tax expense is recognized in the statement of profit and loss except to the extent it relates to items directly recognized in equity or in other comprehensive income.

(a) Current income tax: Current income tax for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the taxable income for the period. The tax rates and tax laws used to compute the current tax amount are those that are enacted or substantively enacted by the reporting date and applicable for the period. The company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis or to realize the asset and liability simulatneously.

(b) Deferred income tax: Deferred income tax is recognized using the balance sheet approach. Deferred income tax assets and liabilities are recognized for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount in financial statements, except when the deferred income tax arises from the intial recognition of goodwill, or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profits or loss at the time of the transaction.

Deferred income tax asset 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 utilized. Deferred income tax liabilities are recognized for all taxable temporay differences.

The carrying amount of deferred income 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 income tax asset to be utilized.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

1.13. Rounding of amounts

All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakh as per the requirement of Schedule III, unless otherwise stated.

1.14. First-time adoption of Indian Accounting Standard (Ind AS)

The company’s financial statements for the year ended 31 March 2018 are the first financial statements prepared in accordance with Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015. The adoption of Ind AS was carried out in accordance with Ind AS 101, using 1 April 2016 as the transition date. Ind AS 101 requires that all Ind AS standards and interpretations that are effective for the first Ind AS Financial Statements for the year ended 31 March 2018, be applied consistently and retrospectively for all fiscal years presented.

All applicable Ind AS have been applied consistently and restropectively wherever required. The resulting difference between the carrying amounts of the assets and liabilities in the financial statements under both Ind AS and Indian GAAP as of the transition date have been recognized directly in other equity at the transition date.

In preparing these financial statements, the company has availed itself of certain exemptions and exceptions in accordance with Ind AS and not required by previous GAAP.

Exceptions from full retrospective application:

Upon an assessment of the estimates made under previous GAAp, the management is of the opinion that there was no need to revise such estimates under Ind AS, except where estimates were required by Ind AS and not required by previous GAAp.

1.15. a) Reconciliation:

The following reconciliations provide a quantification of the effect of significant differences arising from the transition from the indian GAAp in accordance with IND AS 101

- Equity as at 01 April 2016

- Equity as at 31 March 2017

- Total comprehensive income for the year ended 31 March 2017 and Explanation of material adjustments to cash flow statements.

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Mar 31, 2017

1 Basis of Preparation of Financial Statements

The Financial Statements have been prepared on accrual basis under the historical cost convention and applicable accounting standards.

2 Use of Estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. 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 the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.

3 Cash and cash equivalents(for Cash Flow Statement)

Cash on hand comprises Cash on hand and balance in Current account with Bank and other liquid funds.

4 Cash Flow Statement

Cash Flows are reported using the indirect method whereby profit/loss before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The Cash Flows from operating investing and financing activities of the company are segregated based on the available information.

5 Fixed Assets

The Fixed Assets are stated at cost less accumulated Depreciation and impairment losses. Cost comprises the purchase price and any attributable cost of bringing the assets to its working condition for its intended use.

6 Depreciation

a) Depreciation is provided on the basis of straight Line Method adopting the rates and the manner as provided in Schedule II of the Companies Act, 2013 as amended.

b) Depreciation for additions to/deductions from Fixed Assets is calculated pro rata from/to the month of additions/ deletions

c) Fixed Assets individually costing Rs.5000 or less are depreciated in full in the year of additions.”

7 Investments (Long Term)

a) Investments in shares and units are stated at cost, net of permanent diminution in value wherever necessary.

b) Dividends are accounted for when the right to receive the payment is established.

8 Impairment of assets

The company recognizes impairment of assets other than the assets which are specially excluded under the Accounting Standard 28 on impairment assets issued by the Institute of Chartered Accountants of India after comparing the assets recoverable value with its carrying cost in the books. In case carrying amounts exceeds recoverable value impairment losses are provided for.

9 Revenue recognition

a) Revenue is recognized on accrual basis and expenses are accounted on their accrual with necessary provisions for all known liabilities and losses.

b) Dividend income is recognized when the company''s right to receive the dividend is established by the reporting date.

c) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate.

10 Segment reporting

The main business of the company is that of lease of immovable properties which is the only business segment for the current period.

11 Provision for current tax and deferred tax

Provision for current tax is made after taking into consideration admissible benefits under the provisions of the Income Tax 1961. Deferred taxes are recognized when considered prudent for all timing differences between taxable and accounting income.

12 Retirement Benefits

The company has presently no post-employment and other long term benefits.

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Mar 31, 2016

1. Basis of Preparation of Financial Statements

The Financial Statements have been prepared on accrual basis under the historical cost convention and applicable Accounting standards.

2. Use of Estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. 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 the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.

3. Cash and cash equivalents (for Cash Flow Statement)

Cash on hand comprises Cash on hand and balance in Current account with Bank and other liquid funds.

4. Cash Flow Statement

Cash Flows are reported using the indirect method whereby profit/loss before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The Cash Flows from operating investing and financing activities of the company are segregated based on the available information.

5. Fixed Assets

The Fixed Assets are stated at cost less accumulated Depreciation and impairment losses. Cost comprises the purchase price and any attributable cost of bringing the assets to its working condition for its intended use.

6. Depreciation

a) Depreciation is provided on the basis of straight Line Method adopting the rates and the manner as provided in Schedule II of the of the Companies Act, 2013 as amended.

b) Depreciation for additions to/deductions from Fixed Assets is calculated pro rata from/to the month of additions/ deletions.

c) Fixed Assets individually costing Rs.5000 or less are depreciated in full in the year of additions.”

7. Investments (Long Term)

a) Investments in shares and units are stated at cost, net of permanent diminution in value wherever necessary.

b) Dividends are accounted for when the right to receive the payment is established.

8. Impairment of assets

The company recognizes impairment of assets other than the assets which are specially excluded under the Accounting Standard 28 on impairment assets issued by the Institute of Chartered Accountants of India after comparing the assets recoverable value with its carrying cost in the books. In case carrying amounts exceeds recoverable value impairment losses are provided for.

9. Revenue recognition

a) Revenue is recognized on accrual basis and expenses are accounted on their accrual with necessary provisions for all known liabilities and losses.

b) Dividend income is recognized when the company''s right to receive the dividend is established by the reporting date.

c) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate.”

10. Segment reporting

The main business of the company is that of lease of immovable properties which is the only business segment for the current period.

11. Provision for current tax and deferred tax

Provision for current tax is made after taking into consideration admissible benefits under the provisions of the Income Tax 1961. Deferred taxes are recognized when considered prudent for all timing differences between taxable and accounting income.

12. Retirement Benefits

The company has recently commenced the operations and presently there are no post-employment and other long term benefits.

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Mar 31, 2014

1 Basis of Preparation of Financial Statements

The Financial Statements have been prepared on accrual basis under the historical cost convention and applicable Accounting standards.

2 Use of Estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilites (including contingent liabilities) and the reported income and expenses during the year. 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 the differences between the actual results and the estimates are recognised in the years in which the results are known / materialise.

3 Cash and cash equivalents (for Cash Flow Statement)

Cash on hand comprises Cash on hand and balance in Current account with Bank and other liquid funds.

4 Cash Flow Statement

Cash Flows are reported using the indirect method whereby profit/loss before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The Cash Flows from operating investing and financing activities of the company are segregated based on the available information.

5 Fixed Assets

The Fixed Assets are stated at cost less accumulated Depreciation and impairment losses. Cost comprises the purchase price and any attributable cost of bringing the assets to its working condition for its intended use.

6 Depreciation

a) Depreciation is provided on Straight Line Method at the rates specified under Schedule XIV of the Companies Act, 1956.

b) Depreciation on certain premises is provided on composite cost where it is not possible to segregate the land cost.

c) Depreciation for additions to/deductions from Fixed Assets is calculated pro rata from/to the month of additions/deletions.

d) Fixed Assets individually costing Rs.5000 or less are depreciated in full in the year of additions.

7 Investments (Long Term)

a) Investments in shares and units are stated at cost, net of permanent diminution in value wherever necessary.

b) Dividends are accounted for when the right to receive the payment is established.

8 Impairment of assets

The company recognizes impairment of assets other than the assets which are specially excluded under the Accounting Standard 28 on impairment assets issued by the Institute of Chartered Accountants of India after comparing the assets recoverable value with its carrying cost in the books. In case carrying amounts exceeds recoverable value impairment losses are provided for.

9 Revenue recognition

a) Revenue is recognized on accrual basis and expenses are accounted on their accrual with necessary provisions for all known liabilities and losses.

b) Dividend income is recognized when the company''s right to receive the dividend is established by the reporting date.

c) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate.

10 Segment reporting

The main business of the company is that of lease of immovable properties which is the only business segment for the current year.

11 Provision for current tax and deferred tax

Provision for current tax is made after taking into consideration admissible benefits under the provisions of the Income Tax 1961. Deferred taxes are recognized when considered prudent for all timing differences between taxable and accounting income.

12 Retirement Benefits

The company has just commenced the operations and presently there are no post-employment and other long term benefits.

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Mar 31, 2013

1 Basis of Preparation of Financial Statements

The Financial Statements relate to Mercantile Ventures Ltd. These Financial Statements have been prepared on accrual basis under the historical cost convention and applicable Accounting Standards.

2 Use of Estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilites (including contingent liabilities) and the reported income and expenses during the year. The Management belives that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

3 Cash and cash equivalents(for Cash Flow Statement)

Cash on hand comprises Cash on hand and balance in Current account with Bank and other liquid funds.

4 Cash Flow Statement

Cash Flows are reported using the indirect method whereby profit/loss before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The Cash Flows from operating, investing and financing activities of the company are segregated on the available information.

5 Fixed Assets

The Fixed Assets are stated at cost less accumulated Depreciation and impairment losses. Cost comprises the purchase price and any attributable cost of bringing the assets to its working condition for its intended use.

6 Depreciation

a) Depreciation is provided on straight Line Method at the rates specified under Schedule XIV of the Companies Act, 1956

b) Depreciation on certain premises is provided on composite cost where it is not possible to segregate the land cost

c) Depreciation for additions to/deductions from Fixed Assets is calculated pro rata from/to the month of additions/ deletions.

d) Fixed Assets individually costing Rs.5000 or less are depreciated in full in the year of additions.

7 Investments (Long Term)

a) Investments in shares and units are stated at cost, net of permanent diminution in value wherever necessary.

b) Dividends are accounted for when the right to receive the payment is established.

8 Impairment of assets

The company recognizes impairment of assets other than the assets which are specially excluded under the Accounting Standard 28 on impairment of Assets issued by the Institute of Chartered Accountants of India after comparing the assets recoverable value with its carrying cost in the books. In case carrying amounts exceed recoverable value, impairment losses are provided for.

9 Revenue recognition

a) Revenue is recognized on accrual basis and expenses are accounted on their accrual with necessary provisions for all known liabilities and losses.

b) Dividend income is recognized when the company''s right to receive the dividend is established by the reporting date.

c) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate.

10 Segment reporting

The main business of the company is that of lease of immovable properties which is the only business segment for the current period.

11 Provision for current tax and deferred tax

Provision for current tax is made after taking into consideration admissible benefits under the provisions of the Income Tax 1961. Deferred taxes are recognized when considered prudent for all timing differences between taxable and accounting income.

12 Retirement Benefits

The company has just commenced the operations and presently there are no post-employment and other long term benefits.