Accounting Policies of Naksh Precious Metals Ltd. Company

Mar 31, 2024

Corporate Information

NAKSH PRECIOUS METALS LIMITED (Formerly known as VAKSONS AUTOMOBILES
LIMITED] (the "holding Company”] was incorporated in India under the Companies
Act. The Company got Certificate of Incorporation on 20 February 2003 and is engaged
primarily in the business of dealership of Automobiles and trading of spare parts. The
company is listed on Bombay Stock Exchange in India.

The Holding Company and its subsidiaries (jointly referred as the "group"] considered
in consolidated financial statements are:

The company disposed of its investment in Vaksons Metaplast Private Limited on March 31, 2024.

Consequently, as on date, the company no longer has any subsidiaries. Therefore, it is not required to prepare
consolidated financial results for the year ended March 31, 2024.

2. Basis of Preparation

The financial statements of the company have been prepared in accordance with the
Indian Accounting Standards (IND - AS] as per Companies (Indian Accounting
Standards] Rules, 2015 as amended from time to time and notified under section 133
of the Companies Act, 2013. The financial statements have been prepared on a going
concern basis. The Company uses accrual basis of accounting except in case of
significant uncertainties.

2.1

a. IND AS - 1 Presentation of Financial Statement: -

The Company presents its Balance Sheet in order of liquidity.

The Company generally reports financial assets and financial liabilities on a
gross basis in the Balance Sheet. They are offset and reported net only when
Ind AS specifically permits the same or it has an unconditional legally
enforceable right to offset the recognized amounts without being contingent on
a future event. Similarly, the Company offsets incomes and expenses and
reports the same on a net basis when permitted by Ind AS specifically unless
they are material in nature.

Critical accounting estimates and judgments

The preparation of the Company''s financial statements requires Management
to make use of estimates and judgments. In view of the inherent uncertainties
and a level of subjectivity involved in measurement of items, it is possible that
the outcomes in the subsequent financial years could differ from those on
which the Management''s estimates are based.

b. IND AS - 10 Events After the Reporting Period: -

Effects of, events occurred after Reporting Period and having material effect on
financial statements are reflected in the accounts at appropriate places.

c. IND AS - 8 Accounting Policies, Changes in Accounting Estimates & Errors: -

Material items of prior period, non-recurring and extra ordinary items are
shown separately, If any.

d. IND AS - 115 Revenue from contract with customer:-
Interest income

The Company recognizes interest income using Effective Interest Rate (EIR) on
all financial assets subsequently measured at amortized cost or fair value
through other comprehensive income (FVOCI). EIR is calculated by considering
all costs and incomes attributable to acquisition of a financial asset or
assumption of a financial liability and it represents a rate that exactly discounts
estimated future cash payments/receipts through the expected life of the
financial asset/financial liability to the gross carrying amount of a financial
asset or to the amortized cost of a financial liability.

The Company recognizes interest income by applying the EIR to the gross
carrying amount of financial assets other than credit-impaired assets. The
Company recognizes interest income on the amortized cost net of impairment
loss of the financial asset at EIR. If the financial asset is no longer credit-
impaired the Company reverts to calculating interest income on a gross basis.

Delayed payment interest (penal interest) levied on customers for delay in
repayments/nonpayment of contractual cash flows is recognized on realization.

Interest on financial assets subsequently measured at fair value through profit
or loss (FVTPL) is recognized at the contractual rate of interest.

Other revenue from operations

The Company recognizes revenue from contracts with customers (other than
financial assets to which Ind AS 109 ''Financial Instruments’ is applicable) based
on a comprehensive assessment model as set out in Ind AS 115 ''Revenue from
contracts with customers. The Company identifies contract(s) with a customer
and its performance obligations under the contract, determines the transaction
price and its allocation to the performance obligations in the contract and
recognizes revenue only on satisfactory completion of performance obligations.
Revenue is measured at fair value of the consideration received or receivable.

Taxes

Incomes are recognized net of the Goods and Services Tax/Service Tax,
wherever applicable.

Expenditures
Finance costs

Borrowing costs on financial liabilities are recognised using the EIR
Fees and commission expenses

Fees and commission expenses which are not directly linked to the sourcing of
financial assets, such as commission/incentive incurred on value added
services and products distribution, recovery charges and fees payable for
management of portfolio etc., are recognised in the Statement of Profit and Loss
on an accrual basis.

Taxes

Expenses are recognised net of the Goods and Services Tax/Service Tax, except
where credit for the input tax is not statutorily permitted.

e. IND AS - 109 Financial Instruments: -

A) Financial Assets

I. Initial recognition and measurement

All financial assets are recognised initially at fair value when the
parties become party to the contractual provisions of the financial
asset. In case of financial assets which are not recorded at fair value
through profit or loss, transaction costs that are directly attributable
to the acquisition or issue of the financial assets, are adjusted to the
fair value on initial recognition.

II. Subsequent Measurement

The Company classifies its financial assets into various measurement
categories. The classification depends on the contractual terms of the
financial assets'' cash flows and the Company''s business model for
managing financial assets.

a) Financial Assets measured at amortised cost

A financial asset is measured at amortised Cost if it is held within
a business model whose objective is to hold the asset in order to
collect contractual cash flows and the contractual terms of the
Financial Asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount
outstanding.

b) Financial Assets measured at fair value through other
comprehensive income (FVOCI)

A financial asset is measured at FVOCI if it is held within a
business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets and contractual
terms of financial asset give rise on specified dates to cash flows

that are solely payments of principal and interest on the principal
amount outstanding.

c) Financial Assets measured at fair value through profit or loss
(FVTPL)

A financial asset which is not classified in any of the above
categories are measured at FVTPL.

B) Financial liabilities

a. Initial recognition and measurement

All financial liabilities are recognized initially at fair value and, in the
case of borrowings and payables, net of directly attributable
transaction costs. The company''s financial liabilities include trade and
other payables, loans and borrowings including bank overdrafts

b. Subsequent Measurement

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

C) Derecognition of Financial assets and Financial liabilities

a) Financial Assets

The Company derecognizes a financial asset when the contractual cash
flows from the asset expire or it transfers its rights to receive
contractual cash flows from the financial asset in a transaction in which
substantially all the risks and rewards of ownership are transferred. Any
interest in transferred financial assets that is created or retained by the
Company is recognized as a separate asset or liability.

b) Financial Liability

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

D) Offsetting

Financial assets and financial liabilities are generally reported gross
in the balance sheet. Financial assets and liabilities are offset and the net
amount is presented in the balance sheet when the Company has a legal

right to offset the amounts and intends to settle on a net basis or to realise
the asset and settle the liability simultaneously in all the following
circumstances:

a] The Normal Course of business

b] The Event of Default

c] The Event of insolvency or bankruptcy of the company and/or its
counterparties

E) Impairment of Financial assets

In accordance with Ind AS 109, the Company uses ''Expected Credit Loss’
model (ECL], for evaluating impairment of financial assets other than those
measured at Fair value through profit and loss.

1) Overview of the Expected Credit Loss (ECL)

Expected Credit Loss, at each reporting date, is measured through a loss
allowance for a financial asset:

- At an amount equal to the lifetime expected credit losses if the credit
risk on that financial instrument has increased significantly since
initial recognition.

- At an amount equal to 12 month expected credit losses if the credit
risk on that financial instrument has not increased significantly since
initial recognition.

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

12-month expected credit losses means the portion of Lifetime ECL that
represent the ECLs that result from default events on financial assets that
are possible within the 12 months after the reporting date.

The Company performs an assessment, at the end of each reporting period,
of whether a financial assets credit risk has increased significantly since
initial recognition. When making the assessment, the change in the risk of a
default occurring over the expected life of the financial instrument is used
instead of the change in the amount of expected credit losses

Based on the above process, the company categorizes its loans into three
stages as described below:

For Non - Impaired financial assets

• Stage 1 is comprised of all non-impaired financial assets which have
not experienced a significant increase in credit risk (SICR) since
initial recognition. A 12- Month ECL provision is made for stage 1
financial assets. In assessing whether credit risk has increased
significantly, the company compares the risk of a default occurring on
the financial asset as at the reporting date with the risk of a default
occurring on the financial asset as at the date of initial recognition.

• Stage 2 is comprised of all non-impaired financial assets which have
experienced a significant increase in credit risk since initial
recognition. The company recognises lifetime ECL for stage 2
financial assets. In subsequent reporting periods, if the credit risk of
the financial instrument improves such that there is no longer a
significant increase in credit risk since initial recognition, then
entities shall revert to recognizing 12 months ECL Provision.

For impaired financial assets:

Financial assets are classified as stage 3 when there is objective evidence
of impairment as a result of one or more loss events that have occurred
after initial recognition with a negative impact on the estimated future
cash flow of a loan or a portfolio of loans. The company recognizes
lifetime ECL for impaired financial assets.

2) Estimation of Expected Credit Loss

The mechanics of the ECL calculations are outlined below and the key
elements are, as follows:

Probability of Default (PD) -

The Probability of default is an estimate of the likelihood of default over a
given time horizon.

The Company uses historical information where available to determine PD.
Considering the different products and schemes, the Company has bifurcated
its loan portfolio into various pools. For certain pools where historical
information is available, the PD is calculated considering fresh slippage of
past years. For those pools where historical information is not available, the
PD/default rates as stated by external reporting agencies is considered.

Exposure at Default (EAD) -

The Exposure at default is an estimate of the exposure at a future default
date, considering expected changes in the exposure after the reporting date,
including repayments of principal and interest, whether scheduled by
contract or otherwise, expected drawdowns on committed facilities, and
accrued interest from missed payments.

Loss Given Default (LGD) -

The Loss given default is an estimate of the loss arising in the case where a
default occurs at a given time. It is based on the difference between the
contractual cash flows due and those that the lender would expect to receive,
including from the realization of any collateral.

f. IND AS - 16 Property, Plant and Equipment: -

Property, plant and equipment are carried at historical cost of acquisition less
accumulated depreciation and impairment losses, consistent with the criteria
specified in Ind AS 16 ''Property, Plant and Equipment’.

Depreciation on property, plant and equipment

a] Depreciation is provided on a pro-rata basis for all tangible assets on straight
line method over the useful life of assets, except buildings which is
determined on written down value method.

b] Useful lives of assets are determined by the Management by an internal
technical assessment except where such assessment suggests a life
significantly different from those prescribed by Schedule II - Part C of the
Companies Act, 2013 where the useful life is as assessed and certified by a
technical expert.

c] Depreciation on leasehold improvements is provided on straight line method
over the primary period of lease of premises or 5 years whichever is less.

d] Depreciation on addition to assets and assets sold during the year is being
provided for on a pro rata basis with reference to the month in which such
asset is added or sold as the case may be.

e] Assets having unit value up to Rs. 5,000 is depreciated fully in the financial
year of purchase of asset.

f] An item of property, plant and equipment and 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 arising on
derecognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset] is included under
other income in the Statement of Profit and Loss when the asset is
derecognised.

g] The residual values, useful lives and methods of depreciation of property,
plant and equipment are reviewed at each financial year end and adjusted
prospectively, if appropriate.

g. IND AS 21 - The effects of changes in foreign exchange rates: -

The Company''s financial statements are presented in Indian Rupee, which is
also the Company''s functional currency

Initial recognition

Foreign currency transactions are recorded in the reporting currency, by
applying to the foreign currency amount the exchange rate between the
reporting currency and the foreign currency at the date of the transaction.

Conversion

Foreign currency monetary items are re-translated using the exchange rate
prevailing at the reporting date. Nonmonetary items, which are measured in
terms of historical cost denominated in a foreign currency, are reported using
the exchange rate at the date of the transaction.

Exchange differences

All exchange differences are accounted in the Statement of Profit and Loss.

Transactions denominated in foreign currencies are normally recorded at the
exchange rate prevailing at the time of the transactions.

Any income or expenses on account of exchange difference either on
settlement or on Balance sheet Valuation is recognized in the profit and loss
account except in cases where they relate to acquisition of fixed assets in which
case they are adjusted to the carrying cost of such assets.

h. IND AS - 24 Related Party Disclosure: -

The Disclosures of Transaction with the related parties as defined in the related
parties as defined in the Accounting Standard are given in notes to account.

i. IND AS - 33 Earnings Per Share: -

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

Partly paid equity shares are treated as a fraction of equity share to the extent
that they are entitled to participate in dividends relative to a fully paid equity
share during the reporting period.

The Weighted average number of equity shares outstanding during the period is
adjusted for the events such as bonus issue, right issue that have changed the
number of equity shares.

j. IND AS - 12 Income Taxes: -
Current Tax: -

Current tax assets and liabilities are measured at the amount expected to be
recovered from or paid to the taxation authorities, in accordance with the

Income Tax Act, 1961 and the Income Computation and Disclosure Standards
(ICDS) prescribed therein. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted, at the reporting
date.

Current tax relating to items recognised outside profit or loss is recognised in
correlation to the underlying transaction either in OCI or directly in other equity.
Management periodically evaluates positions taken in the tax returns with
respect to situations in which applicable tax regulations are subject to
interpretation and establishes provisions where appropriate.

Deferred Taxes: -

Deferred tax is provided using the Balance Sheet approach 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 and
deferred tax assets are recognized for deductible temporary differences to the
extent that it is probable that taxable profits will be available against which the
deductible temporary differences can be utilized

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.
Unrecognized deferred tax assets, if any, are reassessed at each reporting date
and are recognized 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 relating to items recognised outside profit or loss is recognised
either in OCI or in other equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable
right exists to set off current tax assets against current tax liabilities and the
deferred taxes relate to the same taxable entity and the same taxation authority.