Accounting Policies of R K Swamy Ltd. Company

Mar 31, 2025

3. MATERIAL ACCOUNTING POLICY
INFORMATION

1 . Property. plant, and equipment including Capital
Work-in-progress

a. Recognition and measurement

The Company had applied for the one time transition
exemption of considering the carrying cost on the
transition date i.e. 1st April, 2020 as the deemed cost
under IND AS, regarded thereafter as historical cost.

Property, plant, and equipment is recognised when it
is probable that future economic benefit associated
with the asset will flow to the Company, and the cost of
the asset can be measured reliably.

Property, plant and equipment are measured at
original cost less accumulated depreciation and any
accumulated impairment losses. Capital Work-in¬
progress includes expenditure incurred till the assets
are put into intended use. Capital Work-in-Progress
are measured at cost less accumulated impairment
losses, if any.

The initial cost of property, plant and equipment
comprises:

i. its purchase price, including import duties and non¬
refundable purchase taxes, after deducting trade
discounts and rebates.

ii. any costs directly attributable to bringing the asset to
the location and condition necessary for it to be capable
of operating in the manner intended by the management.

Income and expenses related to the incidental
operations, not necessary to bring the item to the
location and condition necessary for it to be capable of
operating in the manner intended by the management,
are recognised in the Statement of Profit and Loss.

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

Any gain or loss on disposal of an item of property,
plant and equipment is recognised in the Statement of
Profit and Loss.

b. Subsequent expenditure

Subsequent expenditure is capitalised only if it is
probable that the future economic benefits associated
with the expenditure will flow to the Company.

c. Depreciation

The Company has followed the Straight Line method
for charging depreciation on all items of property,
plant, and equipment, at the rates specified in
Schedule II to the Act; these rates are considered
as the minimum rates. If management''s technical
estimate of the useful life of the property, plant and
equipment is different than that envisaged in Schedule
II to the Act, depreciation is provided at a rate based on
management''s estimate of the useful life. The useful

In respect of additions to/deductions from the assets,
the depreciation on such assets is calculated on a
pro rata basis from/upto the month of such addition/
deduction. Assets costing less than Rs. 5,000 are fully
depreciated in the year of purchase/acquisition.

Leasehold improvements are amortised over the
period of the lease.

The useful life for assets given on lease to subsidiaries
have been considered as 5 years.

The Company retains the residual value of assets @
5% of original cost.

The residual values and useful life of property, plant
and equipment are reviewed at each financial year
end and changes, if any, are accounted in the line with
revisions to accounting estimates.

2. Intangible-assets

a. Recognition and measurement

Intangible assets, including software, which is
acquired by the Company and have finite useful lives
are measured at cost less accumulated amortisation
and any accumulated impairment losses.

b. Subsequent expenditure

Subsequent expenditure is capitalised only if it is
probable that the future economic benefits associated
with the expenditure will flow to the Company.

c. Amortisation

Intangible assets are amortised over their estimated
useful life on straight line method. The amortisation
period followed for intangible assets are:

3. Financial Instruments

Financial assets and financial liabilities are recognised
in the Company''s Balance Sheet when the Company
becomes a party to the contractual provisions of the
instrument.

a. Financial Assets

i. Initial recognition and measurements:

The Company recognises a financial asset in
its Balance Sheet when it becomes party to the
contractual provisions of the instrument. All financial

assets are recognised initially at fair value, plus in
the case of financial assets not recorded at fair value
through profit or loss (FVTPL), transaction costs that
are attributable to the acquisition of the financial asset.

Where the fair value of the financial asset at initial
recognition is different from its transaction price, the
difference between the fair value and the transaction
price is recognised as a gain or loss in the Statement
of Profit and Loss at initial recognition if the fair value
is determined through a quoted market price in an
active market for an identical asset (i.e. level 1 input)
or through a valuation technique that uses data from
observable markets (i.e. level 2 input).

In case the fair value is not determined using a level
1 or level 2 input as mentioned above, the difference
between the fair value and transaction price is deferred
appropriately and recognised as a gain or loss in the
Statement of Profit and Loss only to the extent that
such gain or loss arises due to change in factor that
market participants take into account when pricing
the financial asset.

However, trade receivables that do not contain a
significant financing component are measured at
transaction price.

ii. Subsequent measurement:

For subsequent measurement, the Company classifies
a financial asset in accordance with the below criteria;

• The Company''s business model for managing the
financial asset and

• The contractual cash flow characteristics of the
financial asset.

Based on the above criteria, the Company classifies its
financial assets into the following categories:

a) Financial assets measured at amortised cost

b) Financial assets measured at fair value through
other comprehensive income (‘FVOCI'')

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

a) Financial assets measured at amortised cost:

A financial asset is measured at the amortised cost if
both the following conditions are met:

• The Company''s business model objective for
managing the financial asset is to hold financial
assets in order to collect contractual cash flows, and

• The contractual terms of the financial asset give
rise on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding.

This category applies to cash and cash equivalents,
other bank balances, trade receivables, loans and
other financial assets of the Company. Such financial
assets are subsequently measured at amortised cost
using the effective interest method.

Under the effective interest rate method, the future
cash receipts are discounted to the initial recognition
value using the effective interest rate. The cumulative
amortisation using the effective interest method of the

difference between the initial recognition amount and
the maturity amount is added to the initial recognition
value (net of principal/repayments, if any) of the
financial asset over the relevant period of the financial
asset to arrive at the amortised cost at each reporting
date. The corresponding effect of the amortisation
under effective interest method is recognised as
interest income over the relevant period of the financial
asset. The same is included under other income in the
Statement of Profit and Loss.

The amortised cost of financial asset is also adjusted
for loss of allowance, if any.

b) Financial asset measured at FVOCI:

A financial asset is measured at FVOCI if both of the
following conditions are met:

• The Company''s business model objective for
managing the financial asset is achieved both by
collecting contractual cash flows and selling the
financial asset, and

• The contractual terms of the financial asset give
rise on specified dates to cash flows that are solely
payment of principal and interest on the principal
amount outstanding.

This category applies to certain investments in debt
instruments. Such financial assets are subsequently
measured at fair value at each reporting date.
Fair value changes are recognised in the other
Comprehensive Income (‘OCI’). However, the Company
recognises interest income and impairment losses
and its reversals in the Statement of Profit and Loss.

On derecognition of such financial assets, cumulative
gain or loss previously recognised in OCI is reclassified
from equity to the Statement of Profit and Loss.
However, the Company may transfer such cumulative
gain or loss into retained earnings within equity.

c) Financial asset measured at FVTPL:

A financial asset is measured at FVTPL unless it is
measured at amortised cost or at FVOCI as explained
above. This is a residual category applied to all other
financial assets of the Company. Such financial assets
are subsequently measured at fair value at each
reporting date. Fair value changes are recognised in
the Statement of Profit and Loss.

d) Investment in subsidiaries:

Investment in subsidiaries are measured at cost less
impairment as per Ind AS 27 - ‘Separate Financial
Statements''. On disposal of the Investment, the
difference between the net disposal proceeds and
the carrying amount is charged or credited to the
Statement of Profit and Loss.

Impairment of investments:

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 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 Statement of Profit or Loss.

iii. Derecognition:

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

a) The contractual rights to cash flows from the
financial asset expires;

b) The Company transfers its contractual rights to
receive cash flows of the financial asset and has
substantially transferred all the risks and rewards
of ownership of the financial asset;

c) The Company retains the contractual rights to
receive cash flows but assumes a contractual
obligation to pay the cash flows without material
delay to one or more recipients thereby substantially
transferring all the risks and rewards of ownership
of the financial asset; or

d) The Company neither transfers nor retains
substantially all risk and rewards of ownerships and
does not retain control over the financial assets.

In cases where Company has neither transferred nor
retained substantially all of the risks and rewards
of the financial asset, but retains control of the
financial asset, the Company continues to recognise
such financial asset to the extent of its continuing
involvement in the financial asset. In that case, the
Company also recognises an associated liability.
The financial asset and the associated liability are
measured on a basis that reflects the rights and
obligations that the Company has retained.

On Derecognition of a financial asset, (except as
mentioned in b) above for financial assets measured
at FVOCI), the difference between the carrying amount
and the consideration received is recognised in the
Statement of Profit and Loss.

iv. Impairment of financial assets:

The Company applies expected credit losses (‘ECL'')
model for measurement and recognition of loss
allowance on the following:

a) Trade receivables and Contract assets

b) Financial assets measured at amortised cost (other
than Trade receivables and Contract assets)

c) Financial assets measured at fair value through
other comprehensive income (FVOCI)

In case of Trade receivables the Company follows a
simplified approach wherein an amount equal to lifetime
ECL is measured and recognised as loss allowance.

In case of other assets (listed as (b) and (c) above), the
Company determines if there has been a significant
increase in credit risk of the financial assets since
initial recognition, if the credit risk of such assets
has not increased significantly, an amount equal to

12-month ECL is measured and recognised as loss
allowance. However, if credit risk has increased
significantly, an amount equal to lifetime ECL is
measured as recognised as loss allowance.

Subsequently, if the credit quality of the financial asset
improves such that there is no longer a significant
increase in credit risk since initial recognition, the
Company reverts to recognizing impairment loss
allowance based on 12-month ECL.

ECL is the difference between all contractual cash
flows that are due to the Company in accordance with
the contract and all the cash flows that the Company
expects to receive (i.e. all cash shortfalls), discounted
at the original effective interest rate.

Lifetime ECL are the expected credit losses resulting
from all possible default events over the expected life
of a financial asset. 12-month ECL are a portion of the
lifetime ECL which result from default events that are
possible within 12- month from the reporting date.

ECL are measured in a manner that they reflect unbiased
and probability weighted amounts determined by a
range of outcome, taking into account the time value
of money and other reasonable information available
as a result of past events, current conditions and
forecasts of future economic conditions.

As a practical expedient, the Company uses a provision
matrix to measure lifetime ECL on its portfolio of trade
receivables. The provision matrix is prepared based on
historically observed default rates over the expected
life of trade receivables is adjusted for forward-looking
estimates. At each reporting date, the historically
observed default rates and changes in the forward¬
looking estimates are updated.

ECL allowance (or reversal) recognised during the
period is recognised as expense (or income) in the
Statement of Profit and Loss under the head ‘Other
expenses (or Other Income)''.

b. Financial Liabilities

i. Initial recognition and measurements:

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

Where the fair value of a financial liability at initial
recognition is different from its transaction price, the
difference between the fair value and the transaction
price is recognised as a gain or loss in the Statement
of Profit and Loss at initial recognition if the fair value
is determined through a quoted market price in an
active market for an identical asset (i.e. level 1 input)
or through valuation technique that uses data from
observable markets (i.e. level 2 input).

In case the fair value is not determined using a level
1 or level 2 input as mentioned above, the difference
between the fair value and transaction price is deferred
appropriately and recognised as a gain or loss in the
Statement of Profit and Loss only to the extent that

such gain or loss arises due to a change in factor that
market participants take into account when pricing
the financial liability.

ii. Subsequent measurement:

All financial liabilities of the Company are subsequently
measured at amortised cost using the effective
interest method.

Under the effective interest method, the future
cash payments are exactly discounted to the initial
recognition value using the effective interest rate. The
cumulative amortisation using the effective interest
method of the difference between the initial recognition
amount and the maturity amount is added to the initial
recognition value (net of principal repayments, if any)
of the financial liability over the relevant period of
the financial liability to arrive at the amortised cost
at each reporting date. The corresponding effect of
the amortization under effective interest method
is recognised as interest expense over the relevant
period of the financial liability. The same is included
under finance cost in the Statement of Profit and Loss.

iii. Derecognition:

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

4. Cash and cash equivalents

The Company considers all highly liquid investments,
which are readily convertible into known amounts of
cash as cash and cash equivalents. Cash and cash
equivalents in the Balance Sheet comprise of cash
on hand, bank balances which are unrestricted for
withdrawal and usage and short-term deposits with
an original maturity of three months or less, which are
subject to an insignificant risk of changes in value.

5. Dividend

The Company recognises a liability to make dividend
distributions to its 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.

6. Borrowing costs

Borrowing costs consist of interest and other costs
incurred in connection with the borrowing of funds.
Borrowing costs that are directly attributable to the
acquisition, construction or production of qualifying
assets, which are assets that necessarily takes a
substantial period of time to get ready for its intended
use are capitalised as part of the cost of that asset

till the date it is ready for its intended use or sale.
Interest income earned on the temporary investment
of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs
eligible for capitalization. Other borrowing costs are
recognised as an expense in the period in which they
are incurred. Finance costs are recorded using the
effective interest rate method.

---

Mar 31, 2024

3. MATERIAL ACCOUNTING POLICIES 1 . Property. plant, and equipment

a. Recognition and measurement

Property, plant, and equipment is recognised when it is probable that future economic benefit associated with the asset will flow to the Company, and the cost of the asset can be measured reliably.

Items of property, plant and equipment are measured at original cost less accumulated depreciation and any accumulated impairment losses.

The cost of an item of property, plant and equipment comprises:

i. its purchase price, including import duties and nonrefundable purchase taxes, after deducting trade discounts and rebates.

ii. any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by the management.

Income and expenses related to the incidental operations, not necessary to bring the item to the location and condition necessary for it to be capable of operating in the manner intended by the management, are recognised in the Statement of Profit and Loss.

If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment, and depreciated over their respective useful lives. Any gain or loss on disposal of an item of property, plant and equipment is recognised in the Statement of Profit and Loss.

b. Subsequent expenditure

Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

c. Depreciation

The Company has followed the Straight Line method for charging depreciation on all items of property, plant, and equipment, at the rates specified in Schedule II to the Act; these rates are considered as the minimum rates. If management''s technical estimate of the useful life of the property, plant and equipment is different than that envisaged in Schedule II to the Act, depreciation is provided at a rate based on management''s estimate of the useful life. The useful lives followed for various categories of property, plant and equipment are given below:

In respect of additions to/deductions from the assets, the depreciation on such assets is calculated on a pro rata basis from/upto the month of such addition/ deduction. Assets costing less than Rs. 5,000 are fully depreciated in the year of purchase/acquisition.

Leasehold improvements are amortised over the period of the lease.

2. Intangible-assets

a. Recognition and measurement

Intangible assets, including software, which is acquired by the Company and have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses.

b. Subsequent expenditure

Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

c. Amortisation

Intangible assets are amortised over their estimated useful life on straight line method. The amortisation period followed for intangible assets are:

3. Financial Instruments

Financial assets and financial liabilities are recognised in the Company''s Balance Sheet when the Company becomes a party to the contractual provisions of the instrument.

a. Financial Assets

i. Initial recognition and measurements:

The Company recognises a financial asset in its Balance Sheet when it becomes party to the contractual provisions of the instrument. All financial assets are recognised initially at fair value, plus in the case of financial assets not recorded at fair value through profit or loss (FVTPL), transaction costs that are attributable to the acquisition of the financial asset.

Where the fair value of the financial asset at initial recognition is different from its transaction price, the difference between the fair value and the transaction price is recognised as a gain or loss in the Statement of Profit and Loss at initial recognition if the fair value is determined through a quoted market price in an active market for an identical asset (i.e. level 1 input) or through a valuation technique that uses data from observable markets (i.e. level 2 input).

In case the fair value is not determined using a level 1 or level 2 input as mentioned above, the difference between the fair value and transaction price is deferred appropriately and recognised as a gain or loss in the Statement of Profit and Loss only to the extent that such gain or loss arises due to change in factor that market participants take into account when pricing the financial asset.

However, trade receivables that do not contain a significant financing component are measured at transaction price.

ii. Subsequent measurement:

For subsequent measurement, the Company classifies a financial asset in accordance with the below criteria;

• The Company''s business model for managing the financial asset and

• The contractual cash flow characteristics of the financial asset.

Based on the above criteria, the Company classifies its financial assets into the following categories:

a) Financial assets measured at amortised cost

b) Financial assets measured at fair value through other comprehensive income (‘FVOCI'')

c) Financial assets measured at fair value through profit or loss (‘FVTPL'')

a) Financial assets measured at amortised cost:

A financial asset is measured at the amortised cost if both the following conditions are met:

• The Company''s business model objective for managing the financial asset is to hold financial assets in order to collect contractual cash flows, and

• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

This category applies to cash and cash equivalents, other bank balances, trade receivables, loans and other financial assets of the Company. Such financial assets are subsequently measured at amortised cost using the effective interest method.

Under the effective interest rate method, the future cash receipts are discounted to the initial recognition value using the effective interest rate. The cumulative amortisation using the effective interest method of the difference between the initial recognition amount and the maturity amount is added to the initial recognition value (net of principal/repayments, if any) of the financial asset over the relevant period of the financial asset to arrive at the amortised cost at each reporting date. The corresponding effect of the amortisation under effective interest method is recognised as interest income over the relevant period of the financial asset. The same is included under other income in the Statement of Profit and Loss.

The amortised cost of financial asset is also adjusted for loss of allowance, if any.

b) Financial asset measured at FVOCI:

A financial asset is measured at FVOCI if both of the following conditions are met:

• The Company''s business model objective for managing the financial asset is achieved both by collecting contractual cash flows and selling the financial asset, and

• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding.

This category applies to certain investments in debt instruments. Such financial assets are subsequently measured at fair value at each reporting date. Fair value changes are recognised in the other Comprehensive Income (‘ OCI''). However, the Company recognises interest income and impairment losses and its reversals in the Statement of Profit and Loss.

On derecognition of such financial assets, cumulative gain or loss previously recognised in OCI is reclassified from equity to the Statement of Profit and Loss. However, the Company may transfer such cumulative gain or loss into retained earnings within equity.

c) Financial asset measured at FVTPL:

A financial asset is measured at FVTPL unless it is measured at amortised cost or at FVOCI as explained above. This is a residual category applied to all other financial assets of the Company. Such financial assets are subsequently measured at fair value at each reporting date. Fair value changes are recognised in the Statement of Profit and Loss.

d) Investment in subsidiaries:

Investment in subsidiaries are measured at cost less impairment as per Ind AS 27 - ‘Separate Financial Statements''.

Impairment of investments:

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 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 Statement of Profit or Loss.

iii. Derecognition:

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

a) The contractual rights to cash flows from the financial asset expires;

b) The Company transfers its contractual rights to receive cash flows of the financial asset and has substantially transferred all the risks and rewards of ownership of the financial asset;

c) The Company retains the contractual rights to receive cash flows but assumes a contractual obligation to pay the cash flows without material delay to one or more recipients thereby substantially transferring all the risks and rewards of ownership of the financial asset; or

d) The Company neither transfers nor retains substantially all risk and rewards of ownerships and does not retain control over the financial assets.

In cases where Company has neither transferred nor retained substantially all of the risks and rewards of the financial asset, but retains control of the financial asset, the Company continues to recognise such financial asset to the extent of its continuing involvement in the financial asset. In that case, the Company also recognises an associated liability. The financial asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

On Derecognition of a financial asset, (except as mentioned in b) above for financial assets measured at FVOCI), the difference between the carrying amount and the consideration received is recognised in the Statement of Profit and Loss.

iv. Impairment of financial assets:

The Company applies expected credit losses (‘ECL'') model for measurement and recognition of loss allowance on the following:

a) Trade receivables and Contract assets

b) Financial assets measured at amortised cost (other than Trade receivables and Contract assets)

c) Financial assets measured at fair value through other comprehensive income (FVOCI)

In case of Trade receivables the Company follows a simplified approach wherein an amount equal to lifetime ECL is measured and recognised as loss allowance.

In case of other assets (listed as (b) and (c) above), the Company determines if there has been a significant increase in credit risk of the financial assets since initial recognition, if the credit risk of such assets has not increased significantly, an amount equal to 12-month ECL is measured and recognised as loss allowance. However, if credit risk has increased significantly, an amount equal to lifetime ECL is measured as recognised as loss allowance.

Subsequently, if the credit quality of the financial asset improves such that there is no longer a significant increase in credit risk since initial recognition, the Company reverts to recognizing impairment loss allowance based on 12-month ECL.

ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate.

Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial asset. 12-month ECL are a portion of the lifetime ECL which result from default events that are possible within 12- month from the reporting date.

ECL are measured in a manner that they reflect unbiased and probability weighted amounts determined by a range of outcome, taking into account the time value of money and other reasonable information available as a result of past events, current conditions and forecasts of future economic conditions.

As a practical expedient, the Company uses a provision matrix to measure lifetime ECL on its portfolio of trade receivables. The provision matrix is prepared based on historically observed default rates over the expected life of trade receivables is adjusted for forward-looking estimates. At each reporting date, the historically observed default rates and changes in the forwardlooking estimates are updated.

ECL allowance (or reversal) recognised during the period is recognised as expense (or income) in the Statement of Profit and Loss under the head ‘Other expenses (or Other Income)''.

b. Financial Liabilities

i. Initial recognition and measurements:

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

Where the fair value of a financial liability at initial recognition is different from its transaction price, the difference between the fair value and the transaction price is recognised as a gain or loss in the Statement of Profit and Loss at initial recognition if the fair value is determined through a quoted market price in an active market for an identical asset (i.e. level 1 input) or through valuation technique that uses data from observable markets (i.e. level 2 input).

In case the fair value is not determined using a level 1 or level 2 input as mentioned above, the difference between the fair value and transaction price is deferred appropriately and recognised as a gain or loss in the Statement of Profit and Loss only to the extent that such gain or loss arises due to a change in factor that market participants take into account when pricing the financial liability.

ii. Subsequent measurement:

All financial liabilities of the Company are subsequently measured at amortised cost using the effective interest method.

Under the effective interest method, the future cash payments are exactly discounted to the initial recognition value using the effective interest rate. The cumulative amortisation using the effective interest method of the difference between the initial recognition amount and the maturity amount is added to the initial recognition value (net of principal repayments, if any)

of the financial liability over the relevant period of the financial liability to arrive at the amortised cost at each reporting date. The corresponding effect of the amortization under effective interest method is recognised as interest expense over the relevant period of the financial liability. The same is included under finance cost in the Statement of Profit and Loss.

iii. Derecognition:

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

4. Cash and cash equivalents

The Company considers all highly liquid investments, which are readily convertible into known amounts of cash as cash and cash equivalents. Cash and cash equivalents in the Balance Sheet comprise of cash on hand, bank balances which are unrestricted for withdrawal and usage and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.

5. Dividend

The Company recognises a liability to make dividend distributions to its 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.

6. Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of that asset till the date it is ready for its intended use or sale. Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. Other borrowing costs are recognised as an expense in the period in which they are incurred.

Finance costs are recorded using the effective interest rate method. All other borrowing costs are recognised in the profit or loss in the period in which they are incurred.