j) Provisions and Contingencies
The Company recognizes provisions when a present obligation (legal or constructive) as a result of a past event exists and
it is probable that an outflow of resources embodying economic benefits will be required to settle such obligation and the
amount of such obligation can be reliably estimated.
If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when
appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of
time is recognized as a finance cost.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but
probably will not require an outflow of resources embodying economic benefits or the amount of such obligation cannot be
measured reliably. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of
resources embodying economic benefits is remote, no provision or disclosure is made.
k) Cash and Cash Equivalents
Cash and Cash equivalents for the purpose of Cash Flow Statement comprise cash and cheques in hand, bank balances,
demand deposits with banks where the original maturity is three months or less and other short term highly liquid
investments.
l) Employee Benefits
Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee
benefits and they are recognized in the period in which the employee renders the related service. The Company
recognizes the undiscounted amount of short term employee benefits expected to be paid in exchange for services
rendered as a liability (accrued expense) after deducting any amount already paid.
Post-Employment Benefits:
Defined Benefit plans:
i) Provident Fund scheme:
Contribution as required by the statute made to the Government provident fund is debited to Profit and loss statement.
ii) Gratuity scheme:
The cost of providing defined benefits is determined using the Projected Unit Credit method with actuarial valuations being
carried out at each reporting date. The defined benefit obligations recognized in the Balance Sheet represent the present
value of the defined benefit obligations as reduced by the fair value of plan assets, if applicable. Any defined benefit asset
(negative defined benefit obligations resulting from this calculation) is recognized representing the present value of
available refunds and reductions in future contributions to the plan.
All expenses represented by current service cost, past service cost, if any, and net interest on the defined benefit liability /
(asset) are recognized in the Statement of Profit and Loss. Remeasurements of the net defined benefit liability / (asset)
comprising actuarial gains and losses and the return on the plan assets (excluding amounts included in net interest on the
net defined benefit liability/asset), are recognized in Other Comprehensive Income. Such remeasurements are not
reclassified to the Statement of Profit and Loss in the subsequent periods.
The Company presents the above liability/(asset) as current and non-current in the Balance Sheet as per actuarial
valuation by the independent actuary.
m) Borrowing Cost
Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings
and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the
interest cost.
Borrowing costs, if any, directly attributable to the acquisition, construction or production of an asset that necessarily takes
a substantial period of time to get ready for its intended use or sale are capitalized, if any. All other borrowing costs are
expensed in the period in which they occur.
n) Segment Reporting
The Chairman and Managing Director of the Company has been identified as the Chief Operating Decision Maker (CODM)
as defined by IND AS 108, " Operating Segments". The Company operates in one segment only i.e. "Providing services
for procurement of orders". The CODM evaluates performance of the Company based on revenue and operating income
from "Providing services for procurement of orders". Accordingly, segment information has not been seperately disclosed.
o) Events after Reporting date
Where events occurring after the Balance Sheet date provide evidence of conditions that existed at the end of the reporting
period, the impact of such events is adjusted within the financial statements. Otherwise, events after the Balance Sheet
date of material size or nature are only disclosed.
p) Earnings per share
Basic EPS is calculated in accordance with Ind AS - 33 ' Earning per Share" by dividing the profit / loss for the year
attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding
during the year.
Diluted EPS is calculated in accordance with Ind AS - 33 ' Earning per Share" by dividing the profit / loss attributable to
ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus
the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary
shares into ordinary shares.
q) Recent accounting pronouncements and its effect on financials
Ind AS 116 Leases :
On March 30, 2019, Ministry of Corporate Affairs has notified Ind AS 116, Leases. Ind AS 116 will replace the existing
leases Standard, Ind AS 17 Leases, and related Interpretations. The Standard sets out the principles for the recognition,
measurement, presentation and disclosure of leases for both parties to a contract i.e., the lessee and the lessor. Ind AS
116 introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with
a term of more than twelve months, unless the underlying asset is of low value. Currently, operating lease expenses are
charged to the statement of Profit & Loss. The Standard also contains enhanced disclosure requirements for lessees. Ind
AS 116 substantially carries forward the lessor accounting requirements in Ind AS 17.
The effective date for adoption of Ind AS 116 is annual periods beginning on or after April 1, 2019. The standard permits
two possible methods of transition:
1> Full restrospective - Restrospectively to each prior period presented applying Ind AS 8 Accounting policies,Changes in
accounting estimates and errors
2> Modified restrospective - Restrospectively, with the cumulative effect of initially applying the standard recognized at the
date of initial application
Under modified retrospective approach, the lessee records the lease liability as the present value of the remaining lease
payments, discounted at the incremental borrowing rate and the right of use asset either as:
> Its carrying amount as if the standard had been applied since the commencement date, but
discounted at lessee's incremental borrowing rate at the date of initial application or
> An amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments related to that
lease recognized under Ind AS 17 immediately before the date of initial application.
Effective April 01, 2019, the company has adopted Ind AS 116 'Leases' using modified restropective appraoch. The
adoption of the standard did not have any material impact on the financial results.
Ind AS 12 Appendix C, Uncertainty over Income Tax Treatments
On March 30, 2019, Ministry of Corporate Affairs has notified Ind AS 12 Appendix C, Uncertainty over Income Tax
Treatments which is to be applied while performing the determination of taxable profit (or loss), tax bases, unused tax
losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12. According
to the appendix, companies need to determine the probability of the relevant tax authority accepting each tax treatment, or
group of tax treatments, that the companies have used or plan to use in their income tax filing which has to be considered
to compute the most likely amount or the expected value of the tax treatment when determining taxable profit (tax loss), tax
bases, unused tax losses, unused tax credits and tax rates.
The standard permits two possible method of transition :
1> Full restrospective approach - under this approach,Appendix C will be applied restrospectively to each prior reporting
period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors, without
using hindsight
2> Restrospectively, with the cumulative effect of initially applying Appendix C recognized by adjusting equity on initial
application, without adjusting comparatives
Effective April 01, 2019, the company has adopted Ind AS12 Appendix C using Restrospectively, with the cumulative effect
of initially applying Appendix C recognized by adjusting equity on initial application, without adjusting comparatives. The
adoption of the standard did not have any material impact on the financial results.
The Company has elected to exercise the option permitted under section 115BAA of the Income Tax Act, 1961 as
introduced by the Taxation Laws (Amendment) Ordinance 2019. Accordingly, the Company has recognised provision for
the income tax for the year ended 31.03.2020 and re-measured its Deferred Tax Assets based on rate prescribed in the
said section.
2.4 Key accounting estimates and judgements
The estimates and judgements used in the preparation of the financial statements are continuously evaluated by the
Company and are based on historical experience and various other assumptions and factors (including expectations of
future events) that the Company believes to be reasonable under the existing circumstances. Difference between actual
results and estimates are recognised in the period in which the results are known / materialised.
The said estimates are based on the facts and events, that existed as at the reporting date, or that occurred after that date
but provide additional evidence about conditions existing as at the reporting date.
The preparation of the Company’s financial statements requires the management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying
disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in
outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods
Critical accounting estimates and assumptions
The key assumptions concerning the 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:
a. Income taxes
The Company’s tax jurisdiction is India. Significant judgements are involved in estimating budgeted profits for the purpose
of paying advance tax, determining the provision for income taxes, including amount expected to be paid/recovered for
uncertain tax positions
b. Defined benefit obligation
The costs of providing post-employment benefits are charged to the Statement of Profit and Loss in accordance with Ind AS
19 ‘Employee benefits’ over the period during which benefit is derived from the employees’ services. The costs are
assessed on the basis of assumptions selected by the management. These assumptions include salary escalation rate,
discount rates, expected rate of return on assets and mortality rates.
c. Fair value measurement of Financial Instruments
When the fair values of financials assets and financial liabilities recorded in the Balance Sheet cannot be measured based
on quoted prices in active markets, their fair value is measured using valuation techniques, including the discounted cash
flow model, which involve various judgements and assumptions.
d. Property, Plant and Equipment
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. 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 technical or commercial obsolescence arising from changes or improvements in production or from a change
in market demand of the product or service output of the asset.
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