Nilkanth Engineering Ltd. நிறுவனத்தின் கணக்கியல் கொள்கைகள்

Mar 31, 2024

2. Material Accounting Policies

i) Overall consideration

The standalone financial statements have been prepared using the significant accounting
policies and measurement basis summarised below.

ii) Statement of Compliance

These standalone financial statements have been prepared in accordance with the Indian
Accounting Standards (''Ind AS’) prescribed under Section 133 of the Companies Act,
2013 (“the Act”) read with Rule 3 of the Companies (Indian Accounting Standards) Rules,
2015 (as amended).

iii) Basis of preparation

Accounting policies have been consistently applied except where a newly issued
accounting standard is initially adopted or are vision to an existing accounting standard
requires a change in the accounting policy hitherto in use.

The standalone financial statements are presented in Indian National Rupees (INR) and
all values are rounded to the nearest rupees, except when otherwise indicated.

iv) Use of Estimates

The preparation of the standalone financial statements in conformity with IndAS requires
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 standalone 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 standalone financial statements in
the period in which changes are made and, if material, their effects are disclosed in the
notes to the standalone financial statements.

v) Current / non-current classification

Assets and liabilities in the balance sheet are classified into current/ non-current. An asset
is classified as current when it is:

• Expected to be realised or intended to sold or consumed in normal operating cycle.

• Held primarily for the purpose of trading

• Expected to be realised within twelve months after the reporting period, or

• Cash or cash equivalent unless restricted from being exchanged or used to settle a
liability for at least twelve months after the reporting period

All other assets are classified as non-current.

A liability is classified as current when:

• It is expected to be settled in normal operating cycle

• It is held primarily for the purpose of trading

• It is due to be settled within twelve months after the reporting period, or

• There is no unconditional right to defer the settlement of the liability for at least twelve
months after the reporting period

All other liabilities are classified as non-current.

As the Company''s normal operating cycle is not clearly identifiable due to the varying
nature of each project, the normal operating cycle has been assumed to be twelve
months.

Deferred tax assets and liabilities are classified as non-current assets and liabilities
respectively.

vi) Revenue

Revenue is recognised to the extent that it is probable that economic benefits will flow to
the Company and that revenue can be reliably measured, regardless of when the
payments is being made. Revenue is measured at the fair value of the consideration
received or receivable, taking into account contractually defined terms of payment and
excluding duties and taxes collected on behalf of the Government.

The Company follows the prudential norms for income recognition and provides for /writes
off Non-Performing Assets as per the prudential norms prescribed by the Reserve Bank
of India or earlier as ascertained by the management.

a. Dividend Income

Income is recognized as and when the Company’s rights to receive the payment is
established, it is probable that the economic benefits associated with the dividend will flow
to the entity, the dividend does not represent a recovery of part of cost of the investment
and the amount of dividend can be measured reliably.

In case of interim dividend, the right to receive the payment is established, when the
dividend gets approved by the Board of Directors.

In case of final dividend, the right to receive the payment is established, when the dividend
gets approved by the shareholder’s in the annual general meeting.

b. Interest Income

For all the debt instruments measured at amortized cost, interest income is recorded using
effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future
cash payments or receipts over the expected life of the financial instrument or a shorter
period, where appropriate, to the gross carrying amount of the financial asset or to
amortized cost of financial liability. When calculating EIR, the Company estimates the
expected cash flows by considering all the contractual terms of the financial instrument
but does not consider expected credit losses.

c. Other Operational Revenue

Other operational revenue represents income earned from the activities incidental to the
business and is recognised when the right to receive the income is established as per the
terms of the contract.

vii) Property, plant and equipment

PPE is recognised when it is probable that future economic benefits associated with the
item will flow to the Company and the cost of the item can be measured reliably. PPE is
stated at original cost net of tax/duty credits availed, if any, less accumulated depreciation
and cumulative impairment, if any. The total cost of assets comprises its purchase price,
freight, duties, taxes and any other incidental expenses 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. Changes in the expected useful life are accounted
for by changing the amortisation period or methodology, as appropriate, and treated as
changes in accounting estimates. Costs also include borrowing costs for qualifying assets
capitalised in accordance with the Company’s accounting policy.

Subsequent expenditure related to an item of tangible asset are added to its gross value
only if it increases the future benefits of the existing asset, beyond its previously assessed
standards of performance and cost can be measured reliably. Other repairs and
maintenance costs are expensed off as and when incurred.

Depreciation is recognised using Written Down Value method so as to write off the cost
of the assets (other than freehold land)) less their residual values over their useful lives
specified in Schedule II to the Companies Act, 2013, or in case of assets where the useful
life was determined by technical evaluation, over the useful life so determined.
Depreciation method is reviewed at each financial year end to reflect expected pattern of
consumption of the future economic benefits embodied in the asset.

Depreciation for additions to/deductions from, owned assets is calculated pro rata to the
period of use. Depreciation charge for impaired assets is adjusted in future periods in
such a manner that the revised carrying amount of the asset is allocated over its remaining
useful life.

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

viii) Leased assets

A right-of-use asset representing the right to use the underlying asset and a lease liability
representing the obligation to make lease payments is recognized for all leases over 1
year on initial recognition basis. Discounted committed & expected future cash flows
recognised as right-of-use asset and lease liability and depreciation on the asset portion
on straight-line basis & interest on liability portion (net of lease payments) on EIR basis
is recognized over the expected lease term. No right-of-use asset is created for short
term leases (i.e. lease term less than 1 year) and leases of low value items (i.e. lease of
asset with original cost of less than Rs.1 lakh).

ix) Impairment testing of assets

The Company reviews the carrying values of assets for any possible impairment at each
balance sheet date. An impairment loss is recognized in the statement of profit and loss
when the carrying amount of an asset exceeds its recoverable amount. The recoverable
amount is the higher of the assets net of selling price or value in use. In assessing the
value in use, the estimated future cash flows are discounted to their present value based
on appropriate discount rate. If at the balance sheet date there is any indication that a
previously assessed impaired loss no longer exists then such loss is reversed and the
asset is restated to that extent.

For impairment assessment purposes, assets are grouped at the lowest levels for which
there are largely independent cash inflows (cash-generating units). As a result, some
assets are tested individually for impairment and some are tested at cash-generating unit
level.

Cash-generating units (determined by the Company’s management as equivalent to its
operating segments) are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.

x) Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and
a financial liability or equity instrument of another entity.

a. Classification of Financial Instruments

At initial measurement, the Company classifies its financial assets into the following
measurement categories:

1. Financial assets to be measured at amortised cost;

2. Financial assets to be measured at fair value through other comprehensive income;

3. Financial assets to be measured at fair value through profit or loss account.

The classification depends on the contractual terms of the financial assets’ cash flows
and the Company''s business model for managing financial assets which are explained
below:

The Company determines its business model at the level that best reflects how it
manages groups of financial assets to achieve its business objective. The Company’s
business model is not assessed on an instrument-by-instrument basis, but at a higher
level of aggregated portfolios and is based on observable factors.

The business model assessment is based on reasonably expected scenarios without
taking ‘worst case'' or ’stress case’ scenarios into account. If cash flows after initial
recognition are realised in a way that is different from the Company’s original
expectations, the Company does not change the classification of the remaining
financial assets held in that business model, but incorporates such information when
assessing newly originated or newly purchased financial assets going forward.

The Solely Payments of Principal and Interest (SPPI) test

As a second step of its classification process the Company assesses the contractual
terms of financial assets to identify whether they meet the SPPI test.

‘Principal’ for the purpose of this test is defined as the fair value of the financial asset
at initial recognition and may change over the life of the financial asset.

In making this assessment, the Company considers whether the contractual cash flows
are consistent with a basic lending arrangement i.e. interest includes only
consideration for the time value of money, credit risk, other basic lending risks and a
profit margin that is consistent with a basic lending arrangement. Where the contractual
terms introduce exposure to risk or volatility that are inconsistent with a basic lending
arrangement, the related financial asset is classified and measured at fair value
through profit or loss.

The Company classifies its financial liabilities at amortised costs unless it has
designated liabilities at fair value through the statement of Profit and Loss account or
is required to measure liabilities at fair value through profit or loss such as derivative
liabilities.

b. Financial Assets

i. Initial recognition and measurement

All financial assets are recognised initially at fair value. In the case of financial assets
not recorded at fair value through profit or loss, transaction costs that are attributable
to the acquisition of the financial asset are also considered.

ii. Investments in associates

The Company measures investments in Equity instruments of associates at cost.

iii. Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in three
categories:

(a) Debt instruments at amortised cost.

(b) Debt instruments and investment in Preference Shares at fair value through profit
or loss (FVTPL).

(c) Equity instruments measured at fair value through other comprehensive income
(FVTOCI).

(a) Debt instruments at amortised cost

A ‘debt instrument'' is measured at the amortised cost if both the following
conditions are met:

i) The asset is held within a business model whose objective is to hold assets for
collecting contractual cash flows, and

ii) Contractual terms of the asset give rise on specified dates to cash flows that are
solely payments of principal and interest (SPPI) on the principal amount
outstanding.

After initial measurement, such financial assets are subsequently measured at
amortised cost using the effective interest rate (EIR) method. Amortised cost is
calculated by taking into account any discount or premium on acquisition and fees
or costs that are an integral part of the EIR. The EIR amortisation is included in
interest income in the profit or loss.

(b) Debt instruments and investment in Preference Shares at fair value through
profit or loss (FVTPL)

A debt instrument shall be measured at fair value through profit and loss (FVTPL)
unless it is measured at amortised cost or at fair value through other
comprehensive income, which generally occurs when the SPPI criterion is not met
by the debt instrument.

(c) Equity instruments measured at fair value through other comprehensive
income (FVTOCI)

For all equity instruments other than the ones classified as at FVTPL, the Company
may make an irrevocable election to present in other comprehensive income
subsequent changes in the fair value. The Company makes such election on an
instrument-by-instrument basis. The classification is made on initial recognition and
is irrevocable.

If the Company decides to classify an equity instrument as at FVTOCI, then all fair
value changes on the instrument, excluding dividends, are recognized in the OCI.
There is no recycling of the amounts from OCI to P&L, even on sale of investment.
However, the Company transfers the cumulative gain or loss within equity.

iv. Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of
similar financial assets) is primarily derecognised (i.e. removed from the balance sheet)
when the rights to receive cash flows from the asset have expired.

v. Impairment

In accordance with Ind-AS 109, the Company applies expected credit loss (ECL) model
for measurement and recognition of impairment loss on the Trade receivables or any
contractual right to receive cash or another financial asset that result from transactions
that are within the scope of Ind-AS 115. 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 entity expects to receive (i.e., all cash shortfalls), discounted at the original
EIR.

The Company measures the 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. If the credit risk on a financial asset has
not increased significantly since initial recognition, the Company measures the loss
allowance for that financial asset at an amount equal to 12-month expected credit
losses.

No Expected credit losses are recognised on equity investments,

c. Financial Liabilities

i. Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair
value through profit or loss, loans and borrowings, financial guarantee, contract
payables, or derivative instruments.

ii. Subsequent measurement

(a) Financial liabilities at fair value through profit and loss

Financial liabilities at fair value through profit or loss include financial
liabilities held for trading and financial liabilities designated upon initial
recognition as at fair value through profit or loss. Financial liabilities are
classified as held for trading if they are incurred for the purpose of
repurchasing in the near term.

Gains or losses on liabilities held for trading are recognised in the profit or
loss.

Financial liabilities designated upon initial recognition at fair value through
profit or loss are designated as such at the initial date of recognition, and
only if the criteria in Ind AS 109 are satisfied. For liabilities designated as
FVTPL, fair value gains / losses attributable to changes in own credit risk
are recognized in OCI. These gains / losses are not subsequently
transferred to P&L. However, the Company may transfer the cumulative
gain or loss within equity. All other changes in fair value of such liability are

recognised in the statement of profit or loss. The Company has not
designated any financial liability as at fair value through profit and loss.

(b) Financial liabilities measured at amortised cost

After initial recognition, interest bearing loans and borrowings are
subsequently measured at amortized cost using the EIR method.

Amortized cost is calculated by taking into account any discount or
premium and fee or costs that are an integral part of the EIR. The EIR
amortization is included in finance costs in the Statement of Profit and
Loss. Any difference between the proceeds (net of transactions costs) and
the redemption amount is recognized in profit or loss over the period of the
borrowings using the EIR method. Fees paid on the establishment of loan
facilities are recognized as transaction costs of the loan to the extent that
it is probable that some or all of the facility will be drawn down.

iii. Derecognition

A financial liability is derecognised when the obligation under the liability is
discharged or cancelled or expires. When 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 the derecognition of the original liability and the recognition of a new
liability. The difference in the respective carrying amounts is recognised in the
statement of profit or loss.

d. Offsetting of Financial Instruments

Financial assets and financial liabilities are offset and the net amount is reported in the
balance sheet if there is a currently enforceable legal right to offset the recognised
amounts and there is an intention to settle on a net basis, to realise the assets and settle
the liabilities simultaneously.

xi) Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date under
current market conditions.

The Company categorizes assets and liabilities measured at fair value into one of three
levels depending on the ability to observe inputs employed in their measurement which
are described as follows:

(a) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets
or liabilities.

(b) Level 2 inputs are inputs that are observable, either directly or indirectly, other than
quoted prices included within level 1 for the asset or liability.

(c) Level 3 inputs are unobservable inputs for the asset or liability reflecting significant
modifications to observable related market data or Company’s assumptions about
pricing by market participants.

xii) Segment reporting

An operating segment is a component of the Company that engages in business activities
from which it may earn revenues and incur expenses, whose operating results are
regularly reviewed by the company’s chief operating decision maker to make decisions
for which discrete financial information is available. Based on the management approach
as defined in Ind AS 108, the chief operating decision maker evaluates the Company’s
performance and allocates resources based on an analysis of various performance
indicators by business segments and geographic segments.

xiii) Income taxes

Tax expense for the year, comprising current tax and deferred tax, are included in the
determination of the net profit or loss for the year. Provision for current income tax is
made on the basis of the assessable income under the Income tax Act, 1961.

Tax expense recognised in profit or loss comprises the sum of deferred tax and current
tax not recognised in other comprehensive income or directly in equity.

Calculation of current tax is based on tax rates and tax laws that have been enacted or
substantively enacted by the end of the reporting period. Deferred income tax assets and
liabilities are recognised for all temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the standalone financial statements.

Deferred tax assets are recognised to the extent that it is probable that the underlying tax
loss or deductible temporary difference will be utilised against future taxable income. This
is assessed based on the Company’s forecast of future operating results, adjusted for
significant non-taxable income and expenses and specific limits on the use of any unused
tax loss or credit.

xiv) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, together with
other short-term, highly liquid investments that are readily convertible into known
amounts of cash and which are subject to an insignificant risk of changes in value.

xv) Equity, reserves and dividend payments

Share capital represents the nominal (par) value of shares that have been issued. Share
premium includes any premiums received on issue of share capital. Any transaction costs
associated with the issuing of shares are deducted from share premium, net of any
related income tax benefits. Other components of equity include the following:

• Re-measurement of net defined benefit liability - comprises the actuarial losses from
changes in demographic and financial assumptions and the return on plan assets.

• Reserves for financial instruments measured at FVOCI.

• Retained earnings includes all current and prior period retained profits,

xvi) Post-employment benefits and long/short-term employee benefits
Defined benefit plans

For defined benefit plans, the cost of providing benefits is determined using the Projected
Unit Credit Method, with actuarial valuations being carried out at each balance sheet date.
Remeasurement, comprising actuarial gains and losses, the effect of the changes to the
asset ceiling and the return on plan assets (excluding interest), is reflected immediately
in the balance sheet with a charge or credit recognised in other comprehensive income
in the period in which they occur. Past service cost, both vested and unvested, is
recognised as an expense at the earlier of:

(a) when the plan amendment or curtailment occurs; and

(b) when the entity recognises related restructuring costs or termination benefits.

The retirement benefit obligations recognised in the balance sheet represents the present
value of the defined benefit obligations reduced by the fair value of scheme assets. Any
asset resulting from this calculation is limited to the present value of available refunds and
deductions in future contributions to the scheme.

The Company provides benefits such as gratuity to its employees which are treated as
defined benefit plans.

Defined contribution plans

Contributions to defined contribution plans are recognised as expense when employees
have rendered services entitling them to such benefits.

The Company provides benefits such as superannuation, provident fund to its employees
which are treated as defined contribution plans.

Short-term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are
classified as short-term employee benefits. Benefits such as salaries, wages etc. and the
expected cost ofex-gratia are recognised in the period in which the employee renders the
related service. A liability is recognised for the amount expected to be paid when there is
a present legal or constructive obligation to pay this amount as a result of past service
provided by the employee and the obligation can be estimated reliably.

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Mar 31, 2014

1.1 Basis of preparation

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rule, 2006, (as amended) and the relevant provisions of the Companies Act, 1956 read with the General Circular 15/2013 dated September 13,2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

1.2 Use of Estimates:

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

1.3 Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. The following specific recognition criteria are met before revenue is recognized:

a) Interest

Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head "Revenue from Operations" in the statement of profit and loss.

b) Dividend

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

c) Other Income

Other items of revenue are recognized in accordance with the Accounting Standard (AS-9) "Revenue Recongnition".

1.4 Tangible Fixed Assets

All fixed Assets are stated at cost of acquisition less accumulated depreciation. Cost includes all incidental expenses related to acquisition.

1.5 Depreciation/Amortisation on Fixed Assets

Depreciation on Fixed Assets has been provided on ''Written down Method'' as per the rates specified in Scheduled XIV of the Companies Act, 1956.

Depreciation on fixed assets acquired/sold during the year is provided on pro-rata basis.

Intangible Assets are amortised pro-rata on straight line method over the useful life of the assets as estimated by the management.

1.6 Impairment of Tangible and Intangible Assets:

At the end of each year, the Company determines whether a provision should be made for impairment loss on fixed assets by considering the indication that an impairment loss may have occurred in accordance with Accounting Standard 28 on "Impairment of Assets". Where the recoverable amount of any fixed assets is lower than its carrying amount, a provision for impairment loss on fixed assets is made.

1.7 Investments:

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long term investments.

Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Long Term Investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments. In case of investments in mutual funds, the net asset value of units declared by the mutual funds is considered as the fair value.

In accordance with the Revised Schedule VI to the Companies Act, 1956, the portion of the Long Term Investments classified above, and expected to be realised within 12 months of the reporting date, have been classified as current investments.

On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.

1.8 Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period 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 fraction of an 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 events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

1.9 Income Taxes

Current Taxes

Provision for current income-tax is recognized in accordance with the provisions of Indian Income- tax Act, 1961 and is made annually based on the tax liability after taking credit for tax allowances and exemptions.

Deferred Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to timing differences that result between the profits offered for income taxes and the profits as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantially enacted at the balance sheet date. Deferred tax Assets are recognized only to the extent there is reasonable certainty that the assets can be realized in the future. Deferred Tax Assets are reviewed as at each Balance Sheet date.

1.10 Provisions

A provision is recognized when the company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Where the company expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit and loss net of any reimbursement.

1.11 Contingent Liabilities

A contingent liability is a possible obligation that arise from past events whose existence will be confirmed by the occurence or non occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The company does not recognize a contingent liability but discloses its existence in the financial statements.