L Provision and Contingent Liabilities
Provisions are recognised only when:
(I) the company has a present obligation (legal or constructive) as a result of a past event; and
(ii) it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation; and
(iii) a reliable estimate can be made of the amount of the obligation.
Provision is measured using the cash flows estimated to settle the present obligation and when the effect of
time value of money is material, the carrying amount of the provision is the present value of those cash flows.
Reimbursement expected in respect of expenditure required to settle a provision is recognised only when it is
virtually certain that the reimbursement will be received."
"Contingent liability is disclosed in case of:
(i) A possible obligation arising from past events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the
entity; or
(ii) A present obligation arising from past events where:
• it is not probable that an outflow of resources embodying economic benefits will be required to settle
the obligation; or
• the amount of the obligation cannot be measured with sufficient reliability.
Contingent assets are disclosed where an inflow of economic benefits is probable.
Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.
Where the unavoidable costs of meeting the obligations under the contract exceed the economic benefits
expected to be received under such contract, the present obligation under the contract is recognised and
measured as a provision for onerous contract/foreseeable losses."
M Employee Benefits
A. 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 reductions in future contributions to the
scheme. The benefit plans in relation to gratuity and leave encashment are maintained separately and
hence shown separately in the balance sheet.
The Company provides benefits such as gratuity and leave encashment 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 Provident Fund to its employees which is
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 of ex-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.
B. Gratuity and Leave Encashment
The company pays gratuity to the employees whoever has completed five years of service with the
company at the time of resignation as per the payment of Gratuity Act, 1972.
The Gratuity plan provides for a lump sum payment to vested employees on retirement (subject to
completion of five years of continuous employment) death, disability or termination of employment that are
based on last drawn salary and tenure of employment. Liabilities with regard to the Gratuity Plan are
determined by Actuarial valuation on the reporting date and the Company makes annual contribution to
the gratuity fund administered by Life Insurance Companies under their respective Group Gratuity Scheme.
N Foreign Currencies Transactions and Translation
(i) Transactions in currencies other than the company's functional currency are recorded on initial
recognition using the exchange rate at the transaction date or a rate that approximates with it at the
transaction date. At each Balance Sheet date, foreign currency monetary items are reported at the closing
spot rate. Non- monetary items that are measured in terms of historical cost in foreign currency are not
translated. Exchange differences that arise on settlement of monetary items or on reporting of monetary
items at each Balance Sheet date at the closing spot rate are recognised in the Statement of Profit and Loss
in the period in which they arise except for:
A. exchange differences on foreign currency borrowings relating to assets under construction for future
productive use, are included in the cost of those assets when such exchange differences are regarded as
an adjustment to finance costs on those foreign currency borrowings; and
B. exchange differences on transactions entered into to hedge certain foreign currency risks.
(ii) Exchange rate as of the date on which the non-monetary asset or non-monetary liability is recognised on
payment or receipt of advance consideration is used for initial recognition of related asset, liability, expense
or income.
O Revenue Recognition
The company earns revenue primarily from supply of extrusion machines. The revenue is recognized on
transfer of the promised products to the customers and when the company is certain to realize the
consideration related to the product.
Revenue is measured based on the transaction price, which is the consideration, adjusted for volume
discounts, service level credits, performance bonuses, price concessions and incentives, if any, as specified
in the contract with the customer. Revenue also excludes taxes collected from customers.
The Company's contracts with customers could include promises to transfer multiple products and services
to a customer. The Company assesses the products / services promised in a contract and identifies distinct
performance obligations in the contract. Identification of distinct performance obligation involves
judgement to determine the deliverables and the ability of the customer to benefit independently from
such deliverables.
Judgement is also required to determine the transaction price for the contract and to ascribe the
transaction price to each distinct performance obligation. The transaction price could be either a fixed
amount of customer consideration or variable consideration with elements such as volume discounts,
service level credits, performance bonuses, price concessions and incentives. The transaction price is also
adjusted for the effects of the time value of money if the contract includes a significant financing
component. Any consideration payable to the customer is adjusted to the transaction price unless it is a
payment for a distinct product or service from the customer. The estimated amount of variable
consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant
reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each
reporting period. The Company allocates the elements of variable considerations to all the performance
obligations of the contract unless there is observable evidence that they pertain to one or more distinct
performance obligations.
The Company exercises judgement in determining whether the performance obligation is satisfied at a
point in time or over a period of time. The Company considers indicators such as how customer consumes
benefits as services are rendered or who controls the asset as it is being created or existence of enforceable
right to payment for performance to date and alternate use of such product or service, transfer of significant
risks and rewards to the customer, acceptance of delivery by the customer, etc.
Contract fulfilment costs are generally expensed as incurred. In accordance with Ind AS 37, the Company
recognises an onerous contract provision when the unavoidable costs of meeting the obligations under a
contract exceed the economic benefits to be received. Contracts are subject to modification to account
for changes in contract specification and requirements. The Company reviews modification to contract in
conjunction with the original contract, basis which the transaction price could be allocated to a new
performance obligation, or transaction price of an existing obligation could undergo a change. In the event
transaction price is revised for existing obligation, a cumulative adjustment is accounted for.
P Other Income
Interest income from a financial asset is recognized using effective interest rate method and dividend
income is recognized when the reight to receive dividend is established.
Q Cost Recognition
Costs and expenses are recognized when incurred and have been classified according to their nature. The
costs of the company are broadly categorized in employee benefit expenses, cost of materials, changes in
inventories, depreciation and amortization expense and other expense.
R Income Taxes
Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability
during the year. Current and deferred taxes are recognised in statement of profit and loss, except when they
relate to items that are recognised in other comprehensive income or directly in equity, in which case, the
current and deferred tax are also recognised in other comprehensive income or directly in equity,
respectively.
Current income Taxes
The current tax expense represents the tax payable by the company in relation to its global income for the
current year being a domestic company. Advance taxes and provisions for current income taxes are
presented in the balance sheet after off-setting advance tax paid and income tax provision as the
company intends to settle the asset and liability on a net basis.
Deferred income taxes
Deferred income tax is recognised using the balance sheet approach. Deferred income tax assets and
liabilities are recognised for deductible and taxable temporary differences arising between the tax base of
assets and liabilities and their carrying amount, except when the deferred income tax arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and affects neither
accounting nor taxable profit or loss at the time of the transaction.
Deferred income tax assets are recognised to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences and the carry forward of unused tax credits
and unused tax losses can be utilized.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred income tax asset to be utilized. Deferred tax assets and liabilities are measured using substantively
enacted tax rates expected to apply to taxable income in the years in which the temporary differences are
expected to be received or settled.
S Financial Instruments
(i) Financial Assets
a Initial Recognition and Measurment
All Financial Assets are initially recognised at fair value. Transaction costs that are directly attributable to the
acquisition or issue of Financial Assets, which are not at Fair Value Through Profit or Loss, are adjusted to the
fair value on initial recognition. Purchase and sale of Financial Assets are recognised using trade date
accounting.
b Subsequent Measurement
Financial Assets measured at Amortised Cost (AC)
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
to cash flows on specified dates that represent solely payments of principal and interest on the principal
amount outstanding.
Financial Assets measured at Fair Value Through Other Comprehensive Income (FVTOCI)
A Financial Asset is measured at FVTOCI if it is held within a business model whose objective is achieved by
both collecting contractual cash flows and selling Financial Assets and the contractual terms of the
Financial Asset give rise on specified dates to cash flows that represents solely payments of principal and
interest on the principal amount outstanding.
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. Financial
assets are reclassified subsequent to their recognition, if the Company changes its business model for
managing those financial assets. Changes in business model are made and applied prospectively from the
reclassification date which is the first day of immediately next reporting period following the changes in
business model in accordance with principles laid down under Ind AS 109 - Financial Instruments.
c Investment in Subsidiaries, Associates and Joint Ventures
The Company has accounted for its investments in Subsidiaries, associates and joint venture at cost less
impairment loss (if any). The investments in preference shares with the right of surplus assets which are in
nature of equity in accordance with Ind AS 32 are treated as separate category of investment and
measured at FVTOCI.
d Other Equity Investments
All other equity investments are measured at fair value, with value changes recognised in Statement of Profit
and Loss, except for those equity investments for which the Company has elected to present the value
changes in 'Other Comprehensive Income'. However, dividend on such equity investments are recognised
in Statement of Profit and loss when the Company's right to receive payment is established.
e Impairment of Financial Assets
In accordance with Ind AS 109, the Company uses 'Expected Credit Loss' (ECL) model, for evaluating
impairment of Financial Assets other than those measured at Fair Value Through Profit and Loss (FVTPL).
Expected Credit Losses are measured through a loss allowance at an amount equal to:
• The 12-months expected credit losses (expected credit losses that result from those default events on the
financial instrument that are possible within 12 months after the reporting date); or
• Full lifetime expected credit losses (expected credit losses that result from all possible default events over
the life of the financial instrument).
For Trade Receivables the Company applies 'simplified approach' which requires expected lifetime losses
to be recognised from initial recognition of the receivables. The Company uses historical default rates to
determine impairment loss on the portfolio of trade receivables. At every reporting date these historical
default rates are reviewed and changes in the forward-looking estimates are analysed. For other assets,
the Company uses 12 month ECL to provide for impairment loss where there is no significant increase in
credit risk. If there is significant increase in credit risk full lifetime ECL is used.
(ii) Financial Liabilities
a Initial Recognition and Measurement
All Financial Liabilities are recognised at fair value and in case of borrowings, net of directly attributable cost.
Fees of recurring nature are directly recognised in the Statement of Profit and Loss as finance cost.
b Subsequent Measurement
Financial Liabilities are carried at amortised cost using the effective interest method. For trade and other
payables maturing within one year from the balance sheet date, the carrying amounts approximate fair
value due to the short maturity of these instruments.
(iii) Derecognition of Financial Instruments
The Company derecognises a Financial Asset when the contractual rights to the cash flows from the
Financial Asset expire or it transfers the Financial Asset and the transfer qualifies for derecognition under Ind AS
109. A Financial liability (or a part of a Financial liability) is derecognised from the Company's Balance Sheet
when the obligation specified in the contract is discharged or cancelled or expires.
(iv) Offsetting
Financial Assets and Financial Liabilities are offset and the net amount is presented in the balance sheet
when, and only when, the Company has a legally enforceable right to set off the amount and it intends,
either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
T Non-current Assets Held for Sale
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through
a sale transaction rather than through continuing use and sale is considered highly probable. A sale is
considered as highly probable when decision has been made to sell, assets are available for immediate
sale in its present condition, assets are being actively marketed and sale has been agreed or is expected to
be concluded within 12 months of the date of classification. Non-current assets held for sale are neither
depreciated nor amortised. Assets and liabilities classified as held for sale are measured at the lower of their
carrying amount and fair value less cost of disposal and are presented separately in the Balance Sheet.
U Earning per Share
Basic earnings per share is calculated by dividing the net profit after tax by the weighted average number of
equity shares outstanding during the year adjusted for bonus element in equity share. Diluted earnings per
share adjusts the figures used in determination of basic earnings per share to take into account the
conversion of all dilutive potential equity shares.
V Key sources of estimation
The preparation of standalone financial statements in conformity with Ind AS requires that the management
of the company makes estimates and assumptions that affect the reported amounts of income and
expenses of the period, the reported balances of assets and liabilities and the disclosures relating to
contingent liabilities as of the date of the standalone financial statements. The estimates and underlying
assumptions made by the management are explained under respective policies. Revisions to accounting
estimates include useful life of property, plant and equipment & intangible assets, allowance for expected
credit loss, future obligations in respect of retirement benefit plans, expected cost of completion of
contracts, provision for rectification costs, fair value/recoverable amount measurement, tax provisions etc.
Difference, if any, between the actual results and estimates is recognised in the period in which the results are
known.
For, Rushabh R Shah And Co. For, RAJOO ENGINEERS LIMITED
Chartered Accountants
(FRN: 156419W)
Rushabh Shah Utsav K. Doshi Khushboo C. Doshi
Proprietor Joint Managing Director Managing Director
M. No.: 607585 DIN: 00174486 DIN: 00025581
UDIN : 25607585BMKPLV1181
Date :24th April, 2025 Date : 24th April, 2025
Place : Rajkot Place : Shapar (Veraval)
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