2.19 Provisions, Contingent Liabilities and Contingent Assets (Ind AS 37):
Provisions are recognised only when there is a present obligation, as a result of past events, and when a reliableestimate of the amount of obligation can be made at the reporting date. These estimates are reviewed at eachreporting date and adjusted to reflect the current best estimates. Provisions are discounted to their present values,where the time value of money is material.
Contingent liability is disclosed for:
• Possible obligations which will be confirmed only by future events not wholly within the control of the Company; or
• Present obligations arising from past events where it is not probable that an outflow of resources will be required tosettle the obligation or a reliable estimate of the amount of the obligation cannot be made.
Contingent assets are neither recognised nor disclosed. However, when realisation of income is virtually certain, related asset is recognised.
2.20 Prior Period and Extraordinary and Exceptional Items:
• All Identifiable items of Income and Expenditure pertaining to prior period are accounted through "Prior Period Items”.
• Extraordinary items are income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the enterprise and, therefore, are not expected to recur frequently or regularly. The nature and the amount of each extraordinary item be separately disclosed in the statement of profit and loss in a manner that its impact on current profit or loss can be perceived.
• Exceptional items are generally non-recurring items of income and expenses within profit or loss from ordinary activities, which are of such, nature or incidence.
2.21 Financial Instruments (Ind AS 107): Financial Instruments:
I. Financial assets:
A. Initial recognition and measurement
All financial assets and liabilities are initially recognized at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair value through profit or loss, are adjusted to the fair value on initial recognition.
• Financial assets carried at amortized cost (AC)
A financial asset is measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
• Financial assets at fair value through profit or loss (FVTPL)
A Financial asset which is not classified as AC or FVOCI are measured at FVTPL e.g. investments in mutual funds. Again or loss on a debt investment that is subsequently measured at fair value through profit or loss is recognised in profit or loss and presented net in the Statement of Profit and Loss within other gains/(losses) in the period in which it arises.
• Financial assets at fair value through other comprehensive income (FVTOCI)
Afinancial 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 are solely payments of principal and interest on the principal amount outstanding.
B. Investments in subsidiaries
The Company has accounted for its investments in subsidiaries at cost and not adjusted to fair value at the end of each reporting period. Cost represents amount paid foracquisition of the said investments.
II. Financial Liabilities
A. Initial recognition
All financial liabilities are recognized atfair value.
B. Subsequent measurement
Financial liabilities are carried at amortized 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
2.22 Events Reporting Period (Ind AS-10)
An entity shall adjust the amounts recognized in its financial statements to reflect adjusting events after the reporting period.
2.23 Consolidated and Separate Financial Statement (Ind AS 27):
The company has two subsidiary companies for the current reporting period. Hence consolidatedand separate financial statement are prepared as perthe Ind AS 27.
2.24 Investments in Associates (Ind AS 28):
The company has not made any investments in any of its associates during the reporting period. This accounting standard has no financial impact on the financial statements for the current reporting period.
2.25 Interest in Joint Ventures (Ind AS 31)
The company has no interest in any Joint ventures. This accounting standard has no financial impact on the financial statements for the current reporting period.
2.26 Income Taxes (Ind AS 12)
Tax expense for the year, comprising current tax and deferred tax, are included in the determination of the net profit orloss for the year.
• Current Tax:
Current tax assets and liabilities are measured at the amount expected to be recovered or paid to the taxationauthorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantivelyenacted, at the year-end date. Current tax assets and tax liabilities are offset where the entity has a legallyenforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liabilitysimultaneously.
• Deferred Taxes:
Deferred income tax is provided in full, using the balance sheet approach, on temporary differences arising betweenthe tax bases of assets and liabilities and their carrying amounts in financial
statements. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a businesscombination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferredincome tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end ofthe year and are expected to apply when the related deferred income tax asset is realised or the deferred income taxliability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probablethat future taxable amounts will be available to utilise those temporary differences and losses.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable taxregulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected tobe paid to the tax authorities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets andliabilities and when the deferred tax balances relate to the same taxation authority.
Current and deferred tax is recognised in the Statement of Profit and Loss, except to the extent that it relates to itemsrecognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in othercomprehensive income or directly in equity, respectively.
2.27 Significant accounting judgements, estimates and assumptions
The preparation of financial statements requires management to make judgements, estimates and assumptions thataffect the reported amounts of revenues, expenses, assets and liabilities, the accompanying disclosures and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes thatrequire a material adjustment to the carrying amount of assets or liabilities affected in future years.
I. Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the yearend date, thathave a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within thenext financial year, are described below. The Company based its assumptions and estimates on parameters availablewhen the financial statements were prepared. Existing circumstances and assumptions about future developments,however, may change due to market changes or circumstances arising that are beyond the control of the Company.Such changes are reflected in the assumptions when they occur.
(a) Defined benefit plans gratuity benefits
The cost of the defined benefit plans such as gratuity are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each year end. The principal assumptions are the discount and salary growth rate. The discount rate is based upon the market yields available on government bonds at the accounting date with a term that matches that of liabilities. Salary increase rate takes into account of inflation, seniority, promotion and other relevant factors on long term basis.
(b) Share-based payments
Estimating fair value for share-based payment transactions requires determination of the most appropriate valuationmodel, which is dependent on the terms and conditions of the grant. This estimate also requires determination of themost appropriate inputs to the valuation model including the expected life of the share option, volatility and dividendyield and making assumptions about them.
2.28 Recent accounting pronouncements
The Ministry of Corporate Affairs (MCA) has issued the Companies (Indian Accounting Standards) (Amendment) Rules, 2023 on 31st March 2023 amending:
a) Ind AS 1, ‘Presentation of Financial Statements' - This amendment requires companies to disclose their material accounting policies ratherthan theirsignificantaccounting policies.
b) Ind AS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors' - This amendment has introduced a definition of ‘accounting estimates’ and includes guidance to help distinguish changes in accounting policies from changes in accounting estimates.
c) I nd AS 12 ‘Income Taxes’ - This amendment has narrowed the scope of
the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. The amendments clarify how companies account for deferred taxon transactions such as leases
These are applicable from Financial Year beginning on or after 1 st April 2023 (Thus for us will be applicable from 1 st April 2024).
Based on a preliminary evaluation, the Company does not expect any material impact on the financial statements resulting from the implementation of these amendments
32. Derivative instruments and un-hedged foreign currency exposure:
a) There are no outstanding derivative contracts as at March 31,2024, and March 31,2023.
b) Particulars of Un-hedged foreign currency exposure is: Nil
33. Secured Loans:
Term Loans:
From banks and financial institutions, together with interest accrued thereon, are secured byway of Vehicle Loans - primarily secured by the vehicle acquired with the loan sanction and personal guarantee of Director.
Working capital Loans:
Secured by way hypothecation on stocks, books debts and floating charge on Movable property not being pledged.
43. Financial Risk Management
In course of its business, the company is exposed to certain financial risk such as market risk (Including currency risk and other price risks), credit risk and liquidity risk that could have significant influence on the company’s business and operational/financial performance. The Board of directors reviews and approves risk management framework and policies for managing these risks and monitor suitable mitigating actions taken by the management to minimize potential adverse effects and achieve greater predictability to earnings.
44. Credit Risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the company. The company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.
The company makes an allowance for doubtful debts/advances using expected credit loss model.
45. Liquidity risk
Liquidity risk refers to the risk that the company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as pre requirements. The Company's exposure to liquidity risk is minimal as the promoters of the company is infusing the funds based on the requirements.
46. Financial figures have been rounded off to nearest rupees in lakhs and regrouped wherever is necessary.
47. Notes3 to 46 forms part of Balance Sheet and have been authenticated.
As per our Report of even date For and on behalf of the Board of Directors
For M M REDDY & CO., VARIMAN GLOBAL ENTERPRISES LIMITED
Chartered Accountants Firm Reg No:010371S
Sd/- Sd/-
M Madhusudhana Reddy Dayata Sirish Raja Pantham
Partner Managing Director Whole Time Director & CFO
Membership No: 213077 DIN: 01999844 DIN: 07547750
UDIN: 24213077BKBHCK8627 Sd/-
Madhu Mala Solanki
Place: Hyderabad Company Secretary and Compliance Officer
Date : 30-05-2024
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