2.14 Provisions, Contingent Liabilities and Contingent Assets
a. Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a
result of a 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.
The expense relating to a provision is presented in the statement of profit and loss.
b. Contingent Liabilities
Contingent liabilities are disclosed for
i) Possible obligations which will be confirmed only by the future events not wholly within the control of
the company or
ii) Present obligations arising from past events where it is not probable that an outflow of resources will
be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be
made.
c. Contingent Assets
Contingent Assets are not recognised in the financial statements. Contingent Assets if any, are
disclosed in the notes to the financial statements.
2.15 Taxes:
Tax expense is the aggregate amount included in the determination of profit or loss for the period in
respect of current tax and deferred tax.
Current tax:
Current tax is the amount of income taxes payable in respect of taxable profit for a period. Taxable
profit differs from ‘profit before tax’ as reported in the Statement of Profit and Loss because of items of
income or expense that are taxable or deductible in other years and items that are never taxable or
deductible under the Income Tax Act, 1961.
Current tax is measured using tax rates that have been enacted by the end of reporting period for the
amounts expected to be recovered from or paid to the taxation authorities.
Deferred tax:
Deferred tax is recognized on temporary differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of
taxable profit under Income Tax Act, 1961.
Deferred tax liabilities are generally recognized for all taxable temporary differences. However, in case
of temporary differences that arise from initial recognition of assets or liabilities in a transaction (other
than business combination) that affect neither the taxable profit nor the accounting profit, deferred tax
liabilities are not recognized. Deferred tax assets are generally recognized for all deductible temporary
differences to the extent it is probable that taxable profits will be available against which those
deductible temporary difference can be utilized. In case of temporary differences that arise from initial
recognition of assets or liabilities in a transaction (other than business combination) that affect neither
the taxable profit nor the accounting profit, deferred tax assets are not recognized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced
to the extent that it is no longer probable that sufficient taxable profits will be available to allow the
benefits of part or all of such deferred tax assets to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that have been enacted or
substantively enacted by the Balance Sheet date and are expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or settled.
Minimum Alternate Tax (MAT)
Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws in
India, which is likely to give future economic benefits in the form of availability of set off against future
income tax liability. Accordingly, MAT is recognised as deferred tax asset in the balance sheet when
the asset can be measured reliably, and it is probable that the future economic benefit associated with
asset will be realised.
Presentation of current and deferred tax:
Current and deferred tax are recognized as income or an expense in the Statement of Profit and Loss,
except when they relate to items that are recognized in Other Comprehensive Income, in which case,
the current and deferred tax income/ expense are recognized in Other Comprehensive Income.
The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable
right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize
the asset and settle the liability simultaneously. In case of deferred tax assets and deferred tax
liabilities, the same are offset if the Company has a legally enforceable right to set off corresponding
current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities
relate to income taxes levied by the same tax authority on the Company.
2.16 Employees benefits
(i) Provident fund is a defined contribution scheme and the contribution as required by the statue paid
to government provident fund and it is charged to the statement of profit and loss.
(ii) Gratuity liability is a defined benefit obligation and it is funded through a gratuity fund administered
by trustees and managed by the Life Insurance Corporation of India. The Company accounts for liability
for future gratuity benefits based on actuarial valuation carried out as at the end of each financial year,
using the projected unit credit method. Actuarial gain and /or losses are recognised in the statement of
other comprehensive income.
(iii) The company provides for the encashment of leave or leave with pay subject to certain rules. The
employees are entitled to accumulate leave subject to certain limits, for future encashment. The liability
is provided based on the number of days of unutilized leave at each balance sheet date on the basis of
an independent actuarial valuation carried out as at the end of each financial year, using the projected
unit credit method. Actuarial gain and/or losses are recognized in the statement of profit and loss.
2.17 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 and other short term highly liquid investments where the
original maturity is three months or less.
2.18 Earnings per share
Basic earnings per equity share are computed by dividing the net profit attributable to the equity holders
of the company by the weighted average number of equity shares outstanding during the period. 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 is
adjusted for the effects of all dilutive potential equity shares.
2.19 Exceptional items
When items of income and expense within statement of profit and loss from ordinary activities are of
such size, nature or incidence that their disclosure is relevant to explain the performance of the
enterprise for the period, the nature and amount of such material items are disclosed separately as
exceptional items.
2.20 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the
Chief Operating Decision Maker (CODM) of the Company. The Chief Operating Decision Maker
(CODM) is responsible for allocating resources and assessing performance of the operating segments
of the Company.
2.21 Leases
The Company as a lessee
The Company assesses whether a contract contains a lease, at inception of a contract. A contract is,
or contains, a lease if the contract conveys the right to control the use of an identified asset for a
period of time in exchange for consideration. To assess whether a contract conveys the right to control
the use of an identified asset, the Company assesses whether:
(i) The contract involves the use of an identified asset
(ii) The Company has substantially all of the economic benefits from use of the asset through the
period of the lease and
(iii) The Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use asset (“ROU”) and
a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with
a term of twelve months or less (short-term leases) and low value leases. For these short-term and
low value leases, the Company recognizes the lease payments as an operating expense on a straight¬
line basis over the term of the lease.
Certain lease arrangements includes the options to extend or terminate the lease before the end of
the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain
that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or prior to the commencement date of the lease plus
any initial direct costs less any lease incentives. They are subsequently measured at cost less
accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the
shorter of the lease term and useful life of the underlying asset. Right-of-use assets are evaluated for
recoverability whenever events or changes in circumstances indicate that their carrying amounts may
not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of
the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless
the asset does not generate cash flows that are largely independent of those from other assets. In
such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the
asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease
payments. The lease payments are discounted using the interest rate implicit in the lease or, if not
readily determinable, using the incremental borrowing rates in the country of domicile of these leases.
Lease liabilities are re-measured with a corresponding adjustment to the related right-of-use asset if
the Company changes its assessment if whether it will exercise an extension or a termination option.
Lease liability and ROU asset have been separately presented in the balance sheet and lease
payments have been classified as financing cash flows.
Transition
Effective 1st April, 2019, the Company adopted Ind AS 116 “Leases” and applied the standard to all
lease contracts existing on 1st April, 2019. Accordingly, the Company’s lease contracts of the
Company are for lease tenure below 12 months and the Company has accordingly applied the
exemption not to recognize right-of-use assets for such leases.
The Company as a lessor
Lease income from operating leases where the Company is a lessor is recognised in income on a
straight-line basis over the lease term. The respective leased assets are included in the balance sheet
based on their nature.
Arrangements in the nature of lease
The Company enters into agreements, comprising a transaction or series of related transactions that
does not take the legal form of a lease but conveys the right to use the asset in return for a payment
or series of payments. In case of such arrangements, the Company applies the requirements of Ind
AS 116 - Leases to the lease element of the arrangement. For the purpose of applying the
requirements under Ind AS 116 - Leases, payments and other consideration required by the
arrangement are separated at the inception of the arrangement into those for lease and those for
other elements.
a) DEFINED CONTRIBUTION PLAN:
The Company makes contribution towards recognized providend fund to defined contribution retirement benefit plan for
qualifying employee. Under the plan, the company is required to contribute a specified percentage of payroll cost to the
retirement benefit plan to fund the benefit.
The Company has recognized an amount of Rs.27,587/- (P.Y. - Rs. 20,987 /-) as expense under the defined contribution plan in
the statement of Profit and Loss for the year.
b) DEFINED BENEFIT PLAN
The Company recognizes the liability towards the gratuity and leave encashment at each balance sheet date.
Gratuity:
The Company has defined benefit gratuity plan. Every employee who has completed five years or more of service gets a
gratuity, effective at 15 days salary (last drawn salary) for each completed years of service. Major assumptions made for
determination of Defined Benefits Liability summarized as under:
NOTE 26(B) : CAPITAL MANAGEMENT
For the purpose of the Company's capital management, capital includes issued capital and all other equity reserves
attributable to the equity shareholders of the Company. The primary objective of the Company when managing capital is
to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize
shareholder value.
As at 31st March, 2025, the Company has only one class of equity shares and has low debt. Consequent to such capital
structure, there are no externally imposed capital requirements.
NOTE 26(C) FINANCIAL RISK MANAGEMENT - OBJECTIVES AND POLICIES
The Company's activities expose it to a variety of financial risks: Market risk, credit risk, liquidity risk. The Company has a risk
management policy which covers risks associated with the financial assets and liabilities. The risk managemet policy is
approved by the Board of Directors. The focus of the policy is to assess the upredictability of the financial environment and
to mitigate potential adverse effects on the financial performace of the company.
1. Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in
market prices. Market risk comprises three types of risks: interest rate risk, currency risk and other price risk.
a. Interest Rate Risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market interest rates. Since the Company has insignificant interest bearing borrowings, the exposure to risk of changes in
market interest rates is minimal. The Company has not used any interest rate derivatives.
b. Foreign Currency Risk
The Company operates internationally and portion of the business is transacted in several currencies and consequently the
Company is exposed to foreign exchange risk through its sales and services in overseas markets and purchases from
overseas suppliers in various foreign currencies. Foreign currency exchange rate exposure is partly balanced by
purchasing of goods, commodities and services in the respective currencies.
Particulars of unhedged foreign currency exposures as at the reporting date are given as part of Note 25.
The below table demonstrates the sensitivity to a 5% increase or decrease in the Foreign Currency against INR, with all
other variables held constant. The sensitivity analysis is prepared on the net unhedged exposure of the Company as at the
reporting date. 5% represents management's assessment of reasonably possible change in foreign exchange rate.
2. Credit Risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Company's receivables from customers and investment securities.
Credit risk arises from cash held with banks and financial institutions, as well as credit exposure to clients, including
outstanding accounts receivable. The maximum exposure to credit risk is equal to the carrying value of the financial assets.
The objective of managing counterparty credit risk is to prevent losses in financial assets. The Companyassesses the credit
quality of the counterparties, taking into account their financial position, past experience and other factors.
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The
demographics of the customer, including the default risk of the industry and country in which the customer operates, also
has an influence on credit risk assessment. The Company's exposure are continuously monitored.
3. Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company
manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when
due.
The Company consistently generates sufficient cash flow from operations to meet its financial obligations as and when they
fall due.
The tables below provides detail regarding the contractual maturities of signifiacant financial liabilities as at 31st March,
2025 and 31st March, 2024:
Note 28. Other Statutory Dislosures
1 The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for
holding any Benami property.
2 The Company has not advanced any loans or advances in the nature of loans to specified persons viz. promoters, directors, KMPs,
related parties; which are repayable on demand or where the agreement does not specify any terms or period of repayment.
3 The Company has utilised funds raised from issue of securities or borrowings from banks and financial institutions for the specific
purposes for which they were issued/taken.
4 The Company has not any obtained borrowings from banks or financial institutions on the basis of security of current assets.
5 The Company has not been declared as a wilful defaulter by any lender who has powers to declare a company as a wilful defaulter
at any time during the financial year or after the end of reporting period but before the date when financial statements are
approved.
6 The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities
(Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company
(Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
7 The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the
understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party
(Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiarie
8 The Company does not have any transactions with struck-off companies.
9 The Company does not have any transaction which is not recorded in the books of accounts but has been surrendered or disclosed
as income during the year in the tax assessments under the I ncome Tax Act, 1961 (such as, search or survey or any other relevant
provisions of the I ncome Tax Act, 1961).
10 The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
11 The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Companies Act, 2013 read with
Companies (Restriction on number of Layers) Rules, 2017.
NOTE 29: The Company has an outstanding payable of USD [4,56,001.38] (equivalent to INR [3,90,25,236.50]) to a related party, which has remained
unpaid for a period exceeding three years. The payable has been confirmed by the related party at each reporting date. The Company is in the
process of assessing the implications under the Foreign Exchange Management Act, 1999 (FEMA), and other applicable regulatory provisions.
Pending conclusion of such evaluation, no provision has been made for any interest or penalty.
_NOTE 30: Previous year's figures have been regrouped /reclassified wherever necessary._
As per our report of even date atached For and on behalf of the Board of Directors
PARIKH SHAH CHOTALIA & ASSOCIATES
CHARTERED ACCOUNTANTS
Firm Registration No: 118493W
MOHAMMED MANSUR H DHANANI HUMA MADANI
DIRECTOR & CEO DIRECTOR
CA Vijay M. Parikh DIN : 08814878 DIN : 07964833
Partner
Membership No. 031773
UDIN:
NARENDRA M. PATEL RUCHA A PATHAK
CHIEF FINANCIAL OFFICER COMPANY SECRETARY
Date: 27th May, 2025 Date: 27th May, 2025
Place: Vadodara Place: Vadodara
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