Provisions

A Provision is recognised when the Company has a
present obligation (legal or constructive) as a result of a
past event and 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.

2.16 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) Financial assets

Financial assets include cash and cash equivalents,
trade and other receivables, investments in
securities and other eligible current and non¬
current assets.

At initial recognition, all financial assets are
measured at fair value. Such financial assets are
subsequently classified under one of the following
three categories according to the purpose for which
they are held. The classification is reviewed at the
end of each reporting period.

• Financial assets at amortised cost: At the

date of initial recognition, are held to collect
contractual cash flows of principal and interest
on principal amount outstanding on specified
dates. These financial assets are intended
to be held until maturity. Therefore, they
are subsequently measured at amortised
cost by applying the Effective Interest Rate
(EIR) method to the gross carrying amount
of the financial asset. The EIR amortisation
is included as interest income in the profit or
loss. The losses arising from impairment are
recognised in the profit or loss.

• Financial assets at fair value through other
comprehensive income: At the date of initial
recognition, are held to collect contractual
cash flows of principal and interest on principal
amount outstanding on specified dates, as
well as held for selling. Therefore, they are
subsequently measured at each reporting date
at fair value, with all fair value movements
recognised in Other Comprehensive Income
(OCI). Interest income calculated using
the Effective Interest Rate (EIR) method,
impairment gain or loss and foreign exchange
gain or loss are recognised in the Statement of
Profit and Loss. On derecognition of the asset,
cumulative gain or loss previously recognised
in Other Comprehensive Income is reclassified
from the OCI to Statement of Profit and Loss.

• Financial assets at fair value through profit
or loss: At the date of initial recognition,
financial assets are held for trading, or which

are measured neither at Amortised Cost nor
at Fair Value through OCI. Therefore, they are
subsequently measured at each reporting date
at fair value, with all fair value movements
recognised in the Statement of Profit and Loss.

Investment in Equity shares of subsidiaries and
associates are valued at cost.

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.

The company assesses impairment based on
the expected credit losses (ECL) model to all
its financial assets measured at amortised cost.

(b) Financial liabilities

Financial liabilities include long-term and short-term
loans and borrowings, trade and other payables and
other eligible current and non-current liabilities.

All financial liabilities are recognised initially at
fair value and, in the case of loans and borrowings
and other payables, net of directly attributable
transaction costs. After initial recognition, financial
liabilities are classified under one of the following
two categories:

• Financial liabilities at amortised cost: After
initial recognition, such financial liabilities
are subsequently measured at amortised
cost by applying the Effective Interest Rate
(EIR) method to the gross carrying amount of
the financial liability. The EIR amortisation is
included in finance expense in the profit or
loss.

• Financial liabilities at fair value through profit
or loss: which are designated as such on initial
recognition, or which are held for trading. Fair
value gains / losses attributable to changes
in own credit risk is recognised in OCI. These
gains / losses are not subsequently transferred
to Statement of Profit and Loss. All other
changes in fair value of such liabilities are
recognised in the Statement of Profit and Loss.

The Company derecognises a financial liability
when the obligation specified in the contract is
discharged, cancelled or expires.

2.17 Revenue Recognition

The Company derives revenues primarily from business
of Sales of pumps and motors.

As per Ind AS 115 revenue is recognised upon transfer
of control of promised products or services to customers
in an amount that reflects the consideration which the
Company expects to receive in exchange for those
products or services. Revenue is measured based on the

transaction price, which is the consideration, adjusted
net of returns, allowances, trade discounts and volume
discounts and GST etc.

Dividend and interest income is recorded when the right
to receive payment is established.

2.18 Earnings per share

Basic earnings per share are computed by dividing
profit or loss attributable to equity shareholders of the
Company by the weighted average number of equity
shares outstanding during the period. The Company did
not have any potentially dilutive securities in any of the
periods presented.

2.19 Segment Reporting

SPIL is mainly engaged in the business of manufacturing
of various types of Pumps & Motors. Operating
segments are reporting in a manner consistent with the
internal reporting to the Chief Operating Decision Maker
(CODM).

The Board of Directors of the group assesses the
financial performance and position of the group and
makes strategic decisions. The Board of Directors which
are identified as a CODM, consist of CMD, CFO & all
other executive Directors.

Considering the nature of business & financial reporting
of SPIL, the Company has only one segment as
reportable segment. The Company operates in Local &
Export Segments Geographically. The sales for both are
separately given, but due to the nature of business the
assets/liabilities and expenses for these activities cannot
be bifurcated separately

2.20 Cash and Cash Equivalents

Cash and cash equivalents in the balance sheet comprise
cash at banks, cash on hand and highly liquid short-term
deposits with an original maturity of three months or
less, which are subject to an insignificant risk of changes
in value.