Mansoon Trading Company Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

Mar 31, 2024

2. Significant Accounting Policies

2.1. Statement of Compliance

These 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).

2.2. Basis for Preparation

a. Historical Cost Convention

These financial statements have been prepared on the historical cost basis except for
certain financial instruments that are measured at fair values at the end of each reporting
period, as explained in the accounting policies below.

b. Fair Value Measurement

Fair value measurements are categorised into Level 1,2 or 3 based on the degree to
which the inputs to the fair value measurements are observable and the significance
of the inputs to the fair value measurement in its entirety, which are described as
follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date;

• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are
observable for the asset or liability, either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the asset or liability.

A fair value measurement of a non-financial asset takes into account a market
participant’s ability to generate economic benefits by using the asset in its highest and
best use or by selling it to another market participant that would use the asset in its
highest and best use.

For the purpose of fair value disclosures, the Company has determined classes of
assets and liabilities on the basis of the nature, characteristics and risks of the asset
or liability and the level of the fair value hierarchy as explained above.

c. Functional and Presentational Currency

These financial statements are presented in Indian Rupee (INR) which is also the
functional currency.

d. Use of Estimates and Judgments

The preparation of financial statements in conformity with Ind AS requires the
management to make judgments, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from these estimates. Estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimates are revised and in any
future period affected. Information about critical judgments in applying accounting
policies that have the most significant effect on the amounts recognised in the financial
statements is included in the accounting policies and/or the notes to the financial
statements.

2.3. Presentation of financial statements

The financial statements of the Company are presented as per Schedule III (Division III)
of the Act applicable to NBFCs, as notified by the Ministry of Corporate Affairs (MCA).
Financial assets and financial liabilities are generally reported on a gross basis except
when, there is an unconditional legally enforceable right to offset the recognised amounts
without being contingent on a future event and the parties intend to settle on a net basis
in the following circumstances:

i. The normal course of business.

ii. The event of default.

iii. The event of insolvency or bankruptcy of the Company and/or its counterparties.

2.4. 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:

Business Model Assessment

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. 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.

iii. 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.

iv. 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.

2.5. Impairment of Non-Financial Assets

The Company assesses, at each reporting date, whether there is an indication that an
asset may be impaired. If any indication exists or when annual impairment testing for an
asset is required, the Company estimates the asset’s recoverable amount. An asset’s
recoverable amount is the higher of an asset''s or cash-generating unit’s (CGU) fair value
less costs of disposal and its value in use. Recoverable amount is determined for an
individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or Company’s assets. When the carrying amount
of an asset or CGU exceeds its recoverable amount, the asset is considered as impaired
and is written down to its recoverable amount. Impairment losses are recognised in the
statement of profit and loss.

2.6. Revenue Recognition

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 recoveries towards principal & Interest dues in NPA by way of one-time settlement
will be appropriated based on terms of "one-time settlement agreement”. In the absence
of a clear understand ing/agreement between the Company and the borrower for the
purpose of appropriation of recoveries towards principal or interest due in NPAs, the
Company will appropriation the recoveries first from the principal and remaining amount
will be appropriated towards the interest dues.

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 amortised 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.

2.7. Employee Benefits

(i) Short-term employee benefits

Employee benefits falling due wholly within twelve months of rendering the service are
classified as short term employee benefits and are expensed in the period in which the
employee renders the related service.

(ii) Post-employment benefits

Defined benefit plans like the employee’s gratuity fund schemes and employee provident
fund schemes are not applicable to the Company.

2.8. Borrowing Costs

Borrowing costs include interest expense calculated using the effective interest rate
method, other costs incurred in connection with borrowing of funds and exchange
differences to the extent regarded as an adjustment to the interest costs. Borrowing costs
that are directly attributable to the acquisition, construction or production of a qualifying
asset (net of income earned on temporary deployment of funds) are added to the cost of
those assets, until such time as the assets are substantially ready for their intended use
or sale. All other borrowing costs are recognised as an expense in the period in which they
are incurred.

A qualifying asset is an asset that necessarily takes a substantial period of time to get
ready for its intended use or sale.

2.9. Leases

The Company evaluates if an arrangement qualifies to be a lease as per the requirements
of Ind AS 116. Identification of a lease requires significant judgment. The Company uses
significant judgement in assessing the lease term (including anticipated renewals) and the
applicable discount rate.

The Company determines the lease term as the non-cancellable period of a lease,
together with both periods covered by an option to extend the lease if the Company is
reasonably certain to exercise that option; and periods covered by an option to terminate
the lease if the Company is reasonably certain not to exercise that option. In assessing
whether the Company is reasonably certain to exercise an option to extend a lease, or not
to exercise an option to terminate a lease, it considers all relevant facts and circumstances
that create an economic incentive for the Company to exercise the option to extend the
lease, or not to exercise the option to terminate the lease. The Company revises the lease
term if there is a change in the non-cancellable period of a lease.

The discount rate is generally based on the incremental borrowing rate specific to the lease
being evaluated or for a portfolio of leases with similar characteristics.

2.10. Taxes on Income

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.

2.11. Non-Current Investment held for disposal

Non-current investment held for disposal are recognised at the lower of carrying amount
and fair value less costs to sell and are disclosed separately under the head Non-current
investment as Assets held for disposal.

2.12. Cash and cash equivalents

Cash and cash equivalents comprise the net amount of short-term, highly liquid
investments that are readily convertible to known amounts of cash (short-term deposits
with an original maturity of three months or less) and are subject to an insignificant risk of
change in value. They are held for the purposes of meeting short-term cash commitments
(rather than for investment or other purposes).

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash
and short- term deposits, as defined above.

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Mar 31, 2014

1 Basis of Accounting

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 respect with the accounting standards notified under the Companies (Accounting Standards) Rule, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention, except to the extent stated otherwise.

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current - noncurrent classification of assets and liabilities.

2 Use of Estimates

The preparation of the financial statements in conformity with the generally accepted accounting principles requires the Management to make estimates and assumptions to be made that affect the reported amounts of revenues and expenses during the reporting period, the reported amounts of assets and liabilities and the disclosures relating to the contingent liabilities on the date of financial statements. Examples of such estimates include useful lives of Fixed Assets, provision for doubtful debts/advances, deferred tax, etc. Actual results could differ from those estimates and the same are recognized in the period in which the results are known or materialize.

3 Revenue Recognition

a. Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

b. Dividend Income is accounted as and when the Company''s right to receive dividend is established.

c. Profit on sale of investments is recognized as and when the investments is sold / redeemed.

4 Investments

Investments are stated as per the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 issued by the Reserve Bank of India and Accounting Standard 13 as under.

a) Long Term Investments are stated at cost. A provision for diminution, if any, is made to recognize a decline, other than temporary, in the book value of investments.

b) Current Investments are valued at cost or the net asset value declared by theMutual Fund, whichever is lower.

5 Taxation Current Taxes

a) The provision for current taxation is made for the income of the previous year as per the provisions of the Income tax Act, 1961.

b) The Company has the policy of reviewing and passing adjustment entries for Income Tax paid, provision for Income Tax made and excess/ short provision for the year after receiving orders from the Income Tax authorities. The Company also makes a fair estimate of the Income Tax Liability for the said year and gives effect to it in the Books of Account.

Deferred Taxes

All temporary differences at the Balance Sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purpose is provided by way of Deferred Tax Liability. Similarly for all deductible temporary differences, carry forward of unused tax assets and unused tax losses(if any), to the extent that it is probable that sufficient taxable profit will be available in the future against which these items can be utilized are recognized as Deferred Tax Assets.

At each Balance Sheet date the carrying amount of deferred tax assets is reviewed 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 tax assets to be utilized.

Deferred Tax Assets and Liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and the tax laws) that have been enacted subsequent to the Balance Sheet date.

(iii) Rights, preferences and restrictions attached to the Ordinary Shares

The Company has only one class of shares referred to as equity shares having a par value Rs. 10/- each holder of equity shares is entitle to one vote per share.