Meenakshi Steel Industries Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

Mar 31, 2024

2. Significant Accounting Policies:

2.1 Statement of compliance:

The Standalone financial statements of Meenakshi Steel Industries Limited (the “Company”) have
been prepared in accordance with the provisions of the Companies Act, 2013 and the Indian
Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules,
2015 (as amended from time to time) issued by Ministry of Corporate Affairs in exercise of the powers
conferred by section 133 read with sub-section (1) of section 210A of the Companies Act, 2013. In
addition, the guidance notes/announcements issued by the Institute of Chartered Accountants of India
(ICAI) are also applied along with compliance with other statutory promulgations require a different
treatment.

2.2. Basis of preparation:

The Standalone 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.

Fair value measurements under Ind AS 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) inactive markets for identical assets or liabilities that
the Company can access at reporting 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 valuation of assets or liabilities

2.3. Presentation of financial statements:

The Standalone Balance Sheet and the Standalone Statement of Profit and Loss are prepared and
presented in the format prescribed in the Division III to Schedule III to the Companies Act, 2013 (“the
Act”) applicable for Non- Banking Finance Companies(“NBFC”). The Standalone Statement of Cash
Flows has been prepared and presented as per the requirements of Ind AS 7 “Statement of Cash
Flows”.

The disclosure requirements with respect to items in the Standalone Balance Sheet and Standalone
Statement of Profit and Loss, as prescribed in the Schedule III to the Act, are presented by way of
notes forming part of the Standalone financial statements along with the other notes required to be
disclosed under the notified accounting Standards and the SEBI(Listing Obligations and Disclosure
Requirements) Regulations, 2015.

Amounts in the Standalone financial statements are presented in Indian Rupees rounded off to two
decimal places as permitted by Schedule III to the Companies Act, 2013. Per share data are
presented in Indian Rupee to two decimal places.

2.4. Use of estimates and judgments:

The preparation of financial statements inconformity with Ind AS requires that the management of the
Company 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 financial statements. The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates include expected credit loss on loan
books, fair value measurement etc. Difference, if any, between the actual results and estimates is
recognised in the period in which the results are known.

2.5. Operating cycle for current and non-current classification:

Based on the nature of activities of the entity and the normal time between acquisition of assets and
their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12
months for the purpose of classification of its assets and liabilities as current and non-current.

2.6. Revenue recognition:

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the
Company the revenue can be reliably measured and there exists reasonable certainty of its recovery.
Revenue is measured at the fair value of the consideration received or receivable as reduced for
estimated customer credits and other similar allowances.

(i) Interest and dividend income

Interest income is recognised in the Standalone Statement of Profit and Loss and for all financial
instruments.

Dividend income is recognised when the Company right to receive dividend is established by the
reporting date and no significant uncertainty as to collectability exists.

(ii) Net gain or fair value change:

Any differences between the fair values of the financial assets classified as fair value through the
profit or loss, held by the Company on the balance sheet date is recognised as an unrealised
gain/loss in the statement of profit and loss. In cases there is a net gain in aggregate, the same is
recognised in “Net gains or fair value changes” under revenue from operations and if there is a net
loss the same is disclosed “Expenses”, in the statement of profit and loss.

(vi) 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. Financial instruments:

Financial assets and financial liabilities are recognised in the Standalone balance sheet when the
Company becomes a party to the contractual provisions of the instrument. Recognised financial
assets and financial liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities(other than financial
assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognised
immediately in profit or loss

A financial asset and a financial liability is offset and presented on net basis in the balance sheet
when there is a current legally enforceable right to set-off the recognised amounts and it is intended to
either settle on net basis or to realise the asset and settle the liability simultaneously.

(i) Financial assets

(a) Financial assets at amortised cost

Financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) if
these financial assets are held within a business model whose objective is to hold these assets 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.

(b) Financial assets at fair value through other comprehensive income (FVTOCI)

Financial assets are measured at fair value through other comprehensive income if these financial
assets are held within a business model whose objective is achieved by both collecting contractual
cash flows that give rise on specified dates to sole payments of principal and interest on the principal
amount outstanding and by selling financial assets.

(c) Debt instruments at amortised cost or at FVTOCI

The Company assesses the classification and measurement of a financial asset based on the
contractual cash flow characteristics of the asset and the Company’s business model for managing
the asset.

For an asset to be classified and measured at amortised cost, its contractual terms should give rise to
cash flows that are solely payments of principal and interest on the principal outstanding (SPPI).

For an asset to be classified and measured at FVTOCI, the asset is held within a business model
whose objective is achieved both by collecting contractual cash flows and selling financial assets; and
the contractual terms of instrument give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding. The Company has more than one
business model for managing its financial instruments which reflect how the Company manages its
financial assets in order to generate cash flows. The Company’s business models determine whether
cash flows will result from collecting contractual cash flows, selling financial assets or both.

The Company considers all relevant information available when making the business model
assessment. However this assessment is not performed on the basis of scenarios that the Company
does not reasonably expect to occur, such as so-called ‘worst case’ or ‘stress case’ scenarios. The
Company takes into account all relevant evidence available such as:

• how the performance of the business model and the financial assets held within that business model
are evaluated and reported to the entity’s key management personnel;

• the risks that affect the performance of the business model (and the financial assets held within that
business model) and, in particular, the way in which those risks are managed; and

• how managers of the business are compensated (e.g. whether the compensation is based on the
fair value of the assets managed or on the contractual cash flows collected). The Company reassess
its business models each reporting period to determine whether the business models have changed
since the preceding period. For the current and prior reporting period the Company has not identified
a change in its business models.

When a debt instrument measured at FVTOCI is derecognised, the cumulative gain/loss previously
recognised in OCI is reclassified from equity to profit or loss. In contrast, for an equity investment
designated as measured at FVTOCI, the cumulative gain/loss previously recognised in OCI is not
subsequently reclassified to profit or loss but transferred within equity.

Debt instruments that are subsequently measured at amortised cost or at FVTOCI are subject to
impairment.

(d) Financial assets at fair value through profit or loss (FVTPL)

Financial assets are measured at fair value through profit or loss unless it is measured at amortised
cost or at fair value through other comprehensive income on initial recognition. The transaction costs
directly attributable to the acquisition of financial assets and liabilities at fair value through profit or
loss are immediately recognised in profit or loss.

(e) De-recognition

A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar
financial assets) is primarily derecognised when:

• The rights to receive cash flows from the asset have expired, or

• The Company has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a ‘pass¬
through’ arrangement; and

• either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the
Company has neither transferred nor retained substantially all the risks and rewards of the asset, but
has transferred control of the asset.

The transferred asset and the associated liability are measured on a basis that reflects the rights and
obligations that the Company has retained.

(ii) Financial liabilities

(a) Financial liabilities, including derivatives, which are designated for measurement at FVTPL are
subsequently measured at fair value. Financial guarantee contracts are subsequently measured at
the amount of impairment loss allowance or the amount recognised at inception net of cumulative
amortisation, whichever is higher. All other financial liabilities including loans and borrowings are
measured at amortised cost using Effective Interest Rate (EIR) method.

(b) A financial liability is derecognised when the related obligation expires or is discharged or
cancelled.

2.8. Write off:

Loans and debt securities are written off when the Company has no reasonable expectations of
recovering the financial asset (either in its entirety or a portion of it). This is the case when the
Company determines that the borrower does not have assets or sources of income that could
generate sufficient cash flows to repay the amounts subject to the write-off. A write-off constitutes a
derecognition event. The Company may apply enforcement activities to financial assets written off.
Recoveries resulting from the Company’s enforcement activities will result in impairment gains.

2.9. Cash and bank balances:

Cash and bank balances also include fixed deposit. Short term and liquid investments being subject
to more than insignificant risk of change in value, are not included as part of cash and cash
equivalents.

2.10. Borrowing costs:

Borrowing costs include interest expense calculated using the effective interest method, finance
charges in respect of assets acquired on finance lease and exchange differences arising from foreign
currency borrowings, to the extent they are regarded as an adjustment to interest costs. Borrowing
costs net of any investment income from the temporary investment of related borrowings, that are
attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of
cost of such asset till such time the asset is ready for its intended use or sale. A qualifying asset is an
asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All
other borrowing costs are recognised in profit or loss in the period in which they are incurred.

2.11. 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 employees’ gratuity fund schemes and
employee provident fund schemes are not Applicable to the Company.

2.12. Accounting and reporting of information for Operating Segments:

Operating segments are those components of the business whose operating results are regularly
reviewed by the chief operating decision making body in the Company to make decisions for
performance assessment and resource allocation. The reporting of segment information is the same
as provided to the management for the purpose of the performance assessment and resource
allocation to the segments. Segment accounting policies are in line with the accounting policies of the
Company.

2.13. Taxation:

Current Tax

Tax on income for the current period is determined on the basis of taxable income (or on the basis of
book profits wherever minimum alternate tax is applicable) and tax credits computed in accordance
with the provisions of the Income Tax Act 1961, and based on the expected outcome of
assessments/appeals. Deferred Tax Deferred tax is recognised on temporary differences between the
carrying amounts of assets and liabilities in the Company’s financial statements and the
corresponding tax bases used in computation of taxable profit and quantified using the tax rates and
laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets are
generally recognised for all taxable temporary differences to the extent that is probable that taxable
profits will be available against which those deductible temporary differences can be utilised. 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 all or part
of the asset to be recovered.

Deferred tax assets relating to unabsorbed depreciation/business losses/losses under the head”
capital gains” are recognised and carried forward to the extent of available taxable temporary
differences or where there is convincing other evidence that sufficient future taxable income will be
available against which such deferred tax assets can be realised. Deferred tax assets in respect of
unutilised tax credits which mainly relate to minimum alternate tax are recognised to the extent it is
probable of such unutilised tax credits will get realised. The measurement of deferred tax liabilities
and assets reflects the tax consequences that would follow from the manner in which the Company
expects, at the end of reporting period, to recover or settle the carrying amount of its assets and
liabilities.

Transaction or event which is recognised outside profit or loss, either in other comprehensive income
or in equity, is recorded along with the tax as applicable.

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Mar 31, 2014

1.1 METHOD OF ACCOUNTING

The Financial Statements have been prepared on accrual basis, with due compliance of the relevant Directions of the Reserve Bank of India relating to income recognition, accounting standards, asset classification and provisioning for bad and doubtful debts as applicable to it and are in accordance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956 read with the General Circular 15 / 2013 dated September,13 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013,which have been prescribed by the Companies (Accounting Standards) Rules, 2006.

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 realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current - non current classification of assets and liabilities.

1.2 INVESTMENTS

Investments that are readily realisable and are intended to be held for not more than one year from the date, on which such investments are made, are classified as current investments. All other investments are classified as long term investments.

Investments are classified as Quoted & Unquoted

Long term Investments are stated at cost less provision for permanent diminution in value of such Investments. Current Investments are stated at lower of cost and fair market value, determined by category of Investments.

1.3 REVENUE RECOGNITION

i) The Company''s income from operation is accounted for on accrual basis.

ii) Dividend Income is recognized when the right to receive the dividend is established.

iii) The Company follows the prudential norms for income recognition and provides for / writes off Non-performing Assets as per prudential norms prescribed by the Reserve Bank of India or earlier as ascertained by the management.

iv) Other items of revenue are recognised in accordance with the Accounting Standard (AS-9)-Revenue Recognition. Accordingly, wherever there are uncertainties in the ascertainment / realisation of income such as interest from Parties (including the financial condition of the person from whom the same is to be realized), the same is not accounted for.

1.4 RETIREMENT BENEFITS

The Company does not have any employee.

1.5 TAXATION

i) Current Tax is provided on the taxable income using the applicable tax rates and tax laws.

ii) Deferred tax arising on account of timing differences and which are capable of reversal in one or more subsequent periods is recognised using the tax rates and tax laws that have been enacted ouubst&ntively enacted. Deferred tax assets-are not recognised unless there is a virtual certainty with respect to the reversal of the same in future.

1.6 EARNINGS PER SHARE

Basic and diluted earnings per share is computed by dividing the get profit attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year.

1.7 PROVISIONS / CONTINGENCIES

A provision is recognized when there is a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provision are determined based on best estimate of the amount required to settle the obligation at the Balance Sheet date. Contingent liabilities are not provided for and are disclosed in the Notes to Financial Statements.

1.8 IMPAIRMENT OF ASSETS

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal / external factors. An impairment loss will be recognized wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount is greater of asset''s net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to the present value using the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. Previously recognized impairment loss is further provided or reversed depending on changes in circumstances.

1.9 GENERAL

Accounting Policies not specifically referred to otherwise are consistent and in accordance with generally accepted accounting principles.