Shanti Gold International Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

2.1 Summary of Material accounting policies

a) Revenue from sale of goods and rendering of
services

Revenue from contracts with customers (including
franchisees) includes revenue for sale of goods and
provision of services. Revenue from contracts with
customers is recognized when control of the goods or
services is transferred to the customer at an amount
that reflects the consideration to which the Company
expects to be entitled in exchange for those goods
or services. The Company determines at contract
inception whether each performance obligation will
be satisfied (i.e. control will be transferred) overtime
or at a point in time.

The Company manufactures and sells gold jewelry to
retailers and distributors. Revenue from the contract
with customers is recognized when the Company
satisfies performance obligation by transferring
promised goods and services to the customer.
Performance obligations may be satisfied at a point
of time or over a period. Performance obligations
satisfied over a period of time are recognized as
per the terms of relevant contractual agreements/
arrangements. Performance obligations are said to be
satisfied at a point of time when the customer obtains
controls of the asset.

Revenue is recognized based on the price specified
in the contract, net of the estimated line discounts.
Accumulated experience is used to estimate and
provide for the discounts, using the expected value
method, and revenue is only recognized to the extent
that it is highly probable that a significant reversal
will not occur. A contract liability is recognized for
expected volume discounts payable to customers
in relation to sales made until the end of the
reporting period.

Revenue is recognized upon transfer of control
of promised product or services to customer in
an amount that reflect the consideration which
the Company expects to receive in exchange for
those product or services at the fair value of the
consideration received or receivable, which is
generally the transaction price, net of any taxes/
duties and discounts.

Revenue is measured based on the transaction price,
which is the consideration, adjusted for volume
discounts, service level credits, performance
bonuses, price concessions and incentives, if any, as
specified in the contract with the customer. Revenue
also excludes taxes collected from customers.

Interest income

Interest income on time deposits and inter¬
corporate loans is recognized using the effective
interest method.

The ‘effective interest rate’ is the rate that exactly
discounts estimated future cash payments or receipts
through the expected life of the financial instrument
to the gross carrying amount of the financial asset.

Other income

In respect of other heads of income, the Company
follows the practice of recognizing income
on accrual basis.

Use of significant judgements in revenue
recognition: -

• The performance obligation is satisfied upon
delivery of the goods.

• At the time of entering into the agreement /
raising an invoice, performance obligations in
the contract are identified. The Company/Entity
delivers goods as per the terms & conditions of
the contract. Contracts are of differing natures
and sometimes have one specific performance
obligation, and on other occasions have multiple
performance obligations.

• Contract fulfilment costs are
expensed as incurred.

b) Expected Credit Loss on Financial Assets

A financial asset not carried at fair value is assessed
at each reporting date to determine whether there is
objective evidence that it is impaired. A financial
asset is impaired if objective evidence indicates that
a loss event has occurred after the initial recognition
of the asset, and that the loss event had a negative
effect on the estimated future cash flows of that asset
that can be estimated reliably.

Objective evidence that financial assets are impaired
can include default or delinquency by a debtor,
restructuring of an amount due to the Company
on terms that the Company would not otherwise
consider, indications that a debtor or issuer will
enter bankruptcy, the disappearance of an active
market for a security. The entity considers evidence

of impairment for receivables for each specific asset.
All individually Material receivables are assessed for
specific impairment.

An impairment loss in respect of a financial asset
measured at amortized cost is calculated as the
difference between its carrying amount and the
present value of the estimated future cash flows
discounted at the asset''s original effective interest
rate. Losses are recognized in statement of profit
and loss and are reflected as an allowance account
against receivables. Interest on the impaired asset
continues to be recognized as income through the
unwinding of the discount. When a subsequent event
causes the amount of impairment loss to decrease,
the decrease in impairment loss is reversed through
statement of profit and loss. The company assesses
at each date of Balance sheet whether a financial
assets or group of financial assets is impaired. In
accordance with Ind-AS 109, the Company applies
expected credit loss (ECL) model for measurement
and recognition of impairment loss on the financial
assets and credit risk exposure:

For recognition of impairment loss on other financial
assets and risk exposure, the Company determines
whether there has been a Material increase in the
credit risk since initial recognition. The Company
applies a simplified approach in calculating ECLs.
Therefore, the Company does not track changes in
credit risk, but instead recognizes a loss allowance
based on lifetime ECLs at each reporting date.

The Company follows ''simplified approach'' for
recognition of impairment loss allowance on Trade
receivables. The application of simplified approach
does not require the Company to track changes in
credit risk. Rather, it recognizes impairment loss
allowance based on lifetime ECLs at each reporting
date, right from its initial recognition. The Company
has established a provision matrix that is based on
its historical credit loss experience, adjusted for
forward-looking factors specific to the debtors and
the economic environment.

c) Property, plant and equipment
Recognition and Measurement

Items of property, plant and equipment are
measured at cost, net of recoverable taxes (wherever
applicable), which includes capitalized borrowing
costs less accumulated depreciation and accumulated
impairment losses, if any.

Cost of an item of property, plant and equipment
comprises its purchase price, including import duties
and non-refundable purchase taxes, if any, after

deducting trade discounts and rebates, any directly
attributable cost of bringing the item to its working
condition for its intended use and estimated cost of
dismantling and removing the item and restoring the
site on which it is located.

If significant parts of an item of property, plant and
equipment have different useful lives, then they are
accounted for as separate items (major components)
of property, plant, and equipment.

Any gain or loss from the disposal of an item of
property, plant and equipment is recognized in the
statement of profit and loss.

Subsequent Expenditure

Subsequent expenditures are included in the asset’s
carrying amount or recognized as a separate asset,
as appropriate, only if it is probable that future
economic benefits associated with the expenditure
will flow to the Company and the cost of the item
can be measured reliably. The carrying amount of
any component accounted for as a separate asset is
derecognized when replaced.

All other repairs and maintenance are charged to the
statement of profit and loss during the reporting year
in which they are incurred.

Depreciation methods, estimated useful lives and
residual values

Depreciation is calculated on cost of items of
property, plant and equipment less their estimated
residual value over their useful life using straight
line method and is recognized in the statement of
profit and loss.

The estimated useful lives of items of property,
plant and equipment for the current and comparative
periods are as under and the same are equal to lives
specified as per schedule II of the Act.

Based on technical evaluation and consequent
advice, the management believes that its estimates
of useful lives as given above best represent the
period over which management expects to use

these assets. Depreciation on addition to property,
plant and equipment is provided on pro-rata basis
from the date the assets are ready for intended use.
Depreciation on sale/discard from property, plant
and equipment is provided for up to the date of sale,
deduction or discard of property, plant and equipment
as the case may be.

Depreciation method, useful lives and residual values
are reviewed at each financial year-end, and changes,
if any, are accounted for prospectively.

Other intangible assets

An intangible asset is recognized when it is probable
that the future economic benefits attributable to the
asset will flow to the Company where its cost can be
reliably measured.

Intangible assets are initially measured at cost. Such
intangible assets are subsequently measured at cost
less accumulated amortization and any accumulated
impairment losses. Cost comprises the purchase
price and any cost attributable to bringing the assets
to its working condition for its intended use.

Amortization

Amortization is calculated to write off the cost of
intangible assets over their estimated useful lives
using the straight-line method and is included
in depreciation and amortization expense in the
statement of profit and loss.

Amortization method, useful lives and residual
values are reviewed at each financial year-end, and
changes, if any, are accounted for prospectively.

Losses arising from the retirement of, and gain or
losses arising from disposal of an intangible asset
are determined as the difference between the net
disposal proceeds and the carrying amount of asset
and recognized as income or expense in the statement
of profit and loss.

d) Investment Property

Initial Recognition and Measurement

Land and Building is held to earn rental or for
capital appreciation or both, rather than for use in
the production or supply of goods or services or for
administrative purposes: or sale in the ordinary course
of business is recognized as investment property.

Investment property is measured initially at its
cost, including related transaction costs and where
applicable borrowing costs. Subsequent expenditure
is capitalized to the asset’s carrying amount only
when it is probable that future economic benefits
associated with the expenditure will flow to the
Company and the cost of the item can be measured
reliably. All other repairs and maintenance costs are
expended when incurred. When part of an investment
property is replaced, the carrying amount of the
replaced part is derecognized.

Subsequent Measurement:

After initial recognition an investment property
is subsequently measured at cost model. Under
Cost model Investment property is measured at
historical cost, less accumulated depreciation and
any accumulated impairment losses.

Depreciation:

Depreciation is calculated on cost of items of
property, plant and equipment less their estimated
residual value over their useful life using straight
line method and is recognized in the statement of
profit and loss.

e) Capital Work in progress:

Cost of assets not ready for intended use, as on
balance sheet date is shown as capital work in
progress. Advances given towards acquisition of
property, plant and equipment outstanding at each
balance sheet date are disclosed as other non¬
current assets.

f) Impairment of non-financial assets

The Company’s non-financial assets, other than
inventories and deferred tax assets, are reviewed at
each reporting date to determine whether there is
any indication of impairment. If any such indication
exists, then the assets or CGU’s recoverable
amount is estimated.

For impairment testing, assets that do not generate
independent cash inflows are Companied together
into cash-generating units (CGUs). Each CGU
represents the smallest Company of assets that
generates cash inflows that are largely independent
of the cash inflows of other assets or CGUs.

The recoverable amount of a CGU (or an individual
asset) is the higher of its value in use and its fair value
less costs to sell. Value in use is based on the estimated
future cash flows, discounted to their present value
using a pre-tax discount rate that reflects current
market assessments of the time value of money and
the risks specific to the CGU (or the asset).

An impairment loss is recognized if the carrying
amount of an asset or CGU exceeds its estimated
recoverable amount. Impairment losses are
recognized in the statement of profit and loss.
Impairment loss recognized in respect of a CGU is
allocated first to reduce the carrying amount of any
goodwill allocated to the CGU, and then to reduce
the carrying amounts of the other assets of the CGU
(or Company of CGUs) on a pro rata basis.

After impairment, depreciation/amortization is
provided on the revised carrying amount of the asset
over its remaining useful life.

g) Borrowing costs

Borrowing costs are interest and other costs
incurred in connection with the borrowing of funds.
Borrowing costs directly attributable to acquisition
or construction of an asset which necessarily take
a substantial period of time to get ready for their
intended use are capitalized as part of the cost of that
asset. Other borrowing costs are recognized as an
expense in the period in which they are incurred.

h) Financial instruments

i. Recognition and initial measurement

Trade receivables are initially recognized when
they are originated. All other financial assets
and financial liabilities are initially recognized
when the Company becomes a party to the
contractual provisions of the instrument.

A financial asset or financial liability is initially
measured at fair value plus transaction costs
that are directly attributable to its acquisition
or issue, except for an item recognized at fair
value through profit and loss. Transaction cost
of financial assets carried at fair value through
profit and loss is expensed in the statement of
profit and loss.

ii. Classification and subsequent measurement

Financial assets

On initial recognition, a financial asset is
classified as measured at

• amortized cost.

• Fair value through other comprehensive
income (FVOCI), or

• Fair value through profit and loss (FVTPL)

The classification depends on the entity’s
business model for managing the financial assets
and the contractual terms of the cash flows.

Financial assets are not reclassified subsequent
to their initial recognition, except if and in the
period the Company changes its business model
for managing financial assets.

A financial asset is measured at amortized cost
if it meets both of the following conditions and
is not designated as FVTPL:

• the asset is held within a business model
whose objective is to hold assets 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.

A debt investment is measured at FVOCI if it
meets both of the following conditions and is
not designated as FVTPL:

• the asset 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.

On initial recognition of an equity investment
that is not held for trading, the Company may
irrevocably elect to present subsequent changes
in the investment’s fair value in OCI (designated
as FVOCI - equity investment). This election is
made on an investment- by-investment basis.

All financial assets not classified to be
measured at amortized cost or FVOCI as
described above are measured at FVTPL.
This includes all derivative financial assets.
On initial recognition, the Company may
irrevocably designate a financial asset that
otherwise meets the requirements to be
measured at amortized cost or at FVOCI or at
FVTPL if doing so eliminates or significantly
reduces an accounting mismatch that would
otherwise arise.

Financial assets: Subsequent measurement and
gains and losses

Financial assets at amortized cost: These
assets are subsequently measured at amortized

cost using the effective interest method. The
amortized cost is reduced by impairment losses,
if any. Interest income and impairment are
recognized in the statement of profit and loss.
Any gain or loss on derecognition is recognized
in the statement of profit and loss.

Financial assets at FVTPL: These assets are
subsequently measured at fair value. Net gains
and losses, including any interest income, are
recognized in the statement of profit and loss.

Debts investments at FVOCI: These assets
are subsequently measured at fair value.
Interest income under the effective interest
method, foreign exchange gains and losses
and impairment are recognized in profit or
loss. Other net gains and losses are recognized
in OCI. On Derecognition, gains and losses
accumulated in OCI are reclassified to
profit or loss.

Equity investments at FVOCI: These assets are
subsequently measured at fair value. Dividends
are recognized as income in profit or loss unless
the dividend clearly represents a recovery of
part of the cost of the investment. Other net
gains and losses are recognized in OCI and are
not reclassified to profit or loss.

Financial liabilities: classification, subsequent
measurement & gain and loss

Financial liabilities are classified as measured at
amortized cost or FVTPL. A financial liability is
classified as at FVTPL if it is classified as held
for trading, or it is a derivative or it is designated
as such on initial recognition. Financial
liabilities at FVTPL are measured at fair value
and net gains and losses, including any interest
expense, are recognized in the statement of
profit and loss. Other financial liabilities are
subsequently measured at amortized cost
using the effective interest method. Interest
expense and foreign exchange gains and losses
are recognized in the statement of profit and
loss. Any gain or loss on derecognition is also
recognized in the statement of profit and loss.

iii. Offsetting

Financial assets and monetary liabilities
are offset and the net amount presented in
the balance sheet when, and only when, the
Company currently has a legally enforceable
right to set off the amounts and it intends either
to settle them on a net basis or to realise the
assets and settle the liabilities simultaneously.

iv. Derecognition

Financial Assets

The Company derecognize a financial asset
when the contractual rights to the cash flows
from the financial asset expire, or it transfers
the rights to receive the contractual cash flows
in a transaction in which substantially all of the
risks and rewards of ownership of the financial
asset are transferred or in which the Company
neither transfers nor retains substantially all of
the risks and rewards of ownership and does not
retain control of the financial asset.

If the Company enter into transactions whereby
it transfers assets recognized on its balance
sheet but retains either all or substantially all of
the risks and rewards of the transferred assets,
the transferred assets are not derecognized.

Financial liabilities

The Company derecognize a financial liability
when its contractual obligations are discharged
or cancelled or expired.

The Company also derecognize financial
liability when its terms are modified and
the cash flows under the modified terms are
substantially different. In this case, a new
financial liability based on the modified terms
is recognized at fair value. The difference
between the carrying amount of the financial
liability extinguished and the new financial
liability with modified terms is recognized in
the statement of profit and loss.

v. Impairment of financial instruments:

The Company recognize loss allowances for
expected credit losses on: -

(i) Financial assets measured at
amortized cost; and

(ii) Financial assets measured at FVOCI-
debt investments.

At each reporting date, the Company assesses
whether financial assets carried at amortized
cost and debt securities at FVOCI are credit
impaired. A financial asset is ‘credit-impaired’
when one or more events that have a detrimental
impact on the estimated future cash flows of the
financial asset have occurred. Evidence that a
financial asset is credit- impaired includes the
following observable data:

• significant financial difficulty of the
borrower or issuer.

• a breach of contract such as a default or
being past due for an agreed credit period.

• the restructuring of a loan or advance by
the Company on terms that the Company
would not consider otherwise.

• it is probable that the borrower will
enter bankruptcy or another financial
reorganization; or

• the disappearance of an active market for
security because of financial difficulties.

vi. Write-off

The gross carrying amount of a financial asset
is written off (either partially or in full) to the
extent that there is no realistic prospect of
recovery. This is generally the case when the
Company determine that the debtor does not
have assets or sources of income that could
generate sufficient cash flows to repay the
amounts subject to the write-off. However,
financial assets that are written off could still
be subject to enforcement activities in order
to comply with the Company’s procedures for
recovery of amounts due.

i) Inventories

Inventories are measured at the lower of cost and net
realisable value (NRV).

Cost comprises all costs of purchase, costs of
conversion and other costs incurred in bringing the
inventories to their present location and condition.
Net realisable value represents the estimated selling
price in the ordinary course of business less the
estimated costs of completion and the estimated
costs necessary to make the sale. The comparison
of cost and net realisable value is made on an
item-by-item basis.

The basis of valuation of inventories is as follows:

• Raw Materials - Polished Diamonds (including
Colour Stones): Valued at the lower of cost and
net realisable value.

• Raw Materials - Gold: Valued at the lower of
cost and net realisable value.

• Finished Goods - Jewellery: Valued at the
lower of cost and net realisable value. Cost
includes the cost of raw materials, direct labour,
conversion costs and other costs incurred in

bringing the inventories to their present location
and condition, net of eligible input tax credits.

Cost Formula

The cost of all categories of inventories is determined
using the Weighted Average Cost (WAC) method.

During the current year, the Company voluntarily
changed its accounting policy for determining the
cost of inventories from the First-In, First-Out (FIFO)
method to the Weighted Average Cost (WAC) method,
as the management believes that the WAC method
provides more reliable and relevant information by
reflecting the blended cost of inventories, improving
the matching of costs with related revenues and
aligning the Company''s inventory valuation
methodology with prevailing industry practices.

In accordance with Ind AS 8 - Accounting Policies,
Changes in Accounting Estimates and Errors,
the change in accounting policy has been applied
retrospectively with effect from 1 April 2024.
Accordingly, the comparative information for the
previous period has been restated to reflect the
application of the Weighted Average Cost method.
The financial impact of the retrospective application,
including its effect on inventories, retained earnings
and other affected line items, has been disclosed
in Note 26 - Change in Accounting Policy in
finanacial Statement.

j) Employee Benefits

Short term employee benefits:

Short-term employee benefit obligations are
measured on an undiscounted basis and are expenses
off as the related services are provided. Benefits such
as salaries, wages, and bonus etc. are recognized
in the statement of profit and loss in the year in
which the employee renders the related service. The
liabilities are presented as current employee benefit
obligation in the balance sheet.

Long term employee benefits

Defined contribution plan: Provident fund

All employees of the Company are entitled to
receive benefits under the Provident Fund, which
is a defined contribution plan. Both the employee
and the employer make monthly contributions to the
plan at a predetermined rate as per the provisions of
The Employees Provident Fund and Miscellaneous
Provisions Act, 1952. These contributions are
made to the fund administered and managed by the
Government of India. The Company has no further
obligations under the plan beyond its monthly
contributions. Obligation for contribution to defined

contribution plan are recognized as an employee
benefit expense in statement of profit and loss in the
period during which the related services are rendered
by the employees.

Defined Benefit Plan: Gratuity

A defined benefit plan is a post-employment benefit
plan other than a defined contribution plan.

The Company provide for retirement benefits in
the form of Gratuity, which provides for lump sum
payments to vested employees on retirement, death
while in service or on termination of employment
in an amount equivalent to 15 days basic salary for
each completed year of service. Vesting occurs upon
completion of five Year of service. Benefits payable
to eligible employees of the Company with respect to
gratuity is accounted for on the basis of an actuarial
valuation as at the balance sheet date.

The present value of such an obligation is determined
by the projected unit credit method and adjusted for
past service cost as at the balance sheet date. The
resultant actuarial gain or loss on change in present
value of the defined benefit obligation is recognized
as an income or expense in the other comprehensive
income. The Company’s obligation in respect of
defined benefit plans is calculated by estimating
the amount of future benefit that employees
have earned in the current and prior periods,
discounting that amount.

The Company’s determine the net interest expense
(income) on the net defined benefit liability for the
period by applying the discount rate used to measure
the defined benefit obligation at the beginning of
the annual period to the then-net defined benefit
liability, taking into account any changes in the
net defined benefit liability during the period as
a result of contributions and benefit payments.
Actuarial gain and losses are recognized in the Other
Comprehensive Income.

When the benefits of a plan are changed or when a
plan is curtailed, the resulting change in benefit that
relates to past service (‘past service cost’ or ‘past
service gain’) or the gain or loss on curtailment
is recognized in the statement of profit and loss.
The Company recognizes gains and losses on
the settlement of a defined benefit plan when the
settlement occurs.

Other long-term benefits: Compensated absences

Benefits under the Company’s compensated
absences scheme constitute other employee benefits.
The liability in respect of compensated absences
is provided on the basis of an actuarial valuation

using the Projected Unit Credit Method. done by
an independent actuary as at the balance sheet date.
Actuarial gain and losses are recognized immediately
in the Statement of Profit and Loss.

k) Income tax

Income tax comprises current and deferred tax. It is
recognized in the statement of profit and loss except
to the extent that it relates to a business combination
or to an item recognized directly in equity or in other
comprehensive income.

Current tax

Current tax comprises the expected tax payable or
receivable on the taxable income or loss for the year
and any adjustment to the tax payable or receivable
in respect of previous Year. The amount of current
tax reflects the best estimate of the tax amount
expected to be paid or received after considering
the uncertainty, if any, related to income taxes. It is
measured using tax rates (and tax laws) enacted or
substantively enacted by the reporting date.

Current tax assets and current tax liabilities are offset
only if there is a legally enforceable right to set off
the recognized amounts, and it is intended to realise
the asset and settle the liability on a net basis or
simultaneously.

Deferred tax

Deferred tax is recognized in respect of temporary
differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the
corresponding amounts used for taxation purposes.
Deferred tax is also recognized in respect of carried
forward tax losses and tax credits. Deferred tax is not
recognized for:

- temporary differences arising on the initial
recognition of assets or liabilities in a
transaction that is not a business combination
and that affects neither accounting nor taxable
profit or loss at the time of the transaction.

- taxable temporary differences arising on the
initial recognition of goodwill.

Deferred tax assets are recognized to the extent
that it is probable that future taxable profits will
be available against which they can be used. The
existence of unused tax losses is strong evidence that
future taxable profit may not be available. Therefore,
in case of a history of recent losses, the Company
recognizes a deferred tax asset only to the extent
that it has sufficient taxable temporary differences
or there is convincing other evidence that sufficient

taxable profit will be available against which such
deferred tax asset can be realized. Deferred tax assets
- unrecognized or recognized, are reviewed at each
reporting date and are recognized/ reduced to the
extent that it is probable/ no longer probable that the
related tax benefit will be realized.

Deferred tax is 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 the laws
that have been enacted or substantively enacted by
the reporting date.

The measurement of deferred tax reflects the tax
consequences that would follow from the manner in
which the Company expects, at the reporting date,
to recover or settle the carrying amount of its assets
and liabilities.

Deferred tax assets and liabilities are offset if there
is a legally enforceable right to offset current tax
liabilities and assets, and they relate to income taxes
levied by the same tax authority on the same taxable
entity, or on different tax entities, but they intend to
settle current tax liabilities and assets on a net basis
or their tax assets and liabilities will be real.

B. SIGNIFICANT ACCOUNTING POLICIES

This note provides a list of significant accounting policies adopted in the preparation of the
financial statements. These policies have been consistently applied to all the years presented,
unless otherwise stated.

1) BASIS OF ACCOUNTING AND PREPARATION OF FINANCIAL STATEMENTS

a. Accounting Convention And Method Of Accounting:

The Company has prepared these financial statements to comply, in all material respects,
with the accounting standards notified under section 133 of the Companies Act 2013, read
together with the Companies (Accounts) Rules 2016.

The Financial statements of the Company have been prepared under the historical cost
convention on an accrual basis of accounting in accordance with the Generally Accepted
Accounting Principles in India to comply with the Accounting Standards noticed under Section
133 of Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and
relevant provisions of the Companies Act, 2013 ("the 2013 Act").

b. Functional and presentation currency •

These financial statements are presented in Indian Rupees, which is the company''s functional
currency. All amounts have been rounded to nearest Lakhs, unless otherwise stated. ''

c. Basis of Measurement

These financial statements have been prepared in accordance with the generally accepted

accounting principle in india under the historical cost convention on accrual basis pursuant

to section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts)
Rules, 2014. All assets and liabilities have been classified as current or non-current as per the
Company''s operating cycle and other criteria set out in the Schedule III to the Companies Act
2013. Based on the nature of services 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. The accounting policies have been consistently applied by the Company
and are consistent with those used in the previous year''.

2) APPLICABILITY OF ACCOUNTING STANDARDS

The company is a Medium Sized Company as per "SMC" as defined in the General Instructions
of the Companies (Accounting Standards) Rules, 2006 notified by the Central Government
under the Companies Act, 2013. Accordingly, the Company has complied with the Accounting
Standards as applicable to a Medium Sized company. Further, the company by virtue of being
a SMC, requires to comply with the recognition and measurement principles prescribed by all
accounting standards, but is given a relaxation in respect of certain disclosure related
standards and certain disclosure requirements prescribed by other accounting standards.

3) USE OF ESTIMATES

The preparation of financial statements requires management to make judgments, estimates
and assumptions that affect the application of accounting policies and the reported amounts
o assets, liabilities, income, expenses and disclosures of contingent liabilities at the date of
these financial statements. Actual results may differ from these estimates. Estimates and
underlying assumptions are reviewed at each balance sheet date. Revisions to accounting

estimates are recognised in the period in which the estimate is revised and future periods
affected.

4) PROPERTY, PLANT AND EQUIPMENT & INTANGIBLE ASSETS

a. Property, Plant & Equipment

Property, Plant and Equipment are stated at cost net of recoverable taxes based on intended
outward supplies and furtherance of business, trade discounts and rebates less accumulated
depreciation and impairment loss, if any.

The cost comprises its purchase price, borrowing cost and any other cost directly attributable

m bringing the asset to its working condition for its intended use, net charges on foreign

exchange, contracts and adjustments arising from exchange rate variations attributable the
assets.

Property, Plant and Equipment which are significant to the total cost of that item of Property
Plant and Equipment and having different useful life are accounted separately.

Subsequent expenditures to an item of asset are added to its book value only if they increase

the future benefits from the existing asset beyond its previously assessed standard of
performance.

b. Intangible assets

Identifiable intangible assets are recognized when it is probable that future economic
benefits attributed to the asset will flow to the Company and the cost of the asset can be
reliably measured.

Intangible assets are amortised over their respective estimated useful lives on a straight line
basis, from the date that they are available for use. Intangible assets are stated at cost less
accumulated amortisation and impairment.

c. Depreciation / Amortisation

Depreciation/Amortisation on Property, Plant and Equipment is provided based on Straight
Line Method considering the useful life of asset and residual value as prescribed in Schedule
II to the Companies Act, 2013

In respect of additions or extensions forming an integral part of existing asset depreciation
is provided as aforesaid over the residual life of the respective Property, Plant and
Equipment.

Depreciation on assets acquired/sold during the year is recognized on a pro-rata basis to the
statement of profit and loss till the date of acquisition / sale

d. INVESTMENT

Investments that are readily realizable and intended to be held for not more than a year from
the date on which such investments are made, are classified as current investments. All other
investments are classified as non-current investments. On initial recognition, all investments
are measured at cost. The cost comprises purchase price and directly attributable acquisition
charges such as brokerage, fees and duties.

Current investments are carried at lower of cost and fair value determined on an individual
investment basis.

Non-current investments are carried at cost, less provision for diminution in value other than
temporary. On disposal of investments, the difference between its carrying amount and net
disposal proceeds is charged or credited to the statement of profit and loss.

e. INVENTORIES

Inventories consist of raw materials, finished goods and consumables.

Inventories are valued as under:

a) Raw Material: Polished diamonds (including colour stone) are valued at lower of cost or
net realizable value.

b) Raw Material: Gold is valued at lower of cost or net realisable value.

c) Finished goods: Jewellery is valued at lower of cost or Net realisable value. The cost of
material is determined on FIFO basis. Cost includes cost of conversion and other costs

incurred in bringing the inventory to their present location and condition less input credit
availed.

d) Designs & Moulds:- Designs and Moulds is valued at lower of cost or Net Realisable value.
Cost Includes cost associated with creating and refining designs, Purchase cost, cost of
conversion and other costs.

*

7) REVENUE RECOGNITION

The Company recognises revenues on the sale of products, net of discounts and sales
incentive. When the products are delivered to the customer or when delivered to the carrier
for export sales, which is when risks and rewards of ownership pass to the dealer / customer.
Sale of products net of other indirect taxes. Revenues are recognised when collectability of
the resulting receivables is reasonably assured.

Revenue from services are recognised as and when the services are rendered as per
agreements and completion of services

Dividend from investments is recognized when the right to receive the payment is established
and when no Significant uncertainty as to measurability or collectability exists.

Interest income is recognized on the time basis determined by the amount outstanding and
the rate applicable and where no significant uncertainty as to measurability or collectability
exists.

8) EMPLOYEE BENEFITS

Liability in respect of employee benefits is provided for and is charged to profit and loss
account as follows:

(i) Short-term employee benefits:- All employee benefits payable wholly within twelve months
of rendering the services are classified as short-term employee benefits. These benefits include
salaries and wages, bonus, ex-gratia and compensated absences such as paid annual leave. The
undiscounted amount of short-term employee benefits expected to be paid in exchange for the
services rendered by employees is charged to the Statement of profit and loss in the period in
which such services are rendered.

(ii) Post-employment benefits:-

(a) Defined contribution plan: A defined contribution plan is a post-employment benefit plan
under which the company pays specified contributions to a separate entity. The Company
makes specified monthly contributions towards Provident Fund. The Company''s
contributions to Employees Provident Fund are charged to statement of profit and loss
every year. Provision for gratuity is provided based on Actuarial Valuation made covering
at the year ended 31 March 2024, 31^st March 2023 Short Term Employee Benefits like
leave benefit, if any, are paid along with salary and wages on a month to month basis,
bonus to employees are charged to profit and loss account on the basis of actual payment
on year basis.
a &

(b) Defined Benefit Plan
i) Gratuity

The present value of gratuity obligations is/ are determined based on actuarial
valuations for all qualifying employees except directors. 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 attrition and mortality rates. Due to the complexities involved in

the valuation and its long-term nature, these liabilities are highly sensitive to
changes in these assumptions. All assumptions are reviewed at each reporting
date.

The mortality rate is based on publicly available mortality tables. Those mortality
tables tend to change only at interval in response to demographic changes.
Further salary increases and gratuity increases are based on expected future
inflation rates.

ii) Compensated Absences

The Company does not have accrued/carry forward compensated absences policy.

9) BORROWING COST

Borrowing costs that are attributable to the acquisition and construction of the asset which
takes substantial period of time to get ready for its intended use are capitalized as part of cost
of such asset.

All other borrowing costs are charged to Statement of Profit and Loss in the period in which
they are incurred or related.

10) ACCOUNTING FOR TAXES

Tax expense comprises current and deferred taxes.

Current tax is the amount of tax payable on the taxable income for the year as determined in
accordance with the provisions of the Income Tax Act, 1961.

Deferred tax is recognised, on timing differences, being the difference between taxable
incomes and accounting income that originate in one period and are capable of reversal in
one or more subsequent periods.

Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are
recognised if there is virtual certainty that there will be sufficient future taxable income
available to realise such losses. Other deferred tax assets are recognised if there is reasonable
certainty that there will be sufficient future taxable income to realize such assets.

Deferred tax assets and liabilities are measured based on the tax rates that are expected to
apply in the period when asset is realised or the liability is settled, based on tax rates and tax
laws that have been enacted or substantively enacted by the balance sheet date. •