Accounting Policies of Abhijit Trading Company Ltd. Company

Mar 31, 2024

Note 2: BASIS OF PREPARATION, MEASUREMENT AND
SIGNIFICANTCCOUNTINGPOLICIES

2.1 Basis of Preparation and Measurement

(a) Basis for preparation of Accounts:

These financial statements have been prepared in accordance with the Indian Accounting Standards
(hereinafter referred to as the ‘Ind AS’) as notified by Ministry of Corporate Affairs pursuant to
Section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting
Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.

The financial statements have been prepared on accrual and going concern basis. The accounting
policies are applied consistently to all the periods presented in the financial statements. All assets and
liabilities have been classified as current or non-current as per the Company’s normal operating cycle
and other criteria as set out in the Division II of Schedule III to the Companies Act, 2013. Based on
the nature of products and the time between 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 or non-current classification of assets and liabilities.

The financial statements are presented in INR, the functional currency of the Company. Items
included in the financial statements of the Company are recorded using the currency of the primary
economic environment in which the Company operates (the ‘functional currency’). Transactions and
balances with values below the rounding off norm adopted by the Company have been reflected as
“0” in the relevant notes in these financial statements. The financial statements of the Company for
the year ended 31st March, 2024 were approved for issue in accordance with the resolution of the
Board of Directors 10^th May, 2024.

(b) Current - Non Current classification

All assets and liabilities are classified into current and non-current as per company normal accounting
cycle.

(i) Assets

"An asset is classified as current when it satisfies any of the following criteria:

1) It is expected to be realised in, or is intended for sale or consumption in, the Company’s normal
operating cycle;

2) It is held primarily for the purpose of being traded;

3) It is expected to be realised within 12 months after the reporting date; or

4) It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability
for at least 12 months after the reporting date.

Current assets include the current portion of non-current financial assets.

All other assets are classified as non-current.

(ii) Liabilities

"A liability is classified as current when it satisfies any of the following criteria:

1) It is expected to be settled in the company’s normal operating cycle;

2) It is held primarily for the purpose of being traded;

3) It is due to be settled within 12 months after the reporting date; or

4) The company does not have an unconditional right to defer settlement of the liability for at least 12
months after the reporting date. Terms of a liability that could, at the option of the counterparty,
result in its settlement by the issue of equity Instruments do not affect its classification.

Current liabilities include current portion of non-current financial liabilities.

All other liabilities are classified as non-current.

"Operating cycle

Operating cycle is the time between the acquisition of assets for processing and their realisation in
cash or cash equivalents.

(c) Basis of measurement

These financial statements are prepared under the historical cost convention unless otherwise
indicated.

(d) Key Accounting Estimates and Judgments
Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent liabilities at the date of the financial statements and the
result of operations during the reposting year end. Although these estimates are based upon
management’s best knowledge of current events and actions, actual result could differ from these
estimates. Any revisions to the accounting estimates are recognized prospectively in the current and
future years.

(e) Tangible fixed assets

"Tangible fixed assets (except freehold land which is carried at cost) are stated at cost of acquisition
less accumulated depreciation and impairment loss, if any. Cost of acquisition includes freight inward,
duties, taxes and other directly attributable expenses incurred to bring the assets to their working
condition.

(f) Depreciation and amortization

The company has followed the WDV method for the depreciation and amortization of all tangible
and intangible assets. There is no change in the method of depreciation during previous year.

(g) Investments/ Inventory:

Investments/ Inventory are carried at cost less accumulated impairment losses or market price
whichever is lower. Where an indication of impairment exists, the carrying amount of the investment
is assessed and written down immediately to its recoverable amount. On disposal of investments in
subsidiaries, associates and joint venture, the difference between net disposal proceeds and the
carrying amounts are recognized in the Statement of Profit and Loss.

(h) Cash and Cash Equivalents:

Cash and cash equivalents are short-term (three months or less from the date of acquisition), highly
liquid investments that are readily convertible into cash and which are subject to an insignificant risk
of changes in value.

(i) Trade Receivables and Loans:

Trade receivables are initially recognized at fair value. Subsequently, these assets are held at amortised
cost, using the effective interest rate (EIR) method net of any expected credit losses. The EIR is the
rate that discounts estimated future cash income through the expected life of financial instrument.