Accounting Policies of Kovalam Investment and Trading Co. Ltd. Company

Mar 31, 2024

2. Summary of significant accounting policies

The financial statements have been prepared using the significant accounting policies and
measurement bases summarized as below. These policies are applied consistently for all the
periods presented in the financial statements, except where the Company has applied certain
accounting policies and exemptions upon transition to Ind AS.

a) Basis of preparation

(i) Statement of compliance with Indian Accounting Standards (Ind AS)

These standalone financial statements (“the Financial Statements”) have been prepared in
accordance with the Indian Accounting Standards (‘Ind AS’) as notified by Ministry of
Corporate Affairs (‘MCA’) under Section 133 of the Companies Act, 2013 (‘Act’) read with the
Companies (Indian Accounting Standards) Rules, 2015, as amended and other relevant
provisions of the Act. The Company has uniformly applied the accounting policies for the
periods presented in this financial statements.

The financial statements for the year ended March 31, 2024 are the first financial statements
which has been prepared in accordance with Ind AS and other applicable guidelines issued
by the Reserve Bank of India (‘RBI’).

a) The Financial statements of the Company have been prepared on going concern basis and
historical cost basis except certain financial assets and liabilities measured at fair value and
defined benefit plans assets measured at fair value.

b) The Accounting Policies have been consistently applied except where a newly issued
accounting standard is initially adopted or a revision to an existing accounting standard
requires a change in the accounting policy niether to in use.

c) The financial statements for the year ended March 31, 2024 were authorized and approved
for issue by the Board of Directors on 23 May 2024.

(ii) Historical cost convention

The financial statements have been prepared on going concern basis in accordance with
accounting principles generally accepted in India. Further, the financial statements have
been prepared on historical cost basis except for certain financial assets and financial
liabilities which are measured at fair values as explained in relevant accounting policies.

b) Property, plant and equipment

Recognition and initial measurement

Property, plant and equipment are stated at their cost of acquisition. The cost comprises
purchase price, borrowing cost if capitalization criteria are met and directly attributable cost
of bringing the asset to its working condition for the intended use. Any trade discount and
rebates are deducted in arriving at the purchase price. Subsequent costs are included in the
asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Company. All
other repair and maintenance costs are recognised in statement of profit or loss as incurred.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits associated with
the item will flow to the Company and the cost of the item can be measured reliably. All other
repair and maintenance costs are recognised in statement of profit or loss as incurred.

Subsequent measurement (depreciation method, useful lives and residual value)

Property, plant and equipment are subsequently measured at cost less accumulated
depreciation and impairment losses. Cost of acquisition is inclusive of freight, duties, taxes
and other incidental expenses. Depreciation on property, plant and equipment is provided on
the straight-line basis as per the rates specified in Schedule II of the Companies Act, 2013.

Depreciation is calculated on pro rata basis from the date on which the asset is ready for use
or till the date the asset is sold or disposed.

The residual values, useful lives and method of depreciation are reviewed at the end of each
financial year.

The Company fully depreciates the assets having individual value of Rs. 5,000 or less in the
year of acquisition.

De-recognition

An item of property, plant and equipment and any significant part initially recognised is
derecognised upon disposal or when no future economic benefits are expected from its use or
disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of the asset) is recognized in the
statement of profit and loss, when the asset is derecognised.

Capital work-in-progress

Capital work-in-progress are carried at cost, comprising direct cost, related incidental
expenses and advances paid to acquire property, plant and equipment. Assets which are not
ready to intended use are also shown under capital work-in-progress.

c) Investment Property

Properties held to earn rentals or / and for capital appreciation or both but not for sale in the
ordinary course of business, use in the production or supply of goods or services or for
administrative purposes, are categorized as investment properties. These are measured
initially at cost of acquisition, including transaction costs and other direct costs attributable
to bringing asset to its working condition for intended use. Subsequent to initial recognition,
investment properties are stated at cost less accumulated depreciation and accumulated
impairment loss, if any. The cost shall also include borrowing cost if the recognition criteria
are met. Said assets are depreciated on straight line basis based on expected life span of
assets which is in accordance with Schedule II of the Act. However, as per Ind AS 40, there is
a requirement to disclose fair value as at the balance sheet date.

d) Intangible assets

Recognition and initial measurement

Intangible assets are stated at their cost of acquisition. The cost comprises purchase price
including any import duties and other taxes (other than those subsequently recoverable from
taxation authorities), borrowing cost if capitalization criteria are met and directly attributable
cost of bringing the asset to its working condition for the intended use.

Subsequent measurement (amortisation method, useful lives and residual value)

Intangible assets are amortised over a period of 3 years from the date when the assets are
available for use. The estimated useful life (amortisation period) of the intangible assets is
arrived basis the expected pattern of consumption of economic benefits and is reviewed at the
end of each financial year and the amortisation period is revised to reflect the changed
pattern, if any.

e) Revenue recognition

Interest income

Interest income is recorded on accrual basis using the effective interest rate (EIR) method.
Additional interest/overdue interest/penal charges, if any, are recognised only when it is
reasonable certain that the ultimate collection will be made.

Dividend income

Dividend income is recognised at the time when the right to receive is established by the
reporting date. Profit/Loss on Sale of investments is considered at the time of
sale/redemption.

Brokerage income

Brokerage income is recorded on accrual basis.

Capital Gain/Profit on Sale of Investment

Gain/Loss on sale of Investment is considered at the time of Sale / Redemption.

Other income

All other income is recognized on an accrual basis, when there is no uncertainty in the
ultimate realization/collection.

f) Borrowing costs

Borrowing costs that are directly attributable to the acquisition and/or construction of a
qualifying asset, till the time such qualifying assets become ready for its intended use sale,
are capitalised. Borrowing cots consists of interest and other cost that the Company incurred
in connection with the borrowing of funds. A qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use. All other borrowing costs are
charged to the Statement of Profit and Loss as incurred basis the effective interest rate
method.

g) Taxation

Tax expense recognized in Statement of Profit and Loss comprises the sum of deferred tax
and current tax except to the extent it recognized in other comprehensive income or directly
in equity.

Current tax comprises the tax payable or receivable on taxable income or loss for the year
and any adjustment to the tax payable or receivable in respect of previous years. Current tax
is computed in accordance with relevant tax regulations. The amount of current tax payable
or receivable is the best estimate of the tax amount expected to be paid or received after
considering uncertainty related to income taxes, if any. Current income tax relating to items
recognised outside profit or loss is recognised outside profit or loss (either in other
comprehensive income or in equity).

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

Minimum alternate tax (‘MAT’) credit entitlement is recognised as an asset only when and to
the extent there is convincing evidence that normal income tax will be paid during the
specified period. In the year in which MAT credit becomes eligible to be recognised as an
asset, the said asset is created by way of a credit to the Statement of Profit and Loss and
shown as MAT credit entitlement. This is reviewed at each balance sheet date and the
carrying amount of MAT credit entitlement is written down to the extent it is not reasonably
certain that normal income tax will be paid during the specified period.

Deferred tax is recognised in respect of temporary differences between carrying amount of
assets and liabilities for financial reporting purposes and corresponding amount used for
taxation purposes. Deferred tax assets are recognised on unused tax loss, unused tax credits
and deductible temporary differences to the extent it is probable that the future taxable
profits will be available against which they can be used. 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. Unrecognised deferred
tax assets are re-assessed at each reporting date and are recognised to the extent that it has
become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in
the year when the asset is realised or the liability is settled, based on tax rates (and tax laws)
that have been enacted or substantively enacted at 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 only if there is a legally enforceable
right to set off the recognised amounts, and it is intended to realise the asset and settle the
liability on a net basis or simultaneously. Deferred tax relating to items recognised outside
statement of profit and loss is recognised outside statement of profit or loss (either in other
comprehensive income or in equity).

h) Employee benefits

Short-term employee benefits

Liabilities for wages and salaries, including non-monetary benefits, if any, that are expected
to be settled wholly within 12 months after the end of the period in which the employees
render the related service are recognised in respect of employees services up to the end of the
reporting period and are measured at the amounts expected to be paid when the liabilities are
settled.

Other long term employee benefit obligations:

The liabilities, if any, which needs to be settled after 12 months from the end of the period in
which the employees render the related services are measured as the present value of
expected future payments to be made in respect of services provided by employees up to the
end of reporting period using the projected unit credit method.

i) Impairment of financial assets

Loan assets

The Company follows a ‘three-stage’ model for impairment based on changes in credit quality
since initial recognition as summarised below:

• Stage 1 includes loan assets that have not had a significant increase in credit risk since
initial recognition or that have low credit risk at the reporting date.

• Stage 2 includes loan assets that have had a significant increase in credit risk since initial
recognition but that do not have objective evidence of impairment.

• Stage 3 includes loan assets that have objective evidence of impairment at the reporting
date.

The Expected Credit Loss (ECL) is measured at 12-month ECL for Stage 1 loan assets and at
lifetime ECL for Stage 2 and Stage 3 loan assets ECL is the product of the Probability of
Default, Exposure at Default and Loss Given Default, defined as follows:

Probability of Default (PD) - The PD represents the likelihood of a borrower defaulting on its
financial obligation (as per “Definition of default and credit-impaired” above), either over the
next 12 months (12 months PD), or over the remaining lifetime (Lifetime PD) of the obligation.

Loss Given Default (LGD) - LGD represents the Company’s expectation of the extent of loss
on a defaulted exposure. LGD varies by type of counterparty, type and preference of claim
and availability of collateral or other credit support.

Exposure at Default (EAD) - EAD is based on the amounts the Company expects to be owed
at the time of default. For a revolving commitment, the Company includes the current drawn
balance plus any further amount that is expected to be drawn up to the current contractual
limit by the time of default, should it occur.

Forward-looking economic information (including management overlay) is included in
determining the 12-month and lifetime PD, EAD and LGD. The assumptions underlying the
expected credit loss are monitored and reviewed on an ongoing basis.

Other financial assets

In respect of its other financial assets, the Company assesses if the credit risk on those
financial assets has increased significantly since initial recognition. If the credit risk has not
increased significantly since initial recognition, the Company measures the loss allowance at
an amount equal to 12-month expected credit losses, else at an amount equal to the lifetime
expected credit losses.

When making this assessment, the Company uses the change in the risk of a default
occurring over the expected life of the financial asset. To make that assessment, the Company
compares the risk of a default occurring on the financial asset as at the balance sheet date
with the risk of a default occurring on the financial asset as at the date of initial recognition
and considers reasonable and supportable information, that is available without undue cost
or effort, that is indicative of significant increases in credit risk since initial recognition. The
Company assumes that the credit risk on a financial asset has not increased significantly
since initial recognition if the financial asset is determined to have low credit risk at the
balance sheet date.

Write-offs

Financial assets are written off either partially or in their entirety only when the Company
has stopped pursuing the recovery. Any subsequent recoveries are credited to impairment on
financial instrument on statement of profit and loss..

j) Cash and cash equivalents

Cash and cash equivalents comprise cash in hand (including imprest), demand deposits and
short-term highly liquid investments that are readily convertible into known amount of cash
and which are subject to an insignificant risk of changes in value.

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Mar 31, 2014

1. a) Accounting Convention

The financial statements are prepared under the historical cost convention, in accordance with applicable accounting standards and relevant presentational requirements of the Companies Act, 1956.

b) Revenue Recognition:

i) Income from Investments

Dividend Income is recognised when the company''s right to receive payment is established.

ii) Capital Gain/Profit on Sale of Investment

Gain/Loss on Sale of Investment is considered at the time of Sale/Redemption.

iii) Interest Income

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

iv) Brokerage Income

Accounted for on accrual basis.

c) Fixed Assets and Depreciation

Tangible assets are stated at Cost less accumulated depreciation. Cost of acquisition is inclusive of freight duties, taxes and other incidental expenses. Depreciation is charged on WDV basis as per Income Tax Rule. However there is no asset as on 31.03.2014.

d) Investments

The Investments are stated at cost, Diminution in value of Investments on account of market fluctuations which are not of permanent nature have not been provided for. Market value of mutual fund is considered on NAV basis.

e) Accounting for Taxes on Income

The accounting treatment followed for taxes on income is to provide for Current Tax, Deferred Tax. Current Tax is the amount of Income Tax determined to be payable in respect of taxable income for a period. Deferred Tax is calculated for timing difference that originates in one period and is capable of reversal in the subsequent period.

f) Impairment of Assets:

At each balance sheet date, an assessment is made whether any indication exists that an asset has been impaired. If any such indication exists an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

2. a) Segment Revenue includes Income directly identifiable with/allocable to the segment including intersegment revenue.

b) Expenses that are directly identifiable with/allocable to segments are considered for determining the Segment Result. The expenses which relate to the Company as a whole and not allocable to segments, are included under "other unallocable expenditure."

c) Segment assets includes all operating assets I.e. investment and current assets used by the segment.

d) Segment Liabilities consists of creditors and other liabilities directly attributable to segment but does not include tax & financial liabilities.

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Mar 31, 2013

A) Accounting Convention

The financial statements are prepared under the historical cost convention, in accordance with applicable accounting standards and relevant presentational requirements of the Companies Act, 1956.

b) Revenue Recognition:

Income from Investments

Dividend Income is recognised when the company''s right to receive payment is establised.

if Capital Gain/Profit on Sale of Investment

Gain/Loss on Sale of Investment is considered at the time of Sale/Redemption.

iii) Interest Income

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

iv) Brokerage Income

Accounted for on accrual basis.

c) Fixed Aassets and Depreciation

Tangible assets are stated at Cost less accumulated depreciation. Cost of acquisition is inclusive of freight, duties, taxes and other incidental expenses. Depreciation is''charged en WDV basis as per Income Tax Rule.

d) Investments

The Investments are stated at cost, Diminution in value of Investments on account of market fluctuations which are not of permanent nature have not been provided for. Market value of mutual fund is considered on NAV basis.

e) Accounting for Taxes on Income

The accounting treatment followed for taxes on income is to provide for Current Tax, Deferred Tax. Current Tax is the amount of Income Tax determined to be payable in respect of taxable income for a period . Deferred Tax is calculated for timing difference that originates in one period and is capable: of reversal in the subsequent period.

f) Impairment of Assets:

At each balance sheet date, an assessment is made whether any indication exists that an asset has been impaired. If any such indication exists, an impairment loss I.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

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Mar 31, 2012

A) Accounting Convention

The financial statements are prepared under the historical cost convention, in accordance with applicable accounting standards and relevant presentational requirements of the Companies Act, 1956.

b) Revenue Recognition:

i) Income from Investments

Dividend Income is recognised when the company's right to receive payment is establised.

ii) Capital Gain/Profit on Sale of Investment

Gain/Loss on Sale of Investment is considered at the time of Sale/Redemption.

iii) Interest Income

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

iv) Brokerage Income

Accounted for on accrual basis.

c) Fixed Aassets and Depreciation

Tangible assets are stated at Cost less accumulated depreciation. Cost of acquisition is inclusive of freight, duties, taxes and other incidental expenses. Depreciation is charged on WDV basis as per Income Tax Rule.

d) Investments

The Investments are stated at cost, Diminution in value of Investments on account of market fluctuations which are not of permanent nature have not been provided for. Market value of mutual fund is considered on NAV basis.

e) Accounting for Taxes on Income

The accounting treatment followed for taxes on income is to provide for Current Tax, Deferred Tax. Current Tax is the amount of Income Tax determined to be payable in respect of taxable income for a period . Deferred Tax is calculated for timing difference that originates in one period and is capable of reversal in the subsequent period.

f) Impairment of Assets:

At each balance sheet date, an assessment is made whether any indication exists that an asset has been impaired. If any such indication exists, an impairment loss I.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

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Mar 31, 2011

A) Accounting Convention

The financial statements are prepared under the historical cost convention, in accordance with applicable accounting standards and relevant presentational requirements of the Companies Act, 1956.

b) Revenue Recognition:

i) Income from Investments

Dividend Income is recognised when the company's right to receive payment is established.

II) Capital Gain/Profit on Sale of Investment

Gain/Loss on Sale of Investment is considered at the time of Sale/Redemption.

iii) Interest Income

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

iv) Brokerage Income

Accounted for on accrual basis.

c) Fixed Assets and Depreciation

Tangible assets are stated at Cost less accumulated depreciation. Cost of acquisition is inclusive of freight, duties, taxes and other incidental expenses. Depreciation is charged on WDV basis as per Income Tax Rule.

d) Investments

The Investments are stated at cost, Diminution in value of Investments on account of market fluctuations which are not of permanent nature have not been provided for. Market value of mutual fund is considered on NAV basis.

e) Accounting for Taxes on Income

The accounting treatment followed for taxes on income is to provide for Current fax, Deferred Tax. Current

Tax is the amount of Income Tax determined to be payable in respect of taxable income for a period. Deferred Tax is calculated for timing difference that originates in one period and is capable of reversal in the subsequent period.

f) Impairment of Assets:

At each balance sheet date, an assessment is made whether any indication exists that an asset has been impaired. If any such indication exists, an impairment loss I.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

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Mar 31, 2010

A) Accounting Convention

The financial statements are prepared under the historical cost convention, in accordance with applicable accounting standards and relevant presentational requirements of the Companies Act, 1956.

b) Revenue Recognition: i) Income from Investments

Dividend Income is recognised when the companys right to receive payment is establised.

ii) Capital Gain/Profit on Sale of Investment

Gain/Loss on Sale of Investment is considered at the time of Sale/Redemption.

iii) Interest Income

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

iv) Brokerage Income

Accounted for on accrual basis.

c) Fixed Aassets and Depreciation

Tangible assets are stated at Cost less accumulated depreciation. Cost of acquisition is inclusive of freight, duties, taxes and other incidental expenses. Depreciation is charged on WDV basis as per Income Tax Rule.

d) Investments

The Investments are stated at cost, Diminution in value of Investments on account of market fluctuations which are not of permanent nature have not been provided for. Market value of mutual fund is considered on NAV basis.

e) Accounting for Taxes on Income

The accounting treatment followed for taxes on income is to provide for Current Tax, Deferred Tax. Current Tax is the amount of Income Tax determined to be payable in respect of taxable income for a period . Deferred Tax is calculated for timing difference that originates in one period and is capable of reversal in the subsequent period.

f) Impairment of Assets:

At each balance sheet date, an assessment is made whether any indication exists that an asset has been impaired. If any such indication exists, an impairment loss I.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

SIGMENT ACCOUNTING POLICIES:

a) Sigment Revenue includes Income directly identifiable with/allocable to the segment including intersegment revenue.

b) Expenses that are directly identifiable with/allocable to segments are considered tor determining the Segment Result. The expenses which relate to the Company as a whole and not allocable to segments, are included under "other unallocable expenditure."

c) Segment assets includes all operating assets I.e. investment and current assets used by the segment.

d) Segment Liabilities consists of creditors and other liabilities directly attributable to segment but does not include tax & financial liabilities.