Accounting Policies of Magnanimous Trade & Finance Ltd. Company

Mar 31, 2024

3.1. Recognition of interest income

The Company recognises interest income by applying the effective interest rate (EIR) to the
gross carrying amount of a financial asset and as per year to year financial contracts as
agreed by the management.

3.2. Recognition of revenue from sale of goods

Revenue (other than for Financial Instruments within the scope of Ind-AS 109) is measured at
an amount that reflects the considerations, to which an entity expects to be entitled in
exchange for transferring goods or services to customer, excluding amounts collected on
behalf of third parties.

The Company recognises revenue from contracts with customers based on a five-step model
as set out in Ind-AS 115:

Step 1: Identify contract(s) with a customer: A contract is defined as an agreement between
two or more parties that creates enforceable rights and obligations and sets out the criteria
for every contract that must be met.

Step 2: Identify performance obligations in the contract: A performance obligation is a
promise in a contract with a customer to transfer a good or service to the customer.

Step 3: Determine the transaction price: The transaction price is the amount of consideration
to which the Company expects to be entitled in exchange for transferring promised goods or
services to a customer, excluding amounts collected on behalf of third parties.

Step 4: Allocate the transaction price to the performance obligations in the contract: For a
contract that has more than one performance obligation, the Company allocates the
transaction price to each performance obligation in an amount that depicts the amount of
consideration to which the Company expects to be entitled in exchange for satisfying each
performance obligation.

Step 5: Recognise revenue when (or as) the Company satisfies a performance obligation.
Revenue from contract with customer for rendering services is recognised at a point in time
when performance obligation is satisfied.

3.2.1. Recognition of Dividend Income

Dividend Income (including from FVOCI investments) is recognised when the Company''s
right to receive the payment is established. This is established when it is probable that the
economic benefits associated with the dividend will flow to the entity and the amount of
dividend can be measured reliably.

3.3. Financial instruments
A. Financial Assets

3.3.1. Initial recognition and measurement

All financial assets are recognised initially at fair value when the parties become party to the
contractual provisions of the financial asset. In case of financial assets which are not recorded
at fair value through profit or loss, transaction costs that are directly attributable to the
acquisition or issue of the financial assets, are adjusted to the fair value on initial recognition.

3.3.2. Subsequent measurement

The Company classifies its financial assets into various measurement categories. The
classification depends on the contractual terms of the financial assets'' cash flows and the
Company''s business model for managing financial assets.

a. Financial assets measured at amortised cost

A financial asset is measured at Amortised Cost if it is held within a business model whose
objective is to hold the asset 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 measured at fair value through other comprehensive income (FVOCI)

A financial asset is measured at FVOCI if it is held within a business model whose objective
is achieved by both collecting contractual cash flows and selling financial assets and
contractual terms of financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.

c. Financial assets measured at fair value through profit or loss (FVTPL)

A financial asset which is not classified in any of the above categories are measured at
FVTPL.

3.3.3. Investment in Associates

Investments in associate companies are carried at cost and fair value (deemed cost) as per
Ind-AS-101 less accumulated impairment losses, if any. 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 associate companies, the difference
between net disposal proceeds and the carrying amounts are recognised in the Statement of
Profit and Loss.

3.3.4. Equity Investments

Equity instruments are instruments that meet the definition of equity from the issuer''s
perspective; that is, instruments that do not contain a contractual obligation to pay and that
evidence a residual interest in the issuer''s net assets.

The company subsequently measures all equity investments at fair value. Where the
company''s management has elected to present fair value gains and losses on equity
investments in other comprehensive income, there is no subsequent reclassification of fair
value gains and losses to profit or loss following the de-recognition of the investment.

B. Financial liabilities

3.3.5. Initial recognition and measurement

All financial liabilities are recognized initially at fair value and, in the case of borrowings and
payables, net of directly attributable transaction costs.

3.3.6. Subsequent Measurement

Financial liabilities are subsequently carried at amortized cost using the effective interest
method.

3.4. De-recognition of financial assets and liabilities

3.4.1. Financial Asset

The Company derecognizes a financial asset when the contractual cash flows from the asset
expire or it transfers its rights to receive contractual cash flows from the financial asset in a
transaction in which substantially all the risks and rewards of ownership are transferred.

Any interest in transferred financial assets that is created or retained by the Company is
recognized as a separate asset or liability.

3.4.2. Financial Liability

A financial liability is derecognised when the obligation under the liability is discharged,
cancelled or expires. Where an existing financial liability is replaced by another from the
same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as de-recognition of the
original liability and the recognition of a new liability. The difference between the carrying
value of the original financial liability and the consideration paid is recognised in profit or
loss.

3.5. Offsetting

Financial assets and financial liabilities are generally reported gross in the balance sheet.
Financial assets and liabilities are offset and the net amount is presented in the balance sheet
when the Company has a legal right to offset the amounts and intends to settle on a net basis
or to realise the asset and settle the liability simultaneously in all the following
circumstances:

a. The normal course of business

b. The event of default

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

3.6. Impairment of financial assets

In accordance with Ind-AS 109, the Company uses ''Expected Credit Loss'' model (ECL), for
evaluating impairment of financial assets other than those measured at Fair value through
profit and loss.

The measurement of ECL reflects:

• An unbiased and probability-weighted amount that is determined by evaluating a range of
possible outcomes;

• The time value of money; and

• Reasonable and supportable information that is available without undue cost or effort at
the reporting date about past events, current conditions and forecasts of future economic
conditions.

The measurement of ECL allowance is an area that requires the use of complex models and
significant assumptions about future economic conditions and credit behaviour.

3.6.1. Write-off policy

The company writes off financial assets, in whole or in part, when it has exhausted all
practical recovery efforts and has concluded there is no reasonable expectation of recovery.
Indicators that there is no reasonable expectation of recovery include (i) ceasing enforcement
activity and (ii) where the company''s recovery method is foreclosing on collateral and the
value of the collateral is such that there is no reasonable expectation of recovering in full.

3.7. Determination of fair value of Financial Instruments

The Company measures financial instruments, such as, investments at fair value at each
balance sheet date. value is the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date.
The fair value measurement is based on the presumption that the transaction to sell the asset
or transfer the liability takes place either:

i. In the principal market for the asset or liability, or

ii. In the absence of a principal market, in the most advantageous market for the asset or
liability. The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market
participants would use when pricing the asset or liability, assuming that market participants
act in their economic best interest.

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

3.8. Cash and cash equivalents

Cash and cash equivalents comprise of cash at banks and on hand and short-term deposits
with an original maturity of three months or less, which are subject to an insignificant risk of
changes in value.

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and
short- term deposits, as defined above, net of outstanding bank overdrafts if any, as they are
considered an integral part of the Company''s cash management.

3.9. Property, plant and equipment

All items of property, plant and equipment are stated at historical cost less depreciation.
Historical cost includes expenditure that is directly attributable to the acquisition of the
items.

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 he cost of the item can be measured reliably. The
carrying amount of any component accounted for as a separate asset is derecognised when
replaced. All other repairs and maintenance are charged to profit or loss during the reporting
period in which they are incurred.

3.9.1. Depreciation

Depreciation on Property, Plant and Equipment is calculated using written down value
method (WDV) to write down the cost of property and equipment to their residual values
over their estimated useful lives which are in line with the estimated useful life as specified
in Schedule II of the Companies Act, 2013.

The estimated useful lives are as follows:

Particulars Useful life

Furniture and fixture 10 years

Office equipment 15 years

Computer 3 years

Vehicles 15 years

Plant & Machinery 15 years

The company provides pro-rata depreciation from the day the asset is put to use and for any
asset sold, till date of sale. The asset''s residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.

An asset''s carrying amount is written down immediately to its recoverable amount if the
asset''s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposal are determined by comparing proceeds with carrying amount
and are recognised in the statement of profit and loss.

3.10. Impairment of non-financial assets: Property, Plant and Equipment

The Company assesses, at each reporting date, whether there is any indication that any
Property, Plant and Equipment or group of assets called Cash Generating Units (CGU)
maybe impaired. If any such indication exists, or when annual impairment testing for an
asset is required, the Company estimates the asset''s recoverable amount to determine the
extent of impairment, if any.

An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair
value less costs of disposal and its value in use. Recoverable amount is determined for an
individual asset, unless the asset does not generate cash inflows that are largely independent
of those from other assets or groups of assets. When the carrying amount of an asset or CGU
exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount.

In assessing value in use, the estimated future cash flows are 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 asset. In determining fair value less costs of disposal,
recent market transactions are taken into account. If no such transactions can be identified, an
appropriate valuation model is used. These calculations are corroborated by valuation
multiples, quoted share prices for publicly traded companies or other available fair value
indicators.

An assessment is made at each reporting date to determine whether there is an indication
that previously recognised impairment losses no longer exist or have decreased. If such
indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A
previously recognised impairment loss is reversed only if there has been a change in the
assumptions used to determine the asset''s recoverable amount since the last impairment loss
was recognised.

The reversal is limited so that the carrying amount of the asset does not exceed its
recoverable amount, nor exceed the carrying amount that would have been determined, net
of depreciation, had no impairment loss been recognised for the asset in prior years.

Such reversal is recognised in the statement of profit or loss unless the asset is carried at a
revalued amount, in which case, the reversal is treated as a revaluation increase.

3.11. Investment Property

An investment property is accounted for in accordance with cost model. Depreciation on
Property, Plant and Equipment is provided in accordance with the provisions of Schedule II
of the Companies Act, 2013.

3.12. Inventories

The company has two categories of assets as mentioned hereunder:

• Stock of shares: These are valued at cost.

• Stock of Real Estate: These are valued on the basis of cost or net realized value, whichever
is lower.

3.13. Borrowing Costs

Borrowing Costs, which are directly attributable to the acquisition / construction of fixed
assets, till the time such assets are ready for intended use, are capitalised as part of the cost of
the assets. Other borrowing costs are recognised as an expense in the year in which they are
incurred. Brokerage costs directly attributable to a borrowing are expensed over the tenure of
the borrowing.

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Mar 31, 2014

1) GENERAL

The Financial statement are prepared under the historical cost convention on the basis of going concern as per applicable accounting standard and the provisions of the Companies Act 1956, as adopted consistently by the company The company follows mercantile system of accounting.

2) REVENUE RECOGNITION

Revenue / Income and expenditures are accounted for on accrual basis , as and when they are earned or incurred .

3) In the opinion of the board all the current assets and the loan and advances are approximately of the value stated if realized in the ordinary course of business. The provision for all known liabilities are adequate and are not in excess of the amount considered reasonably necessary. Sundry Debtors, Creditors and loans & advances are shown as appearing in the accounts, and are subject to confirmation.

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Mar 31, 2011

1) GENERAL

The Financial statement are prepared under the historical cost convention on the basis of going concern as per applicable accounting standard and the provisions of the Companies Act 1956, as adopted consistently by the company . The company follows mercantile system of accounting,

2) FIXED ASSTES

Fixed Assets are Stated at cost/less accumulated depreciation . Cost comprises of purchase price or construction cost including any cost of bringing the asset to its working condition for use.

3) DEPRECIATION

Depreciation on Fixed Assets has been provided on W.D.V. method as per clarification and on the basis of rates specified in schedule XIV to the companies Act, 1956.

4) INVESTMENT

Long Term Investment are stated at cost. In case of permanent diminution in value of certain investment appropriate provision for the same was made in Accounts in earlier year. The same provision for the same was made in Accounts in earlier year. The same provision is continuing. There is no further diminution in value of investment.

5) INVENTORIES OF SHARES AND REAL ESTATE (STOCK IN TRADE)

a) Shares, stock are valued at cost as on 31st March, 2011 as per practice.

b) Real estate are valued at expected net realizable value or cost whichever is lower.

6) REVENUE RECOGNITION

Revenue / Income except divided and expenditures except Municipal Taxes are accounted for on accrual basis, as and when they are earned or incurred.

7) Deferred Tax resulting from timing difference between book & tax profits is accounted for under the liability method at the current rate of tax to the extent that the timing difference are expected to crystallize. Tax provision has been made according to Income Tax Act, 1961.

8) EMPLOYEES BENEFITS

The Company has provided gratuity amounting to Rs.27750.00 only (as per guide lines prescribed in AS-15, issued by The Institute of Chartered Accountants Of India & as per provisions of Gratuity Act) for all employees on completed year of Service. The provision is made for 15 days salary of each completed years of services.

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Mar 31, 2010

1) GENERAL

The Financial statement are prepared under the historical cost convention on the basis of going Conner in per applicable accounting standard and the provisions of the Companies Act 1956.. as adopted consistently by the company . The company follows mercantile system of accounting.

2) FIXED ASSTES

Fixed Assets are stated at cost/revalued amount less accumulated depreciation . Coat Comprises of purchase price or construction cost including any cost of bringing the asset to its working condition for use.

3) DEPRECIATION.

Depreciation on Fixed Assets has been provided on W.D.V. method as per clarification and on the basis of rates specified in schedule XIV to the companies Act,1956.

4) INVESTMENT

Long Term investment are stated at cast. In case there is a permanent diminution in value of any investment appropriate provision for the same is made in Accounts.

5) INVENTORIES OF SHARES AND REAL ESTATE (STOCK IN TRADE)

a) Shares stock are valued cost as on 31st March 2010.

b) Real estate are valued at expected net realizable value or cost whichever is lower.

6) REVENUE RECOGNITION

Revenue/Income except dividend and expenditures except Municipal Taxes are accounted For on accrual as and when they are earned or incurred.

7) DEFERRED TAX

deferred Tax resulting from timing difference between book & tax profits is accounted for under the liability method at the current rate of tax to the extent that the timing difference are expected to crystallize. Tax provision has been made according to Income Tax Act,1961.

8) EMPLOYEES BENEFITS

The company has provided gratuity amounting to Rs.33400.00 only(as per guide lines prescribed in AS-15- issued by The Institute Of Chartered Accountants Of India & as per provisions of Gratuity Act, for all employees on completed year of service. The provision is made for 15 days salary of each completed year of services..

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Mar 31, 2009

1) GENERAL

The Financial s atement are prepared under the historical cost convention on the basis of going concern i s per applicable accounting standard and the provisions of the Companies Act 1956,. as adoplid consistently by the company . The company follows mercantile system of accounting.

2) FIXED ASSTLS

Fixed Assets Ere staled at cost / revalued amount less accumulated depreciation , Cost comprises of rurchnse price or construction cost including any cost of bringing the asset to its working condition tor use.

3 ) DEPRECIATION

Depreciation on; Fixed Assets has been provided on W.D.V. method as per clarification and on the basis of ates specified in Schedule XIV to the companies Act 1956 .

4 ) INVESTMENT

Long Term investment are stated at cost. In case there is a permanent diminution in value of any .investment appropriate provision for the same is made in Accounts .

5) INVENTORIES OF SHAKES AND REAL ESTATE (STOCK IN TRADE)

a) Shares.stock are valued at cost as on 3Is'',March 2009 while upto proceeding previous year it was valued at cost or market price which ever is less. Due to change in basis of valuation profit has increased by Rs. 2132911.45,

b ) Real estate are valued at expected net realizable value or cost whichever is lower .

6) REVENUE RECOGNITION

Revenue / Income except dividend and expenditures except Municipal Taxes are accounted for on accrual basis , as and when they are earned or incurred .

7) Deferred Tax resulting from timing difference between book & tax profits is accounted for under the liability method at the current rate of lax to the extent that the timing difference arc expected to crystalyse . Tax provision has been made according to Income Tax Act 1961 .

8) Folowing Mutual funds were shown as stock in trade at cost or market price whichever is lower till 31.03.2008 and shown under the head Inventories in Balance Sheet as at 31.03.2008. The management has decided to convert the same into long term Investments as at 21.OS.08 & the market value of these Mutual Funds as at 21.08.2008 has been considered for calculating the value at which these arc to be transferred to Investment account. The difference between the cost and market value has been shown in profit & loss account for the year ended on 31.03.2009.

9 ) EMPLOYEES BENEFITS

The Company, lias provided gratuity amounting to Rs. 15,600.00 only( as per guide lines prescribed in AS - 15 , issued by The Institute Of Chartered Accountants Of India & as per provisions of Gratuity Act) for all employees on completed year of service. The provision is made for 15 days salary of each completed year of services .