Accounting Policies of Sarvamangal Mercantile Company Ltd. Company

Mar 31, 2024

27 Significant Accounting Policies

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

(A) Basis Of Preparation Of Financial Statement

The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the "Act") [Companies (Indian Accounting Standards) Rules, 2015] and
other relevant provisions of the Act.

The financial statements up to year ended March 31, 2017 were prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of
the Act. These financial statements are the second financial statements of the Company under Ind AS. Refer Note on ''First Time Adoption of Ind AS'' for an explanation of how the transition from previous GAAP to Ind AS has
affected the Company''s financial position, financial performance and cash flows which is separately presented in the annual report.

The financial statements were authorized for issue by the Company''s Board of Directors on May 30, 2024

These financial statements are presented in Indian Rupees (INR), which is also the functional currency. All the amounts have been rounded off to the nearest Rupee, unless otherwise indicated.

The Company follows the mercantile system of accounting and recognizes income and expenditure on an accrual basis. The financial statements are prepared under the historical cost convention, except in case of significant
uncertainties and except for the following:

(i) Investments are measured at fair value.

(B) Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade discount taxes and amounts collected on behalf of third parties. The Company recognises
revenue when the amount of revenue can be reliably measured and it is probable that future economic benefits will flow to the company. Interest Income is recognised in time proportinate method.

(I) Sales

Domestic sales are recognised when significant risks and rewards are transferred to the buyer as per the contractual terms or on dispatch where such dispatch coincides with transfer of significant risks and rewards to the buyer.

fin Other Income
(i) Interest Income

Interest income on financial asset is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to
the gross carrying amount of the financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instruments.

fii) Dividends

Dividends are recognised in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the group, and the amount of the dividend can be
measured reliably.

(C) Property, plant and equipment

On transition to Ind AS, The Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1 April 2016 measured as per the previous GAAP and used those carrying value as
the deemed cost of the property, plant and equipment.

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

(ii) Depreciation

(a) Fixed assets are stated at cost less accumulated depreciation.

(b) The depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013.

(D) Cash And Cash Equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash on hand, other short-term, highly liquid investments with original maturities of three months or less
that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(E) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

(F) Trade and other payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. They are recognised initially at their fair value and subsequently measured at amortised
cost using the effective interest method.

(G) Borrowing Cost

(i) Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the borrowings using the effective interest method.

(ii) Borrowings are classified as current financial liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Where there is a breach of a material
provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does not classify the liability as current, if the
lender agreed, after the reporting period and before the approval of the financial statements for issue, not to demand payment as a consequence of the breach.

(H) Investments

All equity investments are measured at fair value, with value changes recognised in Other Comprehensive Income.

(I) Segment Report

(i) The company identifies primary segment based on the dominant source, nature of risks and returns and the internal organisaiton and mangagement structure. The operating segement are the segments for which separate
financial information is available and for which operating profit/loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.

(ii) The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.

(J) Earnings Per Share

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in
ascertaining the Company''s earnings per share is the net profit for the period. The weighted average number equity shares outstanding during the period and all periods presented is adjusted for events, such as bonus shares,
other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net
profit of loss for the period attributable to equity shareholders and the weighted average number of share outstanding during the period is adjusted for the effects of all dilutive potential equity shares, if any.

(K) Taxation

(i) The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate for the jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences, to unused tax losses and unabsorbed depreciation.

(ii) Provision for Income tax is made on the basis of the estimated taxable income for the current accounting period in accordance with the Income- tax Act, 1961 and Revised Income Computation and Disclosure Standards (ICDS)
of the Income-tax Act, 1961.

(iii) Deferred tax is provided using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined
using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is
settled. The carrying amount of deferred tax assets is reviewed at each reporting date and adjusted to reflect changes in probability that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax
assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority.

(iv) Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In that case, the no tax has been recognised in the books of
Accounts.

(L) Impairment of Assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the management estimates the recoverable amount of the asset. If such recoverable
amount of the asset or the recoverable amount of the cash generating unit to which the assets belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an
impairment loss and is recognized in the statement of profit and loss. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed , and
the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost.

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Mar 31, 2014

A) The books of accounts are maintained on accrual basis.

b) Dividend Income in the books is accounted when right to receive the payment is established.

c) Fixed Assets are stated at historical cost.

d) Depreciation has been provided on written down value method at the rates specified in Schedule

XIV of the Companies Act, 1956.

e) Long Term Investments are stated at cost. Cost is determined on average method.

f) Stock in Trade (quoted) are shown at Cost or Market value whichever is lower.

g) Stock in Trade (unquoted) are valued at Cost.

h) Taxation

i. Income-tax expenses comprise current tax and deferred tax charge or credit.

ii. The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax loss that have been enacted or substantially enacted by the Balance Sheet date.

iii. Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognised, only if there is a virtual certainly of its realisation, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognised only to the extent there is a reasonable certainty of its realisation.

iv. At each Balance Sheet date, the carrying amount of deferred tax assets is reviewed to reassure realisation.

i) Other Accounting Policies are consistent with generally accepted account practices.

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Mar 31, 2013

A) The books of accounts are maintained on accrual basis.

b) Dividend Income in the books is accounted when right to receive the payment is established.

c) Fixed Assets are stated at historical cost.

d) Depreciation has been provided on written down value method at the rates specified in Schedule XIV of the Companies Act, 1956.

e) Long Term Investments are stated at cost. Cost is determined on average method.

f) Stock in Trade (quoted) are shown at Cost or Market value whichever is lower.

g) Stock in Trade (unquoted) are valued at Cost. h) Taxation

i. Income-tax expenses comprise current tax and deferred tax charge or credit.

ii. The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax loss that have been enacted or substantially enacted by the Balance Sheet date.

iii. Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognised, only if there is a virtual certainly of its realisation, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognised only to the extent there is a reasonable certainty of its realisation.

iv. At each Balance Sheet date, the carrying amount of deferred tax assets is reviewed to reassure realisation.

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Mar 31, 2012

A) The books of accounts are maintained on accrual basis.

b) Dividend Income in the books is accounted when right to receive the payment is established

c) Fixed Assets are stated at historical cost.

d) Depreciation has been provided on written down value method at the rates specified in Schedule XIV of the Companies Act, 1956.

e) Long Term Investments are stated at cost. Cost is determined on average method.

f) Stock in Trade (quoted) are shown at Cost or Market value whichever is lower.

g) Stock in Trade (unquoted) are valued at Cost. h) Taxation

i. Income-tax expenses comprise current tax and deferred tax charge or credit

ii. The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax loss that have been enacted or substantially enacted by the Balance Sheet date.

iii. Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognised, only if there is a virtual certainly of its realisation, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognised only to the extent there is a reasonable certainty of its realisation.

iv. At each Balance Sheet date, the carrying amount of deferred tax assets is reviewed to reassure realisation.

h) Other Accounting Policies are consistent with generally accepted account practices.

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Mar 31, 2011

A) The books of accounts are maintained on accrual basis.

b) Dividend Income in the books is accounted when right to receive the payment is established

c) Fixed Assets are stated at historical cost.

d) Depreciation has been provided on written down value method at the rates specified in Schedule XIV of the Companies Act, 1956.

e) Long Term Investments are stated at cost. Cost is determined on average method.

f) Stock in Trade (quoted) are shown at Cost or Market value whichever is lower.

g) Stock in Trade (unquoted) are valued at Cost.

h) Taxation

i. Income-tax expenses comprise current tax and deferred tax charge or credit

ii. The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax loss that have been enacted or substantially enacted by the Balance Sheet date.

iii. Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognised, only if there is a virtual certainly of its realisation, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognised only to the extent there is a reasonable certainty of its realisation.

iv. At each Balance Sheet date, the carrying amount of deferred tax assets is reviewed to reassure realisation.

i) Other Accounting Policies are consistent with generally accepted account practices.

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Mar 31, 2010

A) The books of accounts are maintained on accrual basis. b) Dividend Income in the books is accounted when right to receive the payment is established

c) Fixed Assets are stated at historical cost.

d) Depreciation has been provided on written down value method at the rates specified in Schedule XIV of the Companies Act, 1956.

e) Long Term Investments are stated at cost. Cost is determined on average method.

f) Stock in Trade (quoted) are shown at Cost or Market value whichever is lower.

g) Stock in Trade (unquoted) are valued at Cost.

h) Taxation

i. Income-tax expenses comprise current tax and deferred tax charge or credit

ii. The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax loss that have been enacted or substantially enacted by the Balance Sheet date.

iii. Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognised, only if there is a virtual certainly of its realisation, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognised only to the extent there is a reasonable certainty of its realisation.

iv. At each Balance Sheet date, the carrying amount of deferred tax assets is reviewed to reassure realisation.

i) Other Accounting Policies are consistent with generally accepted account practices.