n) Provisions and Contingencies
The assessments undertaken in recognising provisions and contingencies have been made in
accordance with the applicable Ind AS.
Provisions represent liabilities to the Company for which the amount or timing is uncertain. Provisions
are recognized when the Company has a present obligation (legal or constructive), as a result of past
events, and it is probable that an outflow of resources, that can be reliably estimated, will be required to
settle such an obligation. If the effect of the time value of money is material, provisions are determined
by discounting the expected future cash flows to net present value using an appropriate pre-tax discount
rate that reflects current market assessments of the time value of money and, where appropriate, the
risks specific to the liability. Unwinding of the discount is recognized in the statement of profit and loss
as a finance cost. Provisions are reviewed at each reporting date and are adjusted to reflect the current
best estimate.
Provision for Warranty: The Company makes provision for the probable future liability on account of the
warranty based on the estimation of the warranty claims/expenses that the Company expects to
materialize in the future. The Company assesses the need and quantum of provision for warranty based
on conditions prevailing at each year-end.
The Company has significant capital commitments in relation to various capital projects which are not
recognized on the balance sheet. In the normal course of business, contingent liabilities may arise from
litigation and other claims against the Company. Guarantees are also provided in the normal course of
business. There are certain obligations which management has concluded, based on all available facts
and circumstances, are not probable of payment or are very difficult to quantify reliably, and such
obligations are treated as contingent liabilities and disclosed in the notes but are not reflected as
liabilities in the financial statements. Although there can be no assurance regarding the final outcome
of the legal proceedings in which the Company involved, it is not expected that such contingencies will
have a material effect on its financial position or profitability.
Contingent assets are not recognised but disclosed in the financial statements when an inflow of
economic benefits is probable.
o) Cash Flow Statement
Cash flows are reported using indirect method as set out in Ind AS -7 "Statement of Cash Flows", whereby
profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals
or accruals of past or future cash receipts or payments. The cash flows from operating, investing and
financing activities of the Company are segregated based on the available information.
p) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the
management. Operating segments are those components of the business whose operating results are
regularly reviewed by the chief operating decision making body in the Company to make decisions for
performance assessment and resource allocation. The reporting of segment information is the same as
provided to the management for the purpose of the performance assessment and resource allocation to
the segments.
q) Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as
part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur.
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing
of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to
the borrowing costs.
r) Impairment of Non-Financial Assets
An asset is considered as impaired when at the date of Balance Sheet there are indications of impairment
and the carrying amount of the asset exceeds its recoverable amount (i.e. the higher of the fair value
less cost to sell and value in use). The carrying amount is reduced to the recoverable amount and the
reduction is recognized as an impairment loss in the Statement of Profit and Loss. The impairment loss
recognized in the prior accounting period is reversed if there has been a change in the estimate of
recoverable amount. Post impairment, depreciation is provided on the revised carrying value of the
carrying value of the impaired asset over its remaining useful iife.
s) Government Grants
Government grants are recognised where there is reasonable assurance that the grant will be received
and all attached conditions will be complied with. When the grant relates to an expense item, it is
recognised as income on a systematic basis over the periods that the related costs, for which it is
intended to compensate, are expensed. When the grant relates to an asset, it is treated as deferred
income and released to the statement of profit and loss over the expected useful lives of the assets
concerned. When the Company receives grants of non-monetary assets, the asset and the grant are
recorded at fair value amounts and released to statement of profit and loss over the expected useful life
in a pattern of consumption of the benefit of the underlying asset. When loans or similar assistance are
provided by governments or related institutions, with an interest rate below the current applicable market
rate, the effect of this favourable interest is regarded as a government grant. The loan or assistance is
initially recognised and measured at fair value and the government grant is measured as the difference
between the initial carrying value of the loan and the proceeds received. The loan is subsequently
measured as per the accounting policy applicable to financial liabilities.
t) Financial Instruments
A financial Instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.
(A) Financial Assets
(i) Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets
not recorded at fair value through statement of profit and loss, transaction costs that are
attributable to the acquisition of the financial asset. Purchases or sales of financial assets
that require delivery of assets within a time frame established by regulation or convention
in the market place (regular way trades) are recognised on the trade date, i.e., the date that
the Company commits to purchase or sell the asset.
(ii) Subsequent measurement
Subsequent measurement of financial assets is described below -
a. Financial Assets (Debt instruments) at amortised cost
A 'debt instrument' is measured at the amortised cost if both the following conditions
are met:
a) The asset is held within a business model whose objective is to hold assets for
collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are
solely payments of principal and interest (SPPI) on the principal amount
outstanding.
After initial measurement, such financial assets are subsequently measured at
amortised cost using the effective interest rate (EIR) method. Amortised cost is
calculated by taking into account any discount or premium on acquisition and fees or
costs that are an integral part of the EIR. The EIR amortisation is included in finance
income in the statement of profit and loss. The losses arising from impairment are
recognised in the statement of profit and loss. This category generally applies to trade
and other receivables.
b. Debt Instrument at FVTOCI
A 'debt instrument’ is classified as at the FVTOCI if both of following criteria are met:
a) The objective of the business model is achieved both by collecting contractual
cash flows and selling the financial assets, and
b) The asset's contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category are measured initially as well
as at each reporting date at fair value. Fair value movements are recognized in the
other comprehensive income (OCI).
However, the Company recognizes interest income, impairment losses & reversals and
foreign exchange gain or loss in the P&L. On derecognition of the asset, cumulative
gain or loss previously recognised in OCI is reclassified from the equity to P&L. Interest
earned whilst holding FVTOCI debt instrument is reported as interest income using the
EIR method.
c. Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does
not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified
as at FVTPL.
In addition, the Company may elect to designate a debt instrument, which otherwise
meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is
allowed only if doing so reduces or eliminates a measurement or recognition
inconsistency (referred to as 'accounting mismatch'). The Company has designated
its investments in debt instruments as FVTPL. Debt instruments included within the
FVTPL category are measured at fair value with all changes recognized in the P&L.
(iii) De-recognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of
similar financial assets) is primarily derecognised (i.e. removed from the Company's
balance sheet) when:
n The rights to receive cash flows from the asset have expired, or
a The Company has transferred its rights to receive cash flows from the asset or has
assumed an obligation to pay the received cash flows in full without material delay to
a third party under a 'passthrough' arrangement; and either (a) the Company has
transferred substantially all the risks and rewards of the asset, or (b) the Company has
neither transferred nor retained substantially all the risks and rewards of the asset, but
has transferred mntrnl nf the asset
When the Company has transferred its rights to receive cash flows from an asset or has
entered into a pass-through arrangement, it evaluates if and to what extent it has retained
the risks and rewards of ownership. When it has neither transferred nor retained
substantially ail of the risks and rewards of the asset, nor transferred control of the asset,
the Company continues to recognise the transferred asset to the extent of the Company’s
continuing involvement. In that case, the Company also recognises an associated liability.
The xtransferred asset and the associated liability are measured on a basis that reflects
the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is
measured at the lower of the original carrying amount of the asset and the maximum
amount of consideration that the Company could be required to repay.
(iv) Impairment of financial assets
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 that are debt
instruments, and are measured at amortised cost e.g., loans, debt securities, deposits and
trade receivables or any contractual right to receive cash or another financial asset.
Trade Receivables
A receivable is classified as a 'trade receivable' if it is in respect to the amount due from
customers on account of goods sold or services rendered in the ordinary course of
business.
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 recognises impairment loss allowance based on
lifetime ECLs at each reporting date, right from its initial recognition.
In other words, trade receivables are recognised initially at fair value and subsequently
measured at amortised cost less expected credit loss, if any.
For recognition of impairment loss on other financial assets and risk exposure, the
Company determines that whether there has been a significant increase in the credit risk
since initial recognition. If credit risk has not increased significantly, 12-month ECL is used
to provide for impairment loss. However, if credit risk has increased significantly, lifetime
ECL is used. If, in a subsequent period, credit quality of the instrument improves such that
there is no longer a significant increase in credit risk since initial recognition, the Company
reverts to recognising impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over
the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime
ECL which results from default events that are possible within 12 months after the reporting
date.
ECL is the difference between ail contractual cash flows that are due to the Company in
accordance with the contract and all the cash flows that the entity expects to receive (i.e.,
all cash shortfalls), discounted at the original EIR.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as
income/ expense in the statement of profit and loss. This amount is reflected under the
head 'other expenses' in the statement of profit and loss. The balance sheet presentation
for various financial instruments is described below:
D Financial assets measured as at amortised cost: ECL is presented as an allowance,
i.e., as an integral part of the measurement of those assets in the balance sheet. The
allowance reduces the net carrying amount. Until the asset meets write-off criteria, the
Company does not reduce impairment allowance from the gross carrying amount.
a Debt instruments measured at FVTPL: Since financial assets are already reflected at
fair value, impairment allowance is not further reduced from its value. The change in
fair value is taken to the statement of Profit and Loss.
n Debt instruments measured at FVTOCI: Since financial assets are already reflected at
fair value, impairment allowance is not further reduced from its value. Rather, ECL
amount is presented as 'accumulated impairment amount' in the OCI.
For assessing increase in credit risk and impairment loss, the Company combines financial
instruments on the basis of shared credit risk characteristics with the objective of
facilitating an analysis that is designed to enable significant increases in credit risk to be
identified on a timely basis.
The Company does not have any purchased or originated credit-impaired (POCI) financial
assets, i.e., financial assets which are credit impaired on purchase/ origination.
(B) Financial liabilities
(I) Initial Recognition & Measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value
through statement of profit and loss, loans and borrowings, payables, or as derivatives
designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans &
borrowings and payables, net of directly attributable transaction costs.
The Company's financial liabilities include trade and other payables, loans and borrowings
including bank overdrafts, financial guarantee contracts and derivative financial
instruments.
Measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through statement of profit and loss
Financial liabilities at fair value through statement of profit and loss include financial
liabilities held for trading and financial liabilities designated upon initial recognition as at
fair value through statement of profit and loss. Financial liabilities are classified as held for
A.
trading if they are incurred for the purpose of repurchasing in the near term. This category
also includes derivative financial instruments entered into by the Company that are not
designated as hedging instruments in hedge relationships as defined by Ind AS 109.
Separated embedded derivatives are also classified as held for trading unless they are
designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the statement of profit and
loss. Financial liabilities designated upon initial recognition at fair value through statement
of profit and loss are designated as such at the initial date of recognition, and only if the
criteria in Ind AS 109 are satisfied.
For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own
credit risk are recognized in OCI. These gains/ losses are not subsequently transferred to
statement of profit and loss.
However, the Company may transfer the cumulative gain or loss within equity. All other
changes in fair value of such liability are recognised in the statement of profit and loss. The
Company has not designated any financial liability as at fair value through statement of
profit and loss.
(ii) Loans and Borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured
at amortised cost using the effective interest rate (hereinafter referred as EIR) method.
Gains and losses are recognized in statement of profit and loss when the liabilities are de¬
recognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition
and fees or costs that are an integral part of the EIR. The EIR amortisation is included as
finance costs in the statement of profit and loss.
(iii) Buyers Credit
The Company enters into arrangements whereby financial institutions make direct
payments to suppliers for raw materials and project materials. The financial institutions
are subsequently repaid by the Company at a later date providing working capital timing
benefits. These are normally settled up to twelve months (for raw materials) and up to 36
months (for project materials). Where these arrangements are for raw materials with a
maturity of up to twelve months, the economic substance of the transaction is determined
to be operating in nature and these are recognised as operational buyers’ credit (under
Trade and other payables). Where these arrangements are for project materials with a
maturity up to 36 months, the economic substance of the transaction is determined to be
financing in nature, and these are classified as projects buyers’ credit within borrowings in
the statement of financial position.
(iv) Financial liabilities - De-recognition
A financial liability is de-recognised when the obligation under the liability is discharged or
cancelled or expires. When an existing financial liability is replaced by another from the
same lender on substantially different terms, or the terms of an existing liability are
ff ja/ /'“•a vmi ff.vV -v/Av V I
substantially modified, such an exchange or modification is treated as the derecognition of
the original liability and the recognition of a new liability.
The difference in the respective carrying amounts is recognised in the statement of profit
and loss.
(v) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the
balance sheet if there is a currently enforceable legal right to offset the recognised amounts
and there is an intention to settle on a net basis, to realise the assets and settle the
liabilities simultaneously. For more information on financial instruments Refer Note No. 59.
u) Investment in Subsidiaries, joint ventures and associates:
Subsidiary: A subsidiary is an entity controlled by the Company. Control exists when the Company has
power over the entity, is exposed, or has rights to variable returns from its involvement with the entity
and has the ability to affect those returns by using its power over entity. Power is demonstrated through
existing rights that give the Company the ability to direct relevant activities, those which significantly
affect the entity’s returns.
Associate: Associate entities are entities, over which an investor exercises significant influence but not
control. Significant influence is defined as power to participate in the financial or operating policy
decisions of the investee but not control over the policies.
Company assumes that holding of 20% or more of the voting power of the investee (whether directly or
indirectly) gives rise to significant influence, unless contrary evidences exist.
Joint arrangement: A joint venture is a type of joint arrangement whereby the parties that have joint
control of the arrangement have rights to the net assets of the joint venture. Joint control is the
contractually agreed sharing of control of an arrangement, which exists only when decisions about the
relevant activities require unanimous consent of the parties sharing control.
v) Foreign currency transactions
(i) Initial Recognition
In the Standalone financial statements of the Company, transactions in currencies other than the
functional currency are translated into the functional currency at the exchange rates ruling at the
date of the transaction.
(ii) Conversion
Monetary assets and liabilities denominated in other currencies are translated into the functional
currency at exchange rates prevailing on the reporting date. Non-monetary assets and liabilities
denominated in other currencies and measured at historical cost or fair value are translated at the
exchange rates prevailing on the dates on which such values were determined.
(iii) Exchange Differences
All exchange differences are included in the statement of profit and loss except any exchange
differences on monetary items designated as an effective hedging instrument of the currency risk
of designated forecasted sales or purchases, which are recognized in the other comprehensive
income.
w) Dividend Distribution
Dividend Distribution / Annual dividend distribution to the shareholders is recognised as a liability in the
period in which the dividends are approved by the shareholders. Any interim dividend paid is recognised
on approval by Board of Directors. Dividend payable and corresponding tax on dividend distribution is
recognised directly in equity.
x) Prior Period Items
Errors of material amounts relating to prior period(s) are disclosed by a note with nature of prior period
errors, amount of correction of each such prior period presented retrospectively in the statement of
profit and loss and balance sheet, to the extent practicable along with change in basic and diluted
earnings per share. However, where retrospective restatement is not practicable for a particular period
then the circumstances that lead to the existence of that condition and the description of how and from
where the error is corrected are disclosed in Notes on Accounts.
y) Use of Estimates and Judgments
The preparation of the financial statements in conformity with Ind AS requires management to make
judgements, estimates and assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and
liabilities at the date of these financial statements and the reported amounts of revenues and expenses
for the years presented. Actual results may differ from these estimates under different assumptions and
conditions.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised and future periods affected.
In particular, information about significant areas of estimation uncertainty and critical judgments in
applying accounting policies that have the most significant effect on the amounts recognized in the
Standalone financial statements are elaborated in Note No. 4.
4A. CRITICAL ESTIMATES AND JUDGEMENTS IN APPLYING ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted accounting principles in India
requires management to make judgments, estimates and assumptions that affect the reported amount of
revenue, expenses, assets and liabilities and disclosure of contingent liabilities on the date of the financial
statements and the results of operations during the reporting year end. Although these estimates and
associated assumptions are based upon historical experiences and various other factors besides
management’s best knowledge of current events and actions, actual results could differ from these
estimates. The estimates and underlying assumptions are reviewed on a periodic basis. Any revision in the
accounting estimates is recognised in the period in which the results are known/ materialise.
Significant judgments and key sources of estimation in applying accounting policies are as follows:
a) Property, plant and equipment and useful life of property, plant and equipment and intangible assets
The carrying value of property, plant and equipment is arrived at by depreciating the assets over the useful
life of assets. The estimate of useful life is reviewed at the end of each financial year and changes are
accounted for prospectively.
b) Provisions and contingencies
The assessments undertaken in recognising provisions and contingencies have been made in accordance
with the applicable Ind AS.
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be
required to settle the obligation. Where the effect of time value of money is material, provisions are
determined by discounting the expected future cash flows.
The Company has significant capital commitments in relation to various capita! projects which are not
recognized on the balance sheet.
In the normal course of business, contingent liabilities may arise from litigation and other claims against the
Company. Guarantees are also provided in the normal course of business. There are certain obligations
which management has concluded, based on all available facts and circumstances, are not probable of
payment or are very difficult to quantify reliably, and such obligations are treated as contingent liabilities and
disclosed in the notes but are not reflected as liabilities in the Standalone financial statements. Although
there can be no assurance regarding the final outcome of the legal proceedings in which the Company
involved, it is not expected that such contingencies will have a material effect on its financial position or
profitability (Refer Note 44).
c) Employee benefit expenses
Actuarial valuation for gratuity liability of the Company has been done by an independent actuarial valuer on
the basis of data provided by the Company and assumptions used by the actuary. The data so provided and
the assumptions used have been disclosed in the notes to accounts.
d) Taxes
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit
will be available against which the losses can be utilised. Significant management judgement is required to
determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the
level of future taxable profits together with future tax planning strategies.
The Company has determined that it can recognise deferred tax assets on the tax losses carried forward as
it is probable that future taxable profit will be available against which the unused tax losses and unused tax
credits can be utilised. Further details on taxes are disclosed in Note No. 41.
e) Impairment of accounts receivable and advances
Trade receivables carry interest and are stated at their fair value as reduced by appropriate allowances for
expected credit losses. Individual trade receivables are written off when management deems them not to be
collectible. Impairment is recognised for the expected credit losses.
f) Discounting of Security deposit, retention money and other long-term liabilities
For majority of the security deposits received from suppliers of goods or contractors and the retention
moneys received, the timing of outflow, as mentioned in the underlying contracts, is not substantially long
enough to discount. The treatment would not provide any meaningful information and would have no material
impact on the Standalone financial statements.
g) Amortized Cost for Employee Loans
Employee loans have not been recorded using Effective Interest Rate method due to absence of any material
impact on Standalone financial statements and involvement of practical difficulties.
h) Investment in Equity Instruments
Investments made in equity instruments other than subsidiaries, joint ventures and in associates, have been
valued at fair value using the net asset value of the investee Companies as on the reporting date.
i) Restatement of Prior Period Items
Material prior period items, i.e. items having a value of above Rs. 5.00 Lac have been restated in the previous
year financials.
4B. RECENT PRONOUNCEMENTS
Ministry of Corporate Affairs ("MCA*) notifies new standards or amendments to the existing standards under
Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31,
2024, MCA has not notified any new standards or amendments to the existing standards applicable to the
Company.
In terms of our attached report of even date
For Mansaka Ravi & Associates
Chartered Accountants - ^ For afRton behalf of the Board of Directors of
Firm Reg. No.: 015023C Prostar n Info Systems Limited
(CARaviMansalfia) - s * Tapan(holfe^ Vikasngarwal
Partner Chairman & Managing Director Whole Time Director
Membership No. 410816 DIN:01719231 DIN: 01940262
v 0(
\ S' \\9jA c4/ /c°// x c
UDIN: 24410816BKCZMB5210 \\ *
Place: Navi Mumbai RamAgwwal Abhishek iain
Date: 26th August, 2024 CEO & Whole Time Director Chief Financial Officer
DIN:0J739245 PAN -ACJPJ8591L
KiretJ-Mukadam
Company Secretary
M. No. A27627
|