Accounting Policies of P N Gadgil Jewellers Ltd. Company

Mar 31, 2025

2. MATERIAL ACCOUNTING POLICIES
INFORMATION

In accordance with the notification issued by the
Ministry of Corporate Affairs, the Company has
adopted Indian Accounting Standards (referred to
as “Ind AS”) notified under the Companies (Indian
Accounting Standards) Rules, 2015.

2.1 Basis of accounting preparation and
presentation

These financial statements have been prepared on
historical cost basis, except for certain financial assets
and liabilities that are measured at fair value at the
end of each reporting period. The financial statements
are presented in “INR” and all values are rounded
to the nearest Million (INR 000,000), except when
otherwise indicated.

Current versus non-current classification

The Company presents assets and liabilities in
the balance sheet based on current/non-current
classification.

An asset is current when it is :

• Expected to be realised or intended to be sold or
consumed in the normal operating cycle;

• Held primarily for the purpose of trading;

• Expected to be realised within twelve months after
the reporting period; or

• Cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at
least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

• It is expected to be settled in the normal
operating cycle;

• It is held primarily for the purpose of trading;

• It is due to be settled within twelve months after the
reporting period; or There is no unconditional right

to defer the settlement of the liability for at least
twelve months after the reporting period.

• There is no unconditional right to defer the
settlement of the liability for atleast 12 months after
the reporting period. The Company classifies all
other liabilities as non-current.

Deferred tax assets and liabilities are classified as
non-current assets and liabilities.

Operating cycle of the Company is the time between
the acquisition of assets for processing and their
realization in cash or cash equivalents. Based on
the nature of products and the time between the
acquisitions of assets for processing and their
realization in cash and cash equivalents, the company
has ascertained operating cycle of 12 months for the
purpose of current and non-current classification of
assets and liabilities.

Use of estimates and judgements

The preparation of these financial statements in
conformity with the recognition and measurement
principles of Ind AS requires the management of the
Company to make estimates and assumptions that
affect the reported balances of assets and liabilities,
disclosures relating to contingent liabilities as at the date
of the financial statements and the reported amounts
of income and expense for the period presented.

Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimates are
revised and future periods are affected.

Key source of estimation of uncertainty at the date of
the financial statements, which may cause a material
adjustment to the carrying amounts of assets and
liabilities within the next financial year, is in respect of,
useful lives of property, plant and equipment, provision
for warranty, variable consideration in revenue,
principal v/s agent assessment and provisions and
contingent liabilities. Future results could differ due
to these estimates and the differences between the
actual results and the estimates are recognized in the
periods in which the results are known / materialize.

2.2 Revenue from contracts with Customers

I nd AS 115 Revenue from contracts with customers
deals with revenue recognition and establishes
principles for reporting useful information to users of
financial statements about the nature, amount, timing
and uncertainty of revenue and cash flows arising
from an entity’s contracts with customers. Revenue
is recognised when a customer obtains control of a
promised good or service and thus has the ability to
direct the use and obtain the benefits from the good or
service in an amount that reflects the consideration to

which the entity expects to be entitled in exchange for
those goods and services.

A five-step process must be applied before revenue
can be recognised:

(i) identify contracts with customers

(ii) identify the separate performance obligation

(iii) determine the transaction price of the contract

(iv) allocate the transaction price to each of the
separate performance obligations, and

(v) recognise the revenue as each performance
obligation is satisfied.

Revenue recognition policy

The Company has following stream of revenue:

(i) Revenue from sale of jewellery

Sale of Goods

Revenue from the contracts with customers is
recognised when control of the goods is transferred
to the customer at an amount that reflects the
consideration to which the Company expects to
be entitled in exchange for those goods. Sales, as
disclosed, are inclusive of excise but are net of trade
allowances, rebates, goods and service tax and
amounts collected on behalf of third parties. The
Company considers the terms of the contract and
its customary business practices to 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 (for example, indirect taxes).

I n respect of contracts with customers that contain a
financing component i.e. when payment by a customer
occurs significantly before performance and the fair
value of goods provided to the customer at the end
of the contract term exceeds the advance payments
received, interest expense is recognized on recognition
of a contract liability over the contract period and is
presented under the head finance costs in statement
of profit and loss and total transaction price including
financing component is recognized when control of the
goods is transferred to the customer.

Satisfaction of performance obligations

The Company’s revenue is derived from the single
performance obligation to transfer primarily jewellery
under arrangements in which the transfer of control
of the products and the fulfilment of the Company’s
performance obligation occur at the same time.
Revenue from the sale of goods is recognised when
the Company has transferred control of the goods
to the buyer and the buyer obtains the benefits from

the goods, the potential cash flows and the amount
of revenue (the transaction price) can be measured
reliably, and it is probable that the Company will collect
the consideration to which it is entitled to in exchange
for the goods.

2.3 Other Income

Interest income

I nterest income from a financial asset is recognized
when it is probable that the economic benefits will
flow to the company and the amount of income can be
measured reliably. Interest Income is accrued on a time
basis, by reference to the principal outstanding and at
the effective interest rate applicable, which is the rate
that exactly discounts estimated future cash receipts
through the expected life of the financial asset’s net
carrying amount on initial recognition.

Dividend Income

Dividend income is recognized when the right to
receive it is established.

Rental Income

Rental income arising from operating leases is
accounted for on a straight-line basis over the lease
terms and is included in other income in the statement
of profit and loss.

Royalty Income:

Royalty revenue is recognized on the basis of actual
external sales amount of the Franchisee when the
subsequent sale or usage occurs. The Royalty revenue
is calculated on the basis of agreed terms between
company and franchisee.

2.4 Foreign Currency

Functional and presentation currency

Items included in the financial statements of the
company are measured using the currency of the
primary economic environment in which the company
operates (‘the functional currency’). The financial
statements are presented in Indian rupees (INR) and
rounded to the nearest million (INR 000,000), which is
functional and presentation currency of the Company.

Transactions and balances

Transactions in currencies other than the Company’s
functional currency are recognized at the exchange
rate prevailing on the date of transaction. Monetary
assets and liabilities denominated in foreign currencies
are translated into the functional currency at the
closing exchange rate prevailing as at the reporting
date. Non-monetary assets and liabilities denominated
in a foreign currency are translated using the exchange
rate prevailing at the date of initial recognition (in case

measured at historical cost) or at the rate prevailing
at the date when the fair value is determined (in case
measured at fair value).

Foreign exchange differences are recognized in profit
or loss in the period in which they arise except for
exchange difference on foreign currency borrowings
relating to assets under construction for future
productive use, which are included in the cost of those
assets when they are regarded as an adjustment to
interest cost on those foreign currency borrowings and
exchange differences on transactions entered into in
order to hedge foreign currency risks.

2.5 Borrowing Costs

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. Fees paid on
the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn
down. In this case, the fee is deferred until the draw
down occurs. To the extent there is no evidence that
it is probable that some or all of the facility will be
drawn down, the fee is capitalised as a prepayment for
liquidity services and amortised over the period of the
facility to which it relates.

Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which
are assets that necessarily take a substantial period
of time to get ready for their intended use or sale, are
added to the cost of those assets, until such time as
the assets are substantially ready for their intended
use or sale. Borrowing costs consist of interest and
other costs that the Company 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.

All other borrowing costs are recognized in profit or
loss in the period in which they are incurred.

2.6 Employee benefits

Short-term employee benefits

A liability is recognized for benefits accruing to
employees in respect of wages and salaries in
the period the related service is rendered at the
undiscounted amount of the benefit that is expected to
be paid in exchange for that service.

Other employee benefits - Compensated
Absences

The liability for earned leave is measured as the
present value of expected future payments to be made
in respect of services provided by employees up to
the end of the reporting period using the projected
unit credit method with actuarial valuations being
carried out at each balance sheet date. The benefits
are discounted using the market yields at the end of
the reporting period that have terms approximating to
the terms of the related obligation. Re-measurements
as a result of experience adjustments and changes in
actuarial assumptions are recognized in profit or loss.

The Company provides for the encashment of
compensated absences with pay subject to certain
rules. The employees are entitled to accumulate
compensated absences subject to certain limits, for
future encashment.

Accumulated leave, which is expected to be utilized
within the next twelve months, is treated as short¬
term employee benefit and the accumulated leave
expected to be carried forward beyond twelve month
is treated as long-term employee benefit which are
provided based on the number of days of unutilized
compensated absence on the basis of an independent
actuarial valuation.

Post-employment obligations

The Company operates the following post¬
employment schemes:

(a) Defined contribution plans such as provident fund.

(b) Defined benefit plans in the nature of gratuity and

A. Defined Contribution Plan :

The Company’s contribution to provident fund, pension
and employee state insurance scheme are considered
as defined contribution plans and are charged as an
expense based on the amount of contribution required
to be made and when services are rendered by
the employees.

B. Defined Benefit Plan :

For defined retirement benefit plans, the cost of
providing benefits is determined using the projected
unit credit method, with actuarial valuations being
carried out at the end of each annual reporting period.
Re-measurement, comprising actuarial gains and
losses, the effect of the changes to the asset ceiling
(if applicable) and the return on plan assets (excluding
interest), is reflected immediately in the statement of
financial position with a charge or credit recognized
in other comprehensive income in the period in which
they occur. Re-measurement recognized in other
comprehensive income is reflected immediately in
retained earnings and will not be reclassified to profit

or loss. Past service cost is recognized in profit or
loss in the period of a plan amendment. Net interest
is calculated by applying the discount rate at the
beginning of the period to the net defined benefit
liability or asset. Defined benefit costs are categorized
as follows:

• service cost (including current service cost,
past service cost, as well as gains and losses
on curtailments and settlements);

• net interest expense or income; and

• re-measurement.

2.7 Taxation

I ncome tax expense comprises current tax expense
and the net change in the deferred tax asset or liability
during the year. Current and deferred tax are recognized
in profit or loss, except when they relate to items that are
recognized in other comprehensive income or directly
in equity, in which case, the current and deferred tax
are also recognized in other comprehensive income
or directly in equity, respectively. Income tax expense
represents the sum of the tax currently payable and
deferred tax.

Current income tax

The tax currently payable is based on taxable profit for
the year. Taxable profit differs from ‘profit before tax’
as reported in the statement of profit or loss and other
comprehensive income because of items of income or
expense that are taxable or deductible in other years
and items that are never taxable or deductible.

The Company’s current tax is calculated using tax
rates that have been enacted or substantively enacted
by the end of the reporting period.

Management periodically evaluates positions taken
in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis
of amounts expected to be paid to the tax authorities.

Advance taxes and provisions for current income taxes
are presented in the balance sheet after off-setting
advance tax paid and income tax provision arising in
the same tax jurisdiction and where the relevant tax
paying unit intends to settle the asset and liability on a
net basis.

Deferred income taxes

Deferred tax is recognized using the balance sheet
approach. Deferred tax assets and liabilities are
recognized for deductible and taxable temporary
differences arising between the tax base of assets and
liabilities and their carrying amount.

Deferred income tax asset is recognized to the extent
that it is probable that taxable profit will be available
against which the deductible temporary differences
and the carry forward of unused tax credits and
unused tax losses can be utilized. The carrying amount
of deferred income tax assets is reviewed at each
reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be
available to allow all or part of the deferred income tax
asset to be utilized.

Deferred tax assets and liabilities are measured using
substantively enacted tax rates expected to apply to
taxable income in the years in which the temporary
differences are expected to be received or settled.

Deferred tax assets and liabilities are offset when they
relate to income taxes levied by the same taxation
authority and the relevant entity intends to settle its
current tax assets and liabilities on a net basis.

The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from
the manner in which the Company expects, at the end
of the reporting period, to recover or settle the carrying
amount of its assets and liabilities.

2.8 Property Plant and Equipment

Freehold land and Capital work in progress are
carried at historical costs. All other items of property,
plant and equipment are stated at historical cost,
net of accumulated depreciation and accumulated
impairment losses, if any. Such historical cost includes
the cost of replacing part of the property, plant and
equipment and borrowing costs if the recognition
criteria are met. When significant parts of the property,
plant and equipment are required to be replaced at
intervals, the Company depreciates them separately
based on their specific useful lives. Likewise, when a
major inspection is performed, its cost is recognised
in the carrying amount of the plant and equipment
as a replacement if the recognition criteria are
satisfied. All other repair and maintenance costs are
recognised in statement of profit or loss as incurred.
No decommissioning liabilities are expected or be
incurred on the assets of plant and equipment.

Expenditure directly relating to construction activity
is capitalised. Indirect expenditure incurred during
construction period is capitalised as part of the
construction costs to the extent the expenditure can
be attributable to construction activity or is incidental
there to. Income earned during the construction period
is deducted from the total of the indirect expenditure.

Property Plant and Equipment (PPE) are stated
at cost of acquisition or construction where cost
includes amount added/deducted on revaluation
less accumulated depreciation / amortization and
impairment loss, if any. Capital work-in-progress

for production, supply of administrative purposes is
carried at cost less accumulated impairment loss, if
any, until construction and installation are complete
and the asset is ready for its intended use.

Depreciation is provided on a pro-rata basis on the
straight-line method over the estimated useful lives
of the assets, based on technical evaluation done by
management’s expert taking into account the nature
of the assets, their estimated period of use and the
operating conditions. Lease hold improvements
are amortised over the lease term. The depreciation
charge for each period is recognised in the Statement
of Profit and Loss, unless it is included in the carrying
amount of any other asset.

I ndividual assets costing less than or equal to C 5,000
are depreciated at the rate of 100% in the year
of purchase.

The estimated useful lives, residual values and
depreciation method are reviewed at the end of each
reporting period, with the effect of any changes in
estimate accounted for on a prospective basis.

An item of property, plant and equipment is
derecognized upon disposal or when no future
economic benefits are expected to arise from the
continued use of the asset. Any gain or loss arising on
the disposal or retirement of an item of property, plant
and equipment, determined as the difference between
the sales proceeds and the carrying amount of the
asset, is recognized in the Statement of Profit or Loss..

2.9 Investment properties

Property that is held for long-term rental yields or for
capital appreciation or both, and that is not occupied
by the Company, is classified as investment property.
Investment property is measured initially at its
cost, including related transaction costs and where
applicable borrowing costs. Subsequent expenditure
is capitalised to the asset’s carrying amount only when
it is probable that future economic benefits associated
with the expenditure will flow to the Company and
the cost of the item can be measured reliably. All
other repairs and maintenance costs are expensed
when incurred. When part of an investment property

is replaced, the carrying amount of the replaced part
is derecognised.

Investment properties are derecognised either
when they have been disposed of or when they
are permanently withdrawn from use and no future
economic benefit is expected from their disposal. The
difference between the net disposal proceeds and the
carrying amount of the asset is recognised in profit or
loss in the period of derecognition.

2.10 Intangible Assets

Intangible assets are recognized at cost. Intangible
assets are amortised on a straight line basis over the
estimated useful economic life so as to reflect the
pattern in which the assets economic benefits are
consumed. Internally generated intangible assets,
excluding capitalised development costs, are not
capitalised and the expenditure is recognised in the
Statement of Profit and Loss in the period in which the
expenditure is incurred.

The estimated useful life and amortisation method are
reviewed at the end of each reporting period, with the
effect of any changes in estimate being accounted for
on a prospective basis.

Following summarizes the nature of intangible and the
estimated useful life:

An intangible asset is derecognized on disposal or
when no future economic benefits are expected
from use or disposal. Gains or losses arising from
derecognition of an intangible asset, measured as the
difference between the net disposal proceeds and the
carrying amount of the asset, and are recognized in the
profit or loss when the asset is derecognized.

2.11 Inventories

Inventories are valued at the lower of cost or net
realisable value.

Cost is determined as follows :

1. Gold, silver and platinum bullion, old ornaments
are considered as finished goods and valued at
weighted average cost.

2. Gold, silver and platinum ornaments are
considered as finished goods at weighted average
cost of purchase plus weighted average cost of
labour charges.

3. Stock of diamond, stones, MRP traded goods and
NSI is considered as finished goods and valued
as per at weighted average cost.

Cost comprises all cost of purchases, duties, taxes
(other than those subsequently recoverable from tax
authorities) and all other directly attributable costs
incurred in bringing the inventory to their present
location and condition.

Unfixed gold and quantities of gold covered under fair
value hedge is valued at gold prices prevailing on the
period closing date.

Net realisable value is the estimated selling price in the
ordinary course of business, less estimated costs of
completion to make the sale.