2. Significant Accounting policies
2.1 Statement of Compliance
These financial statements of the Company have been prepared in accordance with Indian Accounting
Standards notified under the Companies (Indian Accounting Standards) Rules, 2015 ("Ind AS").
2.2 Basis of preparation
These financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified
under Section 133 of the Companies Act, 2013 ('the Act') read with Rule 3 of the Companies (Indian
Accounting Standards) Rules, 2015, and presentation requirements of Schedule III to the Act under the
historical cost convention on the accrual basis except for certain financial instruments which are measured
at fair value.
Accounting policies have been consistently applied except where a newly issued accounting standard is
initially adopted or a revision to an existing accounting standard requires a change in the accounting policy
hitherto in use.
All assets and liabilities have been classified as current and non-current as per the Company's normal
operating cycle. The statement of cash flows has been prepared under indirect method, whereby profit or
loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or
future operating cash receipts or payments and items of income or expense associated with investing or
financing cash flows. The cash flows from operating, investing and financing activities of the Company are
segregated.
2.3 Critical accounting judgments and key sources of estimation uncertainty
The preparation of the financial statements in conformity with the Ind AS requires management to
make judgments, estimates and assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities and disclosures as at date of the financial statements and the reported
amounts of the revenues and expenses for the years presented. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be relevant. Actual results may
differ from these estimates under different assumptions and conditions.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised if the revision affects only that period,
or in the period of the revision and future periods if the revision affects both current and future periods.
Critical Judgments in the process of applying the Company's accounting policies, management has made
the following judgments, which have the most significant effect on the amounts recognized in the financial
statements.
Contingences and commitments: In the normal course of business, contingent liabilities may arise from
litigations and other claims against the Company. Where the potential liabilities have a low probability of
crystallizing or are very difficult to quantify reliably, company treat them as contingent liabilities. Such
liabilities are disclosed in the notes but are not provided for in the financial statements. Although there can
be no assurance regarding the final outcome of the legal proceedings, company do not expect them to have a
materially adverse impact on the financial position or profitability.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the
reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are discussed below:
Income taxes: The Company's tax jurisdiction is India. Significant judgments are involved in determining the
provision for income taxes, including amount expected to be paid /recovered for uncertain tax positions.
Useful lives of property, plant and equipment: As described in Note 2.8, the Company reviews the
estimated useful lives and residual values of property, plant and equipment at the end of each reporting
period. During the current financial year, the management determined that there were no changes to the
useful lives and residual values of the property, plant and equipment.
Allowances for doubtful debts: The Company makes allowances for doubtful debts based on an assessment
of the recover ability of trade and other receivables. The identification of doubtful debts requires use of
judgment and estimates.
2.4 Operating Cycle and Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification
in accordance with Part-I of Division- II of Schedule Ill of the Companies Act, 2013.
An asset is treated as current when it,
(a) Expected to be realized or intended to be sold or consumed in normal operating cycle;
(b) Held primarily for the purpose of trading; or
(c) Expected to be realized with in twelve months after the reporting period, or
(d) The asset is 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,
(a) It is expected to be settled in normal operating cycle; or
(b) It is held primarily for the purpose of trading; or
(c) It is due to be settled within twelve months after the reporting period, or
(d) There is no unconditional right to defer the settlement of the liability for at least twelve months after the
reporting period. Terms of a liability that could, at the option of the counter party, results in its settlement
by the issue of equity instruments do not affect its classification. The Company classifies all other liabilities
as non- current.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash
and cash equivalents. The Company has identified twelve months as its normal operating cycle.
2.5 Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company
and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is
measured at the fair value of the consideration received or receivable, considering contractually defined
terms of payment inclusive of excise duty and net of returns, trade allowances, rebates, taxes and amounts
collected on behalf of third parties and government.
Sale of Goods Revenue from the sale of goods is recognized when the goods are delivered and titles have
passed, at which time all the following conditions are satisfied:
• The Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
• The Company retains neither continuing managerial involvement to the degree usually associated with
ownership nor effective control over the goods sold;
• The amount of revenue can be measured reliably;
• It is probable that the economic benefits associated with the transaction will flow to the Company; and the
costs incurred or to be incurred in respect of the transaction can be measured reliably.
Interest income Interest income is accrued on a time basis, by reference to the principal outstanding and at
the effective interest rate applicable.
Dividends that there is no any dividend income has earned by the company during the current financial year,
Generally, the company has policy to recognized the dividend income from investments when the Company's
right to receive the payment is established, which is generally when shareholders approve the dividend.
2.6 Segment Reporting
The Company has only one segment of activity dealing in production to marketing and distribution of health
and wellness products during the period; hence segment wise reporting as defined in Indian Accounting
Standard-108 is not applicable.
2.7 Functional Currency
The functional currency of the Company is the Indian rupee.
All financial information presented in INR LAKHS has been rounded to the nearest of LAKHS, unless otherwise
indicated.
2.8 Property, plant and equipment
Property, plant and equipment are stated at cost, less accumulated depreciation and impairment, if any Costs
directly attributable to acquisition are capitalized until the property, plant and equipment are ready for use,
as intended by management.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon
disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising
on de-recognition of the asset is included in the Statement of Profit or Loss when the asset is derecognized.
For transition to Ind AS, the Company has elected to continue with the carrying value of all its
property, plant and equipment are measured as per previous GAAP as it deemed cost on the date
of transition.
The company depreciates property, plant and equipment over their estimated useful lives using the straight¬
line method. The estimated useful lives of assets are as follows:
Plant and Equipment :10 - 15 years
Office Equipment* :3 to 6 years Furniture and Fixture :10 years
Electrical Installation and Equipment: 10 years Vehicles: 10 years
*Based on technical evaluation, the management believes that the useful lives as given above best represent
the period over which management expects to use these assets. Hence, the useful lives for these assets is
different from the useful lives as prescribed under Part C of Schedule-II of the Companies Act 2013.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed
at each financial year end and adjusted prospectively, it appropriate.
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 disposal or retirement of
an item of property, plant and equipment is determined as the difference between sales proceeds and the
carrying amount of the asset and is recognized in profit or loss. Fully depreciated assets still in use are retained
in financial statements.
2.9 Capital work-in-progress and intangible assets under development
Capital work-in-progress/intangible assets under development are carried at cost, comprising direct cost,
related incidental expenses and attributable borrowing cost.
2.10 Intangible assets
Intangible assets are measured on initial recognition at cost and subsequently are carried at cost less
accumulated amortization and accumulated impairment losses, if any.
An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use
or disposal. Gains or losses on de-recognition are determined by comparing proceeds with carrying amount.
These are included in profit or loss within other gains/ (losses).
The Company amortizes intangible assets with a finite useful life using the straight-line method over the of
useful lives determined by the terms of the agreement /contract. The estimated useful life is reviewed
annually by the management.
2.11 Income tax
Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability
during the year. Current and deferred taxes are recognized in Statement of Profit and 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.
Current tax: Current tax is measured at the amount of tax expected to be payable on the taxable income for
the year as determined in accordance with the provisions of the Income Tax Act, 1961. Current tax assets and
current tax liabilities are offset when there is a legally enforceable right to set off the recognized amounts and
there is an Intention to settle the asset and the liability on a net basis.
Deferred tax: Deferred income tax is recognized using the Balance Sheet approach. Deferred income 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, except when the deferred income tax arises from the
initial recognition of an asset or liability in a transaction that is not a business combination and affects neither
accounting nor taxable profit or loss at the time of the transaction.
Deferred tax assets are recognized only to the extent that it is probable that either future taxable profits or
reversal of deferred tax liabilities 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 a
deferred tax asset is reviewed at the end of 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 the tax rates and tax laws that have been enacted or
substantively enacted by the end of the reporting period and are expected to apply when the related deferred
tax asset is realized, or the deferred tax liability is settled. Deferred tax assets and liabilities are offset when
there is a legally enforceable right to set current tax assets and liabilities and when the deferred tax balances
relate to the same taxation authority.
2.12 Impairment of assets
Financial assets: The Company assesses on a forward-looking basis the expected credit losses associated
with its financial assets. The impairment methodology applied depends on whether there has been a
significant increase in credit risk. For trade receivables only, the Company applies the simplified approach
permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognized from
initial recognition of the receivables.
PPE and intangibles assets: Property, plant and equipment and intangible assets with finite life are
evaluated for recover ability whenever there is any indication that their carrying amounts may not be
recoverable. If any such indication exists, the recoverable amount (i.e., higher of the fair valueless cost to sell
and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows
that are largely independent of those from other assets. In such cases, the recoverable amount is determined
for the cash- generating unit (CGU) to which the asset belongs.
If the recoverable amount of an asset (or CGU) is estimated to be less than it's carrying amount, the carrying
amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognized in the
Statement of Profit and Loss.
2.13 Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cosine
hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and equivalent
subject to an insignificant risk of changes in value.
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