2 MATERIAL ACCOUNTING POLICIES:
A Basis of Preparation and Presentation
i) The financial statements are prepared in accordance with applicable Indian Accounting Standards (Ind AS) and
on accounting principles of going concern which are measured at fair values except Property, Plant & Equipments,
which are accounted for on historical cost basis. These financial statements have been prepared to comply
with all material aspects with the Indian accounting standards notified under section 133 of the Act, (the “Act”)
read with Companies (Accounting Standard) Rules, 2015 as amended, and the other relevant provisions of the
Act.
ii) 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 policies
hitherto in use.
iii) All assets and liabilities have been classified as current or non-current as per the Company’s normal operating
cycle and other criteria set out in the Schedule III to the Act. Based on the nature of products and the time
between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company
has ascertained its operating cycle as 12 months for the purpose of current classification of assets and
liabilities.
iv) Historical cost conventionThe financial statements have been prepared on a historical cost basis, except for
the following:^ Certain financial assets and liabilities that are measured at fair valuer Assets held for sale -
measured at lower of carrying amount or fair value less cost to sell;
B REVENUE RECONGNTION
i) Revenue is measured at the transaction valued considered as fair value of the consideration received or receivable
where the ownership and significant risk has been transferred to the buyer.
ii) Interest on overdue debtors is accounted for as and when received, as the collection cannot be ascertained
with reasonable certainty.
iii) Sales return are accounted for / provided for in the year in which they pertain to, as ascertained till finalization
of the books of account.
C PROPERTY, PLANT AND EQUIPMENTS
i) Land and buildings held for use in the production or supply of goods or services, or for administrative purposes,
are stated in the balance sheet at cost less and accumulated depreciation/ amortisation.
ii) Office Furniture, Vehicles and office equipment are stated at cost less accumulated depreciation and accumulated
impairment losses.
iii) An item of property, plant and equipment is derecognised 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 is determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised to the standalone statement of profit and loss.
D DEPRECIATION / AMORTIZATION
Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their
estimated useful lives or, in the case of certain leased furniture, fittings and equipment, the shorter lease term as
follows:
Asset Class Useful Life
Leasehold land 95 Years
Buildings- Office 60 Years
Buildings- Factory 30 Years
Furniture and fixtures 10 Years
Office equipments 5 Years
Vehicles 8 Years
E IMPAIRMENT
Assessment is done at each Balance Sheet date as to whether there is any indication that an asset may be
impaired. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash
inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets,
is considered as a cash generating unit. If any such indication exists, an estimate of the recoverable amount of the
asset/cash generating unit is made. Assets whose carrying value exceeds their recoverable amount are written
down to the recoverable amount. Recoverable amount is higher of an asset’s or cash generating unit’s net selling
price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the
continuing use of an asset and from its disposal at the end of its useful life. Assessment is also done at each
Balance Sheet date as to whether there is any indication that an impairment loss recognised for an asset in prior
accounting periods may no longer exist or may have decreased.
F EMPLOYEES BENEFITS:
Liability as at the year end in respect of retirement benefits is provided for and/ or funded and charged to Statement
of Profit and Loss as follows:
i) Provident Fund / Family Pensions:
At a percentage of salary/wages for eligible employees.
ii) Retirement benefit costs and termination benefit
The Company determines the present value of the defined benefit obligation and recognizes the liability or
asset in the balance sheet.
The present value of the obligation is determined using the projected unit credit method, with actuarial valuations
being carried out at the end of each year
Defined benefit costs are composed of:
(a) service cost - recognized in profit or loss; service cost comprises (i) current cost which is the increase in the
present value of defined benefit obligations resulting from employee service in the current period, (ii) past
service cost which is the increase in the present value of defined benefit obligations resulting from employee
service in the prior periods resulting from a plan amendment, and (iii) gain or loss on settlement.
(b) remeasurements of the liability or asset - recognized in other comprehensive income.
(d) remeasurements of the liability or asset essentially comprise of actuarial gains and losses (i.e. changes in the
present value of defined benefit obligations resulting from experience adjustments and effects of changes in
actuarial assumptions).
Short-term benefits: A liability is recognised for benefits accruing to employees in respect of wages and
salaries, annual leave and sick leave and other short term benefits in the period the related service is rendered
at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Other long-term benefits: Liabilities recognised in respect of other long-term employee benefits are measured
at the present value of the estimated future cash outflows expected to be made by the Group in respect of
services provided by employees up to the reporting date.
iii) Bonus
The company recognises a liability and expense for bonus in the year of payment. The company recognises a
provision where contractually obliged or where there is past practice that has created a constructive obligation.
G BORROWING COST
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, are added to the cost
of those assets, until such time as the assets are substantially ready for their intended use. All other borrowing
costs are recognised in the Statement of Profit and Loss in the period in which they are incurred. The Company
determines the amount of borrowing costs eligible for capitalisation as the actual borrowing costs incurred on that
borrowing during the period less any interest income earned on temporary investment of specific borrowings pending
their expenditure on qualifying assets, to the extent that an entity borrows funds specifically for the purpose of
obtaining a qualifying asset. In case if the Company borrows generally and uses the funds for obtaining a qualifying
asset, borrowing costs eligible for capitalisation are determined by applying a capitalisation rate to the expenditures
on that asset. The Company suspends capitalisation of borrowing costs during extended periods in which it suspends
active development of a qualifying asset
H EARNING PER SHARE
Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders
by the weighted average number of equity shares outstanding during the year. Earnings considered in ascertaining
the Company’s earnings per share is the net profit for the year attributable to equity share holders. The weighted
average number of equity shares outstanding during the year and for all years 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 or loss for the year attributable to equity shareholders and the weighted average number of
shares outstanding during the year is adjusted for the effects of all dilutive potential equity shares.
I TAXATION
INCOME TAX
Provision for Current Tax is made and retained in the accounts on the basis of estimated tax liability as per
applicable provisions of Income Tax Act 1961.
DEFERRED TAX
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax
liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised
for all deductible temporary differences to the extent that it is probable that taxable profits will be available against
which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not
recognised if the temporary difference arises from the initial recognition (other than in a business combination) of
assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent
that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be
recovered
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form
of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the
Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is
highly probable that future economic benefit associated with it will flow to the Company.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the
liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively
enacted by the end of the reporting period.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation
authority.
Current and deferred tax for the period
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised 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. Where current tax or deferred tax arises from the
initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
The Company recognises interest levied and penalties related to Income Tax assessments in the tax expanse.
J USE OF ESTIMATES
The preparation of Financial Statements requires estimates and assumptions to be made that affect the reported
amounts of assets and liabilities on the date of Financial Statements and the reported amounts of revenues and
expenses during the reporting period. Difference between the actual results and the estimates are recognised in
the period in which the results are known/ materialised.
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