2. SIGNIFICANT ACCOUNTING POLICIES
2.1. Property, plant and equipment
Property, plant and equipment are stated at cost of acquisition or
construction less accumulated depreciation and any accumulated
impairment losses. The cost of fixed assets comprises of its purchase
price, non-refundable taxes & levies, freight and other incidental
expenses related to the acquisition and installation of the respective
assets. Borrowing cost attributable to financing of acquisition or
construction of the qualifying fixed assets is capitalized to respective
assets when the time taken to put the assets to use is substantial.
When major items of property, plant and equipment have different
useful lives, they are accounted for as separate items of property, plant
and equipment. The cost of replacement of any property, plant and
equipment is recognized in the carrying amount of the item if it is
probable that the future economic benefit associated with the item will
flow to the Company and its cost can be measured reliably.
The Estimated Useful Lives of assets are in accordance with the
Schedule II of the Companies Act, 2013.
2.2. Financial Instruments
2.2.1. Cash and cash equivalents
Cash and cash equivalents consists of cash on hand, short demand
deposits and highly liquid investments, that are readily convertible
into known amounts of cash and which are subject to an insignificant
risk of change in value. Short term means investments with original
maturities / holding period of three months or less from the date of
investments. Bank overdrafts that are repayable on demand and form
an integral part of the Company’s cash management are included as a
component of cash and cash equivalent for the purpose of statement
of cash flow.
2.2.2. Investments
Investments in the shares of private limited companies are valued at
cost and the same has been showed as Long Term Investments.
2.2.3. Trade Receivables
Trade receivables are amounts due from customers for sale of goods
or services performed in the ordinary course of business. Trade
receivables are initially recognized at its transaction price which is
considered to be its fair value and are classified as current assets as it
is expected to be received within the normal operating cycle of the
business.
2.2.4. Borrowings
Borrowings are initially recorded at fair value and subsequently
measured at amortized costs using effective interest method.
Transaction costs are charged to statement of profit and loss as
financial expenses over the term of borrowing. But as per the records
all the debts are recorded at their effective interest rate.
2.2.5. Trade payables
Trade payables are amounts due to vendors for purchase of goods or
services acquired in the ordinary course of business and are classified
as current liabilities to the extent it is expected to be paid within the
normal operating cycle of the business.
2.2.6. Other financial assets and liabilities
Other non-derivative financial instruments are initially recognized at
fair value and subsequently measured at amortized costs using the
effective interest method.
2.3. Inventories
Items of inventories are measured at lower of cost and net realisable
value after providing for obsolescence, if any. Cost of inventories
comprises of cost of purchase, cost of conversion and other costs
including manufacturing overheads incurred in bringing them to their
respective present location and condition. Cost of raw materials,
process, stores and spares, packing materials, trading and other
products are determined on FIFO basis. Cost of Finished Goods and
process Stock(WIP) is ascertained on full absorption cost basis.
2.4. Impairment of Assets
Financial assets
At each balance sheet date, the Company assesses whether a financial
asset is to be impaired. Ind AS 109 requires expected credit losses to
be measured through loss allowance. The Company measures the loss
allowance for financial assets at an amount equal to lifetime expected
credit losses if the credit risk on that financial asset has increased
significantly since initial recognition. If the credit risk on a financial
asset has not increased significantly since initial recognition, the
Company measures the loss allowance for financial assets at an
amount equal to 12-month expected credit losses. The Company uses
both forward-looking and historical information to determine whether
a significant increase in credit risk has occurred.
Non-financial assets
Property, Plant, Equipment and intangible assets
Property, plant and equipment and intangible assets with finite life are
evaluated for recoverability 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 value less 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. The Title deeds of all Immovable Properties are held in
the name of the company. No revaluation has been done for
“Property, Plant and Equipment” and “ Intangible Assets”.
If the recoverable amount of an asset (or CGU) is estimated to be less
than its 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 to such extent.
2.5. Employee Benefit
Short term employee benefits
Short term benefits payable before twelve months after the end of the
reporting period in which the employees have rendered service are
accounted as expense in statement of profit and loss.
Long term employee benefits
Defined benefit plans
The Company has not provided net obligation in respect of defined benefit plans
(gratuity, pension and other retirement benefit plans) as the company follows the
practice of accounting for retirement benefits as and when paid. This is not in
accordance with the Indian Accounting Standard 19- “Employee Benefit” issued by
the Institute of Chartered Accountants of India. The extent of non compliance in
value terms is not ascertained.
Defined Contribution Plan
A defined contribution plan is a post-employment benefit plan under
which the Company pays specified contributions for provident fund
and pension as per the provisions of the Provident Fund Act, 1952 to
the government. The Company’s contribution is recognised as an
expense in the Profit and Loss Statement during the period in which
the employee renders the related service. The company's obligation is
limited to the amounts contributed by it.
Compensated absences and earned leaves
The company offers a short term benefit in the form of encashment of
unavailed accumulated compensated absence above certain limit for all
of its employees and same is being provided for in the books at actual
cost.
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