Note 2. Significant Accounting Policies:
1. Basis of Accounting: -
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting
Principles in India ("Indian GAAP"), the Accounting Standards ("AS") as specified under section 133 of The Companies
Act, 2013, read with applicable rules of Companies (Accounts) Rules 2014 and the relevant provisions of the Companies
Act, 2013 ("the Act"). The financial statements are prepared on the basis of going concern under the historical cost
convention using the accrual method of accounting.
2. Use of Estimates: -
The preparation of financial statements in conformity with Indian GAAP requires the Management to make estimates
and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and disclosures of
contingent liabilities. Management believes that the estimates used in the preparation of financial statements are
prudent and reasonable. Actual results could differ from the estimates.
3. Valuation of Inventories:-
Raw materials, stores and Spares are valued at cost and net of credits under scheme under CENVAT Rules, VAT Rules and
GST Rules. Finished Goods and Trade Goods are valued at Cost or Market Value/Contract Price Whichever is lower. Cost
of inventories comprises of cost of purchase, cost of conversion and other costs including manufacturing overheads
net of recoverable taxes incurred in bringing them to their respective present location and condition.
Cost of raw materials, process chemicals, stores and spares, packing materials, trading and other products are
determined on weighted average basis.
4. Cash and Cash Equivalents (for the purpose of Cash Flow Statement): -
Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand, fixed deposits
with banks which are short term, highly liquid investments that are readily convertible into known amounts of cash
and which are subject to an insignificant risk of changes in value.
5. Cash Flow Statement: -
Cash flows are reported using the indirect method, whereby profit / loss before extraordinary items and 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
available information.
6. Event Occurring After Balance Sheet Date:
As per AS 4 Events occurring after the balance sheet date are those significant events, both favourable and unfavourable,
that occur between the balance sheet date and the date on which the financial statements are approved by the Board
of Directors in the case of a company, and by the corresponding approving authority in the case of any other entity.
These events can broadly be classified in two ways:
a) Those which provide further evidence of conditions that existed at the balance sheet date; and
b) Those which are indicative of conditions that arose subsequent to the balance sheet date.
Adjustments to assets and liabilities are required for events occurring after the balance sheet date that provide
additional information materially affecting the determination of the amounts relating to conditions existing at the
balance sheet date.
7. Revenue Recognition: -
Income from sale is recognized upon transfer of significant risks and rewards of ownership of the goods to the customer
which generally coincides with dispatch of Goods to customer. Sales are recorded net of- Sales Tax / VAT, GST, returns,
rebates, discounts and excise duties.
Interest income is recognized on accrual basis.
Other operational revenue represents income earned from the activities incidental to the business and is recognized
when the right to receive the income is established as per the terms of the contract.
Revenue is recognized when consideration receivable for the sale of goods, the rendering of services or from the use
by others of enterprise resources is reasonably determinable. When such consideration is not determinable within
reasonable limits, the recognition of revenue is postponed.
When recognition of revenue is postponed due to the effect of uncertainties, it is considered as revenue of the period
in which it is properly recognized.
8. Property, Plant and Equipment & Capital Work-In-Progress and Depreciation: -
Property, Plant and Machinery are stated at cost less depreciation/amortization and impairment losses, if any. The cost
of Fixed Assets comprises its purchase price net of any taxes, duties, freight and other incidental expenses related to
acquisition, improvements and installation of the assets.
Borrowing costs that are directly attributable to the acquisition/construction of the Qualifying asset are capitalized as
part of the cost of such asset, acquisition/completion of construction.
Projects under which Property, Plant and Machinery are not yet ready for their intended use are carried at cost,
comprising direct cost, related incidental expenses and attributable interest.
Gains or Losses arising from de-recognition of Property, Plant and Machinery are Measured as the difference between
the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss
when the asset is derecognized.
Intangible Assets acquired separately are measured on initial recognition at cost. Following initial recognition, Intangible
Assets are carried at cost less accumulated amortization and accumulated impairment, if any. Gains or losses arising
from de-recognition of an Intangible Asset are measured as the difference between the net disposal proceeds and the
carrying amount of the Asset and are recognized in the statement of profit and loss when the asset is derecognized.
Depreciation on Property, Plant and Machinery is provided on "Written down Value Method" over the useful lives of the
assets estimated by the Management. The Management estimates are based on the useful life provided in Schedule II
to Companies Act 2013, however for certain assets the Management Estimates differs from the useful life mentioned
in Schedule II. The Useful Life of Various assets are mentioned in the below Chart.
The change in respect of periodic depreciation is derived after determining an estimate of an asset's expected useful life
and the expected residual value at the end of its life. The useful lives and the residual value of the company's assets are
determined by the management at the time the asset is acquired and reviewed periodically, including at each financial
year end.
9. Government Grants: -
Grants/Subsidy is not recognized until and unless it is reasonably assured to be realized and the company has reasonable
assurance that it will comply with the conditions attached to the grant/subsidy.
Here Company has reasonable assurance that it will comply with the conditions attached to Government Grants and also
the company is reasonably certain about the ultimate receipt of the Grants. Hence government grants are recorded as
Income in Books of Accounts on fulfilment of criteria for recognition of Grants as per AS 12" Accounting for Government
Grants."
A contingency related to a government grant, arising after the grant has been recognized, should be treated in
accordance with Accounting Standard (AS) 4, Contingencies and Events Occurring after the Balance Sheet Date.
Government grants that become refundable should be accounted for as an extraordinary item (see Accounting Standard
(AS) 5, Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies).
10. Investments: -
Recognition and Measurement
Long-term investments are carried individually at cost, on disposal of investment, the difference between its cost and
net disposal proceeds is charged or credited to the Statement of Profit and Loss.
Current investments are carried at lower of cost and fair value. The determination of carrying amount of such investments
is done on the basis of weighted average cost of each individual investment.
Presentation and disclosures
Investments that are readily realizable and are intended to be held for not more than one year from the date, on
which such investments are made, are classified as current assets. All other investments are classified as long¬
term investments.
Interest and Rentals on Investment from long term and current investments, Gross Income are stated and the
amounts of Tax deducted at Source are disclosed separately.
11. Employee Benefits:
Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee
benefits. Benefits such as salaries, performance incentives, etc., are recognized as an expense at the undiscounted
amount in the Statement of Profit and Loss of the year in which the employee renders the related service.
Post-Employment Benefits:
a) Defined Contribution Plans
A defined contribution plan is a post-employment benefit plan under which the Company pays specified contributions
to a separate entity. The Company makes specified monthly contributions towards Provident Fund and Pension
Scheme. The Company's contribution is recognized as an expense in the Profit and Loss Statement during the
period in which the employee renders the related service.
b) Defined Benefit Plans
For defined benefit plans in the form of Gratuity Fund, the company is maintaining gratuity fund with Life Insurance
Corporation of India, premium paid to Life Insurance Corporation of India is debited to Profit and Loss account for
the respected accounting period in which they occur.
12. Borrowing Cost: -
Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalized
as part of cost of such asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset
that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs
are recognized as an expense in the period in which they are incurred.
13. Earnings Per Share: -
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders
by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity
shareholders and the weighted average number of Shares outstanding during the period are adjusted for the effects of
all dilutive potential equity shares. The same has been disclosed at the end of the Statement of Profit and Loss separately.
14. Taxes on Income: -
Tax expense comprises both current and deferred taxes. Current tax is provided for on the taxable profit of the year
at applicable tax rates.
Deferred taxes on income reflect the impact of timing difference between taxable income and accounting income for
the year and reversal of timing differences of earlier years if any.
The Company has Policy of offsetting deferred tax asset and deferred tax liabilities as it is a legally enforceable right to
set off assets against liabilities representing current tax and it relates to same governing taxation laws.
Deferred tax assets and liabilities are measured using the tax rates and tax law that have been enacted or substantively
enacted by the Balance Sheet date.
15. Impairment of Assets: -
Pursuant to "AS-28 Impairment of Assets" issued by the Central Government under the Companies (Accounting Standard)
Rules 2006 for determining Impairment in the carrying amount of fixed assets, the management has concluded that
since recoverable amount of fixed Assets is not less than its carrying amount, therefore no provision is required for
impairment in respect of fixed Assets owned by the Company.
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