2. Material Accounting Policies
a. Basis of Preparation
These financial statements have been prepared in
accordance with the Generally Accepted Accounting
Principles in India ('Indian GAAP') to comply with the
Accounting Standards specified under Section 133 of
the Companies Act, 2013, as applicable. The financial
statements have been prepared under the historical
cost convention on accrual basis, except for certain
financial instruments which are measured at fair value.
The accounting policies adopted in the preparation
of the financial statements are consistent with those
followed in the previous year.
Based on the nature of products and the time between
acquisition of assets for processing and their
realisation in cash and cash equivalents, the company
has identified twelve months as its operating cycle for
the purpose of current/non-current classification of
assets and liabilities.
b. Use of Estimates
The preparation of financial statements requires the
management of the Company to make estimates and
assumptions that affect the reported balances of assets
and liabilities and disclosures relating to the contingent
liabilities as at the date of the financial statements and
reported amounts of Income and expenses during the
year. Examples of such estimates include provisions
for doubtful receivables, provision for income taxes,
the useful lives of depreciable property, plant and
equipment and provision for impairment. Future results
could differ due to changes in these estimates and the
difference between the actual result and the estimates
are recognised in the period in which the results are
known/materialise.
c. Functional and Presentation currency
These financial statements are presented in Indian
Rupees which is the company's functional currency
and all values are presented as H in lakh except where
specified and for number of shares.
d. Principles of Consolidation
The consolidated financial statements have been
prepared on the following basis:
The financial statements of the company and its
subsidiary have been combined on line-by-line basis by
adding together the book values of like items of assets,
liabilities, income and expenses, after fully eliminating
intra group balances and intra group transactions
resulting in unrealised profits or losses.
e. Property, Plant and Equipment
Freehold land is carried at historical cost.
All other items of property, plant and equipment are
stated at cost which includes capitalised borrowing
cost less accumulated depreciation and impairment
loss, if any. Cost includes purchase price including
non-refundable duties and taxes, expenditure directly
attributable to bring the assets to the location and
condition necessary for its intended use.
Subsequent expenditure is capitalised only if it is
possible that the future economic benefits associated
with the expenditure will flow to the company.
Intangible assets are recognised only if it is probable
that the future economic benefits that are attributable
to the assets will flow to the company and the cost
of assets can be measured reliably. Intangible assets
are stated at cost of acquisition less accumulated
amortisation and accumulated amortisation, if any.
f. Depreciation and Amortization
Depreciation has been provided on the Fixed Asset on
the WDV method and in accordance with the useful
life of the Asset as prescribed under Schedule II of the
Companies Act, 2013.
Intangible Assets
Intangible assets acquired separately are measured on
initial recognition at cost. Intangible assets acquired in a
business combination are recognized at fair value as at
the date of acquisition. Subsequently, intangible assets
are carried at cost less accumulated amortisation and
accumulated impairment losses, if any.
Intangible assets with finite useful lives are amortised
on a straight-line basis over their estimated useful lives
and assessed for impairment whenever there is an
indication of impairment.
g. Impairment of Assets
At each balance sheet date, the management reviews
the carrying amounts of its assets included in each
cash generating unit to determine whether there is
any indication that those assets were impaired. If any
such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of
impairment. Recoverable amount is the higher of an
asset's net selling price and value in use. In assessing
value in use, the estimated future cash flows expected
from the continuing use of the asset and from its
disposal are discounted to their present value using a
pre-tax discount rate that reflects the current market
assessments of time value of money and the risks
specific to the asset. Reversal of impairment loss is
recognised as income in the statement of profit and loss.
h. Investment
The company has accounted for its investments in
subsidiary/ies, associates and joint ventures at cost
less impairment loss, if any.
Other investments that are readily realisable and
intended to be held for not more than a year are
classified as current investments. All other investments
are classified as non-current investments.
Current investments are carried at lower of cost and fair
value determined on an individual investment basis.
Non-current investments are carried at cost. However,
provision for diminution in value is made to recognise
a decline, other than temporary, in the value of
these investments.
Inventories
Inventories are measured at lower of cost and net
realisable value. Cost of inventories is determined on a
First In First Out (FIFO) after providing for obsolescence
and other losses as considered necessary.
Cost includes expenditure incurred in acquiring the
inventories, conversion cost and the cost incurred in
bringing them to their present location and condition.
Inventories are valued on the principle laid down by the
Accounting Standard - 2 on Inventories :
j. Cash and Cash Equivalents
Cash and cash equivalents for the purpose of cash
flow statement comprises of cash at bank and hand
and short-term investments with an original maturity of
three months or less.
k. Revenue Recognition
Revenue from sale of goods is recognised when the
significant control, risk and rewards of the ownership
have been transferred to the buyer, generally on the
delivery of goods.
Revenue from rendering of services is recognised
when the performance of agreed contractual task has
been completed.
Revenue from sale of scrap is recognised as and
when scrap is sold.
Interest income is recognised on a time proportion
basis taking into account the amount outstanding and
the applicable rate.
Dividend income from investments is recognised
when the company's right to receive the payment is
established, which is generally when shareholders
approve the dividend.
The benefits accrued under Roadtep as per the Import
Export Policy in respect of exports under the said
scheme are recognised when there is a reasonable
assurance that the benefits will be received.
Rent income is recognised on accrual basis as per the
terms of the rent agreement.
l. Borrowing Costs
Borrowing costs that are directly attributable to the
acquisitions or production of a qualifying asset are
capitalized during the period of time that is required
to complete and prepare the asset for intended use
or sale. Qualifying assets are assets that necessarily
take a substantial period of time to get ready for their
intended use or sale. All other borrowing costs are
expenses in the period in which they are incurred.
Investment income earned on the temporary investment
of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing cost
eligible for capitalization.
m. Employee Benefits
Post Employment Benefit Plans :
1. 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, wages, bonus, leave salary, allowances
etc. are recognised as actual amounts due in period
in which the employee renders the related services.
2. Defined Contribution Plans :
Retirement benefits in the form of provident
fund are a defined contribution scheme and the
contributions are charged to the statement of
profit and loss of the year when the contribution
to the respective funds are due. There are no other
obligations other than the contribution payable to
the respective funds.
3. Defined Benefit Plans :
The company has a defined benefit gratuity plan.
Every employee who has completed 5 years of
more of service is eligible for payment of gratuity
on past employment at 15 days salary for such
completed years of services as per the rules of
the company. The aforesaid liability is provided for
on the basis of an actuarial valuation at the end
of the financial year. The said qualifying amount
is provided for in the profit and loss statement.
However, the scheme is not funded with any of the
recognised insurance company, other company/
trust managing the funds.
Compensated absences which are not expected
to occur within twelve months after the end of
the period in which the employee renders the
related services are recognised as an actuarially
determined liability at the present value of the
defined benefit obligation at the balance sheet date.
n. Foreign Currency Transactions
Income and expense in foreign currencies are
converted at exchange rates prevailing on the date of
the transaction. Foreign currency monetary assets and
liabilities other than net investments in non-integral
foreign operations are translated at the exchange rate
prevailing on the balance sheet date and exchange gains
and losses are recognised in the statement of profit
and loss. Exchange difference arising on a monetary
item that, in substance, forms part of an enterprise's
net investments in a non-integral foreign operation are
accumulated in a foreign currency translation reserve.
o. Taxation
Current income tax expense comprises taxes on income
from operations in India and in foreign jurisdictions.
Income tax payable in India is determined in accordance
with the provisions of the Income Tax Act, 1961. Tax
expense relating to foreign operations is determined in
accordance with tax laws applicable in countries where
such operations are domiciled.
Minimum Alternative Tax (MAT) paid in accordance
with the tax laws in India, which gives rise to future
economic benefits in the form of adjustment of future
income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal
income tax after the tax holiday period. Accordingly,
MAT is recognised as an asset in the balance sheet
when the asset can be measured reliably and it is
probable that the future economic benefit associated
with it will fructify.
Deferred tax expense or benefit is recognised on timing
differences being the difference between taxable
income and accounting income that originate in one
period and is likely to reverse in one or more subsequent
periods. Deferred tax assets and liabilities are measured
using the tax rates and tax laws that have been enacted
or substantively enacted by the balance sheet date.
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 for relevant tax paying units
and where the Company is able to and intends to settle
the asset and liability on a net basis.
The Company offsets deferred tax assets and deferred
tax liabilities if it has a legally enforceable right and
these relate to taxes on income levied by the same
governing taxation laws.
p. Earnings Per Shares
Basic earnings per share is computed 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. Diluted earnings
per share is computed by taking into account the
weighted average number of equity shares outstanding
during the period and the weighted average number of
equity shares which would be issued on conversion of
all dilutive potential equity shares into equity shares.
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