2 SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
(a) Basis of preparation of Financials Statements
The Financial Statements of the Company have
been prepared in accordance with the generally
accepted accounting principles in India (Indian
GAAP). The Company has prepared these financial
statements to comply in all material aspects with
the accounting standards notified under Section
133 of the Companies Act, 2013 read together
with paragraph 7 of the Companies (Accounts)
Rules 2014. The financial statements have been
prepared under the historical cost convention on
an accrual basis.
The accounting policies adopted in the
preparation of financial statements are
consistent with those of previous year."
(b) Use of Estimates
The preparation of financial statements
in conformity with Indian GAAP requires
management to make estimates and
assumptions that affect the application of
accounting policies and reported amounts of
assets, liabilities, revenues and expenses and
disclosure of contingent assets and liabilities
at the date of the financial statements. The
estimates and assumptions used in the
accompanying financial statements are based
upon management's evaluation of the relevant
facts and circumstances as of the date of financial
statements which in management's opinion
are prudent and reasonable. Actual results may
differ from the estimates used in preparing the
accompanying financial statements. However,
accounting estimates could change from period
to period. Appropriate changes in estimates
are made as the Management becomes aware
of changes in circumstances surrounding the
estimates. Any revision to accounting estimates
is recognised prospectively in current and
future periods and, if material, their effects are
disclosed in the notes to the Standalone financial
statements.
(c) Functional and Presentation Currency
These financial statements are presented in
Indian Rupees (Rs.), the company's functional
currency. All Financial information presented in
Indian Rupee has been rounded off to the nearest
Lakh as per the requirements of Schedule III of
"the Act" unless otherwise stated.
(d) Current-Non-Current Classification
All assets and liabilities are classified into current
and non-current
Assets
An asset is classified as current when it satisfies
any of the following criteria:
i) It is expected to be realized in, or is intended
for sale or consumption in, the Company's
normal operating cycle;
ii) It is held primarily for the purpose of
being traded;
iii) It is expected to be realized within 12
months after the reporting date; or
iv) It is cash or cash equivalent unless it is
restricted from being exchanged or used to
settle a liability for at least 12 months after
the reporting date.
Current assets include the current portion of
non-current financial assets. All other assets are
classified as non-current.
Liabilities
A liability is classified as current when it satisfies
any of the following criteria:
i) It is expected to be settled in the Company's
normal operating cycle;
ii) It is held primarily for the purpose of
being traded;
iii) It is due to be settled within 12 months
after the reporting date;
iv) The Company does not have an
unconditional right to defer settlement of
the liability for at least 12 months after the
reporting date.
Current liabilities include the current portion
of non-current financial liabilities. All other
liabilities are classified as non-current"
(e) Operating Cycle
Operating cycle is the time between the
acquisition of assets for processing and their
realisation in cash and cash equivalents. Based
on the above definition and nature of business,
the company has ascertained its operating
cycle as less than 12 months for the purpose of
current / non current classification of assets and
liabilities.
(f) Property, Plant and Equipment Intangible
Assets & CWIP
(i) Property, Plant and Equipment
"Property, Plant and Equipment are stated
at cost less accumulated depreciation. The
total cost of assets comprises its purchase
price, freight, duties, taxes and any other
incidental expenses directly attributable to
bringing the asset to the working condition
for its intended use and interest on loans
attributable to the acquisition of assets up
to the date of commissioning of assets.
Subsequent costs related to an item
of property, plant and equipment
are recognized as a separate asset, as
appropriate, only when it is probable that
future economic benefits associated with
the item will flow to the Group and the
cost of the item can be measured reliably.
The carrying amount of any component
accounted for as a separate asset is
derecognized when replaced. All other
repairs and maintenance are recognized
in statement of profit and loss during the
reporting period when they are incurred.
An item of property, plant and equipment
is derecognized on disposal or when no
future economic benefits are expected
from its use or disposal. The gains or losses
arising from de-recognition 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"
(ii) Intangible Assets
"Intangible assets are recognized if it is
probable that the future economic benefits
that are attributable to the assets will flow
to the Company and cost of the assets can
be measured reliably. The cost of intangible
assets comprises its purchase price,
including any duties and other taxes and
any directly attributable expenditure on
making the asset ready for its intended use.
An item of an intangible asset is de¬
recognized on disposal or when no future
economic benefits are expected from its
use or disposal. The gains or losses arising
from de-recognition 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.
Subsequent costs related to intangible
assets are recognised as a separate asset, as
appropriate, only when it is probable that
future economic benefits associated with
the item will flow to the Group and the cost
of the item can be measured reliably"
(iii) Capital Work In Progress
Capital work in progress are carried at cost,
comprising direct cost, related incidental
expenses during the construction
period, attributable borrowing costs
for the qualifying assets and other
expenses incurred in connection with
project implementation in so far as such
expenses relate to the period prior to the
commencement of commercial production.
(g) Depreciation and Amortisation
Depreciation on Property, Plant and Equipment
is provided on written down value method at
the rates arrived at on the basis of the estimated
economic useful life of the assets. The useful
life for building, plant & machinery & leasehold
improvements is considered as prescribed
in Schedule II of the Companies Act, 2013,
representing the management's estimate of
the useful life of these assets and following
consistency with previous year.
Amortization of the intangible asset begins when
the asset is acquired and is available for use. It
is amortized over the period of expected future
benefit. Amortization expense is recognized
in the statement of profit and loss unless such
expenditure forms part of the carrying value
of another asset. The estimated useful life of
the intangible assets, amortization method
and the amortization period are reviewed at
the end of each financial year. Intangible assets
are amortized with a finite useful life using the
Written down value method.
The company's computer software has an
estimated useful life of three years as its licence
is renewed after every three years
The company has estimated residual value of the
assets to be 5% of the cost of the asset"
(h) 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.
Sale of Goods
Revenue from sale of goods is recognized on
transfer of all significant risks and rewards related
to the ownership of such goods to the buyer.
Sales are stated net of trade discount, sales
return, duties and GST. Revenue is recognized
only when it can be reliably measured and it is
reasonable to expect ultimate collection
Sale of Services
Revenue is recognized based on contractual terms
and ratably over the period in which services
are rendered. Revenue from the end of the last
billing to the Balance Sheet date is recognized
as unbilled revenues. Revenue from fixed-price
and fixed-timeframe contracts, where there is no
uncertainty as to measurement or collectability
of consideration, is recognized based upon the
percentage-of-completion method.
Interest income
Interest income is recognized on time proportion
basis on interest rates implicit in the transaction.
Dividend Income
Dividend income is recognised on receipt basis.
Other Income
Other income is recognized based on the
contractual obligations on accrual basis.
Lease rentals are recognised on a straight line
basis over the period of lease.
Other Operating Revenue
Export incentives, production linked incentives
and subsidies are recognized when there is
reasonable assurance that the Company is
complying with the conditions and the incentive
will be received"
(i) Inventories
Inventories are valued at cost or net realisable
value, whichever is lower. Cost comprises of
all costs of purchase, costs of conversion and
other costs incurred in bringing the inventories
to their present location and condition and is
determined on First in First Out (FIFO) method.
Net Realizable Value is the estimated selling
price in the ordinary course of business less
estimated cost of completion and the estimated
cost necessary to make the sale.
Raw materials, components, stores and spares
are valued at lower of cost and net realizable
value. However, materials and other items held
for use in production of inventories are not
written down below cost if the finished products
in which they will be incorporated are expected
to be sold at or above cost. Cost of raw materials,
components and stores and spares is determined
on First in First Out (FIFO) basis.
Finished goods are valued at lower of cost and
net realizable value. Cost of raw materials is
determined on First in First Out (FIFO) basis.
Work in progress and finished goods are valued
at lower of cost and net realizable value. Cost
includes direct material and labour and a
proportion of manufacturing overheads based
on normal operating capacity. Cost is determined
on First in First Out (FIFO) basis"
(j) Foreign Currency Transactions
Initial recognition
Foreign currency transactions are recorded in
the reporting currency which is Indian Rupee,
by applying to the foreign currency amount the
exchange rate between the reporting currency
and the foreign currency at the date of the
transaction.
Conversion
Monetary assets and liabilities in foreign
currency, which are outstanding as at the year-
end, are revalued at the year-end at the closing
exchange rate and the resultant exchange
differences are recognized in the Statement of
Profit and Loss at the year end.
Exchange Differences
All exchange differences are recognized as
income or as expenses in the period in which
they arise"
(k) Taxation
Income-tax expense comprises current tax and
deferred tax.
Current tax
Provision for current tax is made for the tax
liability payable on taxable income after
considering tax allowances, deductions and
exemptions determined in accordance with the
prevailing tax laws. The tax currently payable
is based on taxable profit for the year. Taxable
profit differs from 'profit before tax' as reported
in the statement of profit and loss because of
items of income or expense that are taxable
or deductible in other years and items that are
never taxable or deductible. The company's
current tax is calculated using the tax rates as
prescribed in the section 115BAA of the Income
Tax Act, 1961.
Deferred tax
Deferred tax liability or asset is recognized for
timing differences between the profits/losses
offered for income tax and profits/losses as per
the financial statements. Deferred tax assets and
liabilities are measured using the tax rates and
tax laws that have been enacted or substantively
enacted at the Balance Sheet date.
Deferred tax asset is recognized only to the extent
there is reasonable certainty that the assets can
be realized in future. However, where there is
unabsorbed depreciation or carried forward
loss under taxation laws, deferred tax asset on
such losses is recognized only if there is a virtual
certainty of their realization. Deferred tax assets
and liabilities are reviewed at each Balance Sheet
date and written down or written up to reflect
the amount that is reasonably/virtually certain
to be realized.
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 tax assets and deferred tax
relates to the same taxable entity and the same
taxation authority"
(l) Borrowing Cost
Borrowing costs to the extent related /
attributable to the acquisition / construction of
assets that takes substantial period of time to
get ready for their intended use are capitalized
along with the respective Property, Plant and
Equipment up to the date such asset is ready
for use. Other borrowing costs are recognised
as expense in the Statement of Profit and Loss in
the period in which they are incurred.
(m) Earning Per Share
Basic EPS
In determining earnings per share, the Company
considers the net profit / (loss) after tax and
includes the effect of extraordinary items in the
profit and loss account. The number of shares
used in computing basic earnings per share is the
weighted average number of shares outstanding
during the period. The weighted average
number of equity shares outstanding during
the period is adjusted for events such as bonus
issue and issue of fresh equity shares under IPO
that have changed the number of equity shares
outstanding at the year end.
Diluted EPS
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."
(n) Investment
Investments that are readily realizable and
intended to be held for not more than a
year are classified as current investments. All
other investments are classified as long-term
investments. Current investments are carried
at lower of cost and fair value determined on
an individual investment basis. Long-term
investments are carried at cost. However,
provision for diminution in value is made to
recognize a decline other than temporary in the
value of the investments.
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