2 Significant accounting policies
(a) Basis of preparation
The financial Statements have been prepared to comply in all material respects with the Indian Accounting Standards
notified under Section 133 of Companies Act, 2013 (the Act) read with Companies (Indian Accounting Standards (Ind
AS) Rules, 2015 and other relevant provisions of the Act and rules framed thereunder.
The financial statements have been prepared under the historical cost convention and on accrual basis, except for
certain financial assets and liabilities measured at fair value as explained in accounting policies below.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, regardless of whether that price is directly observable or
estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes
into account the characteristics of the asset or liability if market participants would take those characteristics into
account when pricing the asset or liability at the measurement date.
The financial statements are presented in ' lakhs, except when otherwise indicated.
(b) Current and non-current classification
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and
their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the
purpose of classification of its assets and liabilities as current and non-current.
(c) Property, plant and equipment
i) All property, plant and equipment are stated at original cost of acquisition/installation (net of input credits
availed) less accumulated depreciation and impairment loss, if any, except freehold land which is carried at cost.
Cost includes cost of acquisition, construction and installation, taxes, duties, freight and other incidental
expenses that are directly attributable to bringing the asset to its working condition for the intended use and
estimated cost for decommissioning of an asset.
ii) Subsequent expenditure is capitalised only if it is probable that the future economic benefit associated with the
expenditure will flow to the Company.
iii) Property, plant and equipment is derecognised from financial statements, either on disposal or when no future
economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the property
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included
in the statement of profit and loss in the period in which the property, plant and equipment is derecognised.
iv) On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant
and equipment recognised as at 1 April 2018 measured as per the previous GAAP and use that carrying value as
the deemed cost of the property, plant and equipment.
v) Depreciation on property, plant and equipment is provided on written down value method based on the useful
life specified in Schedule II of the Companies Act, 2013.
(d) Inventories
Inventories of raw materials and stores and spare parts are valued at the lower of weighted average cost and the net
realisable value after providing for obsolescence and other losses, where considered necessary.
Work-in-progress and finished goods are valued at lower of cost and net realisable value where cost is worked out on
weighted average basis. Cost includes all charges in bringing the goods to the point of sale, including octroi and other
levies, transit insurance and receiving charges alongwith appropriate proportion of overheads and, where applicable,
excise duty.
Net realizable value represents the estimated selling price for inventories less estimated costs of completion and costs
necessary to make the sale.
(e) Fair value measurement
The Company's accounting policies and disclosures require the measurement of fair values for financial instruments.
The Company has an established control framework with respect to the measurement of fair values. The
management regularly reviews significant unobservable inputs and valuation adjustments.
All financial assets and financial liabilities for which fair value is measured or disclosed in the financial statements are
categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to
the fair value measurement as a whole:
• Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
• Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement
is directly or indirectly observable, or
• Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement
is unobservable.
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during
which the change has occurred.
(f) Financial instruments
I Financial assets
i) Classification
The Company classifies its financial assets either at Fair Value through Profit or Loss (FVTPL), Fair Value
through Other Comprehensive Income (FVTOCI) or at amortised Cost, based on the Company's business
model for managing the financial assets and their contractual cash flows.
ii) Initial recognition and measurement
The Company at initial recognition measures a financial asset at its fair value plus transaction costs that are
directly attributable to it's acquisition. However, transaction costs relating to financial assets designated at
fair value through profit or loss (FVTPL) are expensed in the statement of profit and loss for the year.
iii) Subsequent measurement
For the purpose of subsequent measurement, the financial asset are classified in four categories:
a) Debt instrument at amortised cost
b) Debt instrument at fair value through other comprehensive Income
c) Debt instrument at fair value through profit or loss
d) Equity investments
Debt instruments
• Amortised cost:
Assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest are measured at amortised cost. A gain or loss on such instruments is
recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial
assets is calculated using the effective interest rate method and is included under the head "Finance
income".
• Fair value through other comprehensive income (FVTOCI):
Assets that are held for collection of contractual cash flows and for selling the financial assets, where the
assets' cash flows represent solely payments of principal and interest, are measured at fair value through
other comprehensive income (FVTOCI). Movements in the carrying amount are taken through OCI, except
for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses
which are recognised in the statement of profit and loss. When the financial asset is derecognised, the
cumulative gain or loss previously recognised in OCI is reclassified from equity to statement of profit and
loss. Interest income from these financial assets is calculated using the effective interest rate method and is
included under the head "Finance income".
• Fair value through profit or loss:
Assets that do not meet the criteria for amortised cost or fair value through other comprehensive income
(FVTOCI) are measured at fair value through profit or loss. Gain and losses on fair value of such instruments
are recognised in statement of profit and loss. Interest income from these financial assets is included in
other income.
iv) Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets
carried at amortised cost and FVOCI debt instruments. The impairment methodology applied depends on
whether there has been a significant increase in credit risk.
v) De-recognition of financial assets
A financial asset is derecognised only when:
• The rights to receive cash flows from the financial asset have expired
• The Company has transferred substantially all the risks and rewards of the financial asset or
• The Company has neither transferred nor retained substantially all the risks and rewards of the financial
asset, but has transferred control of the financial asset.
II Financial liabilities
i) Classification
The Company classifies all financial liabilities at amortised cost or fair value through profit or loss.
ii) Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or
loss, loans and borrowings, deposits or as payables, as appropriate. All financial liabilities are recognised
initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable
transaction costs.
iii) Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
a Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are
classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or
losses on liabilities held for trading are recognised in the profit or loss.
b Loans, borrowings and deposits
After initial recognition, loans, borrowings and deposits are subsequently measured at amortised cost using
the effective interest rate (EIR) method. Gains and losses are recognised in the statement of profit and loss
when the liabilities are derecognised as well as through the EIR amortization process. The EIR amortisation
is included in finance costs in the statement of profit and loss.
c Trade and other payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of
financial year which are unpaid. For trade and other payables maturing within one year from the balance
sheet date, the carrying amounts approximate fair value due to the short-term maturity of these
instruments.
iv) De-recognition of financial liabilities
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as the de-recognition of the original liability and the recognition of a new liability. The
difference in the respective carrying amounts is recognised in the statement of profit or loss.
(g) Cash and cash equivalents
(i) Cash and cash equivalents in the balance sheet comprise cash at bank and on hand and short-term deposit with
original maturity upto three months, which are subject to insignificant risk of changes in value.
(ii) For the purpose of presentation in the statement of cash flows, cash and cash equivalents consists of cash and
short-term deposit, as defined above, net of outstanding bank overdraft as they are considered as an integral
part of Company's cash management.
(h) Revenue recognition
Revenue from contracts with customers are recognised when the control over the goods or services promised in
the contract are transferred to the customer. The amount of revenue recognised depicts the transfer of promised
goods and services to customers for an amount that reflects the consideration to which the Company is entitled
to in exchange for the goods and services.
i) Sale of goods
The Company manufactures and markets flashlights and Solar lights. Revenue from sale of goods is recognised
when control of the products has transferred, being when the products are despatched to the customers and the
customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation
that could affect the customer's acceptance of the products. Revenue is recognised based on the price specified
in the contract, net of the estimated discounts. Accumulated experience is used to estimate and provide for the
discounts, using the expected value method, and revenue is only recognised to the extent that it is highly
probable that a significant reversal will not occur. A contract liability is recognised for expected discounts payable
to customers in relation to sales made until the end of the reporting period. A receivable is recognised when the
goods are despatched as this is the point in time that the consideration is unconditional because only the
passage of time is required before the payment is due.
ii) Interest income
Interest income on financial asset is accrued on a time proportion basis by reference to the principal amount
outstanding and the applicable effective interest rate.
(i) Foreign currency transactions
i) Foreign currency transactions are recorded in the reporting currency (Indian rupee) by applying to the foreign
currency amount the exchange rate between the reporting currency and the foreign currency on the date of the
transaction.
ii) All monetary items denominated in foreign currency are converted into Indian rupees at the year-end exchange
rate. The exchange differences arising on such conversion and on settlement of the transactions are recognised
in the statement of profit and loss. Non-monetary items in terms of historical cost denominated in a foreign
currency are reported using the exchange rate prevailing on the date of the transaction.
(j) Income taxes
The income tax expenses comprises current and deferred tax. It is recognised in the statement of profit and loss
except to the extent that it relates to items recognised directly in equity or in other comprehensive income.
Current tax:
The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the
reporting period.
Deferred tax:
Deferred tax is recognised in respect of temporary differences between the carrying amount of assets and liabilities
for financial reporting purposes and the amount used for taxation purposes.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to
the extent that is probable that future taxable profits will be available against which they can be used. Deferred tax
assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the
related tax benefit will be realised, such reductions are reversed when the probability of future taxable profits
improves.
Unrecognised deferred tax assets are measured at each reporting date and recognised to the extent that it has
become probable that future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they
reverse, using tax rates enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the
Company expects at the reporting date to recover or settle the carrying amount of its assets and liabilities.
Minimum Alternate Tax (MAT) credit is recognised as deferred tax asset only when and to the extent there is
convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed
at each balance sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no
longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.
(k) Employee benefits
(i) Short-term benefits
Short-term employee benefits are recognized as an expense at the undiscounted amount in the statement of
profit and loss for the year in which the related services are rendered.
(ii) Defined contribution plans
Payments to defined contribution retirement benefit schemes 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 fund.
(iii) Defined benefit plans
Defined benefits plans is recognized as an expense in the statement of profit and loss for the year in which the
employee has rendered services. The expense is recognized at the present value of the amount payable
determined using actuarial valuation techniques.
Re-measurement of the net defined benefit liability, which comprises of actuarial gains and losses, are
recognised in other comprehensive income in the period in which they occur.
(iv) Other long-term employee benefits
Other long-term benefits are recognised as an expense in the statement of profit and loss at the present value of
the amounts payable determined using actuarial valuation techniques in the year in which the employee renders
services. Re-measurements are recognised in the statement of profit and loss in the period in which they arise.
(l) Impairment of non-financial assets
The carrying amounts of non financial assets are reviewed at each balance sheet date if there is any indication of
impairment based on internal/external factors. An asset is treated as impaired when the carrying amount exceeds its
recoverable value. The recoverable amount is the greater of an asset's or cash generating unit's, net selling price and
value in use. In assessing value in use, the estimated future cash flows are discounted to the present value using a
pre-tax discount rate that reflects current market assessment of the time value of money and risks specific to the
assets. An impairment loss is charged to the statement of profit and loss in the year in which an asset is identified as
impaired. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining
useful life. The impairment loss recognized in prior accounting periods is reversed by crediting the statement of profit
and loss if there has been a change in the estimate of recoverable amount.
(m) Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity
shareholders (after deducting preference dividends and attributable taxes) 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 except when the results would be anti¬
dilutive.
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