A) BASIS OF PREPARATION OF FINANCIAL STATEMENT
The Financial Statement have been prepared under the historical cost convention in accordance with the generally accepted
accounting principles, applicable accounting standards excepts otherwise stated and the provisions of the Companies Act,
2013 as adopted consistently by the Company. The Company generally follows mercantile system of accounting and recognizes
items of income and expenditure on accrual basis.
These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the
historical cost convention on the accrual basis.
GAAP comprises mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 ('the Act')
read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act. The accounting policies adopted in the
preparation of financial statements have been consistently applied. All assets and liabilities have been classified as current or
non-current as per the company's normal operating cycle and other criteria set out in the Schedule Ill to the Companies Act,
2013. Based on the nature of operations and time difference between the provision of services and realization of cash and
cash equivalents, the company has ascertained its operating cycle as 12 months for the purpose of current and non-current
classification of assets and liabilities.
B) USE OF ESTIMATES
The preparation of financial statements is in conformity with Indian GAAP requires judgments, estimates and assumptions to
be made that affect the reported amount of assets and liabilities, disclosure of contingent liabilities on the date of the financial
statements and the reported amount of revenues and expenses during the year. Difference between the actual results and
estimates are recognized in the year in which the results are known/ materialized.
C) ACCOUNTING CONVENTION
The Company follows the mercantile system of accounting, recognizing income and expenditure on accrual basis. The accounts
are prepared on historical cost basis and as a going concern.
Accounting policies not referred to specifically otherwise, are consistent with the generally accepted accounting principles.
The following significant accounting policies are adopted in the preparation and presentation of these financial
statements:
1. 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. The following specific recognitions criteria must also be met before revenue is recognized:
i) Sale of goods
Revenue is recognized when the significant risks and rewards of ownership of the goods have been passed to the
buyer. Sales are disclosed net of GST, trade discounts and returns, as applicable.
ii) Interest Income
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the
applicable interest rate.
2. PROPERTY, PLANT, EQUIPMENT & INTANGIBLE ASSETS
a) Property, Plant & Equipment are stated as per Cost Model i.e., at cost less accumulated depreciation and impairment,
if any;
b) Costs directly attributable to acquisition are capitalized until the Fixed Assets are ready for use, as intended by the
management. For addition to assets, depreciation is calculated from the succeeding month in which the assets is
purchased and put to use. For sale of assets, depreciation is calculated till the end of the month before the day of
sale and the Profit or Loss on sale is determined accordingly.
c) Subsequent expenditures relating to fixed assets are capitalized only when it is probable that future economic
benefits associated with these will flow to the Company and the cost of the item can be measured reliably. Repairs
& maintenance costs are recognized in the Statement of profit & Loss when incurred;
d) The cost and related accumulated depreciated are eliminated from the financial statements upon sale or retirement
of the asset and the resultant gains or losses are recognized in the Statement of Profit or Loss. Assets to be disposed
of are reported at the lower of the carrying value or the fair value less cost to sell;
e) Depreciation on Tangible Assets in case of company is provided in such a manner so that the cost of asset (Net
of realizable value) will be amortized over their estimated remaining useful life on SLM basis as per the useful life
prescribed under Schedule II to the Companies Act 2013.
f) Depreciation methods, useful lives, and residual values are reviewed periodically, including at each financial year
end. Fixed Assets of individual value of Rs. 5000/- and below each are fully depreciated in the year of its purchase.
g) Useful lives of the property plant & equipment is recognized as under:-
Assets class Useful life
Furniture & Fixtures 10 Years
Office Equipment’s 10 Years
Computer Equipment’s including mobile phones 3 Years
Plant & Machinery 8 Years
Vehicles 8 Years
Land & Building 60 Years
3. INVESTMENTS
Investments which are readily realizable and intended to be held for not more than one year from the date on which
such investments are made, are classified as Current Investments. All other investments are classified as Long-Term
investment. On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly
attributable acquisition charges such as Brokerage, Fees and Duties.
Current investments are carried in the financial statements at lower of cost and fair value determined on an individual
investment basis. Long-term investments are carried at cost.
However, the provision for a reduction in value is made to recognize a decline other than temporary in the value of
investments. On disposal of an investment, the difference between it carrying amount and net disposal proceeds is
charged or credited to the Statement of Profit and Loss.
4. INVENTORIES
Inventories comprising of raw material, finished goods and consumables. Cost includes the purchase price and other
associated costs directly incurred in bringing the inventory to its present location excluding GST. Net realizable value is
the estimated selling price in the ordinary course of business less estimated costs of completion and estimated cost
necessary to make the sale. Inventories are valued as under:-
1. Raw Material- Valued at cost price or net realisable value whichever is lower
2. Finished goods- Valued at cost or market value whichever is lower
3. Consumables- at cost price
5. IMPAIRMENT OF ASSETS
The Management periodically assesses, using external and internal sources, whether there is an indication that an asset
may be impaired. An impairment loss is recognized wherever the carrying value of an asset exceeds its recoverable
amount. The recoverable amount is higher of the asset's net selling price and value in use, which means the present value
of future cash flows expected to arise from the continuing use of the asset and its eventual disposal. An impairment loss
for an asset is reversed if, and only if, the reversal can be related objectively to an event occurring after the impairment
loss was recognized. The carrying amount of an asset is increased to its revised recoverable amount, provided that this
amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or
depreciation) had no impairment loss been recognized for the asset in Prior Years.
6. RETIREMENT BENEFITS & OTHER EMPLOYEE BENEFITS
Short term employee benefits are recognized as an expense on accrual basis. The company has no obligation in terms of
retirement benefits towards its employees except Gratuity.
There are no defined benefits for leave encashment etc. In the financial statements, the Company has made provision for
payment of Gratuity to its employees.
7. FOREIGN EXCHANGE TRANSACTIONS
Details of foreign currency transactions recorded during the years are covered under this financial information are in the
note 25 of the financial statements
8. CASH FLOW STATEMENT
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of
a non- cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income
or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing
activities are segregated.
9. BORROWING COSTS
Expenses related to borrowing cost are accounted using an effective interest rate. Borrowing costs are interest and other
costs (including exchange differences relating to foreign currency borrowings to the extent that they are regarded as an
adjustment to interest costs) incurred in connection with the borrowing of funds. Borrowing costs directly attributable to
acquisition or construction of an asset which necessarily take a substantial period to get ready for their intended use are
capitalized as part of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which they
are incurred.
10. INCOME TAX
Income tax expenses comprise current tax and deferred tax charged or credited. Provisions for income tax are made on
the basis of section 115 BAB of the Income Tax Act. Current tax is measured on the basis of estimated taxable income for
the current accounting year in accordance with the provisions of the Income Tax Act, 1961.
Deferred Tax is recognized, on timing differences, being the difference between taxable incomes and accounting income
that originate in one period and are capable of reversal in one or more subsequent periods.
Deferred tax assets and liabilities are measured based on the tax rates that are expected to apply in the period when
assets is realized or liability is settled, based on taxed rates and tax laws that have been enacted or substantially enacted
by the Balance Sheet date.
Deferred Tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized only if there is virtual
certainty that there will be sufficient future taxable income available to realize such losses.
11. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net profit for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding during the period.
As per Accounting Standard -20 on Earning Per Share, If the number of equity or potential equity shares outstanding
increases as a result of bonus issue or share split or decreases as a result of reverse split(consolidation of shares), the
calculation of basic and diluted earning per shares should be adjusted for all the periods presented. If these changes occur
after the balance sheet date but before the date on which the financial statements are approved by Board of Directors, the
per share calculation of those financial statements and any prior period financial statements presented should be based
on new number of shares.
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