C) SIGNIFICANT ACCOUNTING POLICIES
I) Current and non-current classification
The operating cycle is the time between the acquisition of assets for processing and their realisation in
cash and cash equivalents. The Company has identified twelve months as its operating cycle.
The Company presents assets and liabilities in the balance sheet based on current/non-current classification.
An asset is current when :
- It is expected to be realised or intended to be sold or consumed in normal operating cycle, or
- It is held primarily for the purpose of trading, or
- It is expected to be realised within twelve months after the reporting period, or
- It is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at
least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when :
- It is expected to be settled in normal operating cycle, or
- It is held primarily for the purpose of trading, or
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after
the reporting period.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
II) PROPERTY, PLANT AND EQUIPMENT
i) Land is carried at historical cost. All other items of Property, Plant and Equipment are stated at
historical cost less depreciation. Cost of acquisition comprises its purchase price including import
duties and other non-refundable taxes or levies and any directly attributable cost of bringing the asset
to its working condition for its intended use; any trade discount and rebates are deducted in arriving at
the purchase price.
ii) Capital Work In Progress represents expenditure incurred on capital assets that are under construction
or are pending capitalisation and includes project expenses pending allocation. Project expenses
pending allocation are apportioned to the Property, Plant and Equipment of the project proportionately
on capitalisation.
iii) Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to
the Company and the cost of the item can be measured reliably. The carrying amount of any component
accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance
are charged to profit or loss during the reporting period in which they are incurred.
iv) The residual useful life of Property, Plant & Equipment is reviewed at each balance sheet date and
adjusted if required in the depreciation rates.
v) Depreciation on all assets of the Company is charged on Straight Line Method over the useful life of
the assets mentioned in Schedule II to the Companies Act, 2013.
III) IMPAIRMENT LOSS
On an annual basis the Company makes an assessment of any indicator that may lead to impairment of
assets. An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. The
recoverable amount is higher of an asset’s net selling price and value in use. Value is the present value of
estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at
the end of its useful life.
IV) INVENTORIESi) RAW MATERIAL
Raw Materials are valued at lower of cost or net realizable value. Cost is determined on First In First
Out basis.
ii) PACKING MATERIAL
Packing Materials are valued at lower of cost or net realizable value. Cost is determined on First In
First Out basis.
iii) WORK IN PROCESS
Work in Process are valued at cost. The cost of Stock-in-process comprises of cost of purchases,
cost of conversion and other cost incurred in bringing the inventories to it’s present location and
condition.
iv) FINISHED GOODS
Finished Goods are valued at lower of cost or net realizable value. The cost of Finished Goods
comprises of cost of purchases net of refundable taxes, cost of conversion and other cost incurred in
bringing the inventories to it’s present location and condition.Net realisable value is the estimate of the
selling price in ordinary course of business as applicable.
V) EMPLOYEE BENEFITS
i) Short Term Employee Benefits
All employee benefits payable wholly within twelve months of rendering the services are classified as
short term employee benefits. Benefits such as salaries, wages, bonus, compensated absences, ex-
gratia, leave encashment and leave travel allowance is recognised in the period in which the employees
renders related services.
ii) Long Term Employee Benefits1 Defined Contribution Plan
The Company’s contribution to Provident Fund Scheme, Employee’s State Insurance Scheme
are considered as defined contribution plans and are recognised as an expense to the statement
of profit and loss, based on the amount of contribution required to be made and when services
are rendered by employees.
2 Defined Benefit Plan
The Company provides for gratuity, a defined benefit retirement plan (‘the Gratuity Plan’) covering
eligible employees. The Gratuity Plan provides a lumpsum payment to vested employees at
retirement, death, or termination of employment, of an amount based on the respective employee’s
salary and the tenure of employment with the Company.
Liabilities with regard to Gratuity Plan are determined by actuarial valuation, performed at each
balance sheet date using the Projected Unit Credit Method.
The Company contributes ascertained liabilities to the BDH Industries Limited Employees’ Group
Gratuity Cash Accumulation Scheme (the Trust). Trustees administer contributions made to the
Trust and contributions are invested in a scheme with Life Insurance Corporation of India as
permitted by laws of India.
Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling,
excluding amounts included in net interest on the net defined benefit liability and the return on
plan assets (excluding amounts included in net interest on the net defined benefit liability), are
recognised immediately in the balance sheet with a corresponding debit or credit to retained
earnings through OCI in the period in which they occur. Remeasurements are not reclassified to
profit or loss in subsequent periods.
The retirement benefit obligations recognised in the balance sheet represents the present value
of the defined benefit obligations reduced by the fair value of scheme assets. Any asset resulting
from this calculation is limited to the present value of available refunds and reductions in future
contributions to the scheme. The company recognizes the net obligation of a defined benefit plan
in its balance sheet as an asset or liability. Actuarialgains and losses are recognised in full in the
other comprehensive income for the period in which they occur. The effect of any plan amendments
are recognized in the statement of profit and loss.
3 Compensated absences
The Company has a policy on compensated absences which are both accumulating and non¬
accumulating in nature. The expected cost of accumulating compensated absences is determined
by actuarial valuation performed by an independent actuary at each balance sheet date using
Projected Unit Credit method on the additional amount expected to be paid/availed as a result of
the unused entitlement that has accumulated at the balance sheet date. Expense on non¬
accumulating compensated absences is recognized in the period in which the absences occur.
4 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 etc. and the expected cost of
ex-gratia, bonus and performance incentive are recognised in the period in which the employee
renders the related service. A liability is recognised for the amount expected to be paid when
there is a present legal or constructive obligation to pay this amount as a result of past service
provided by the employee and the obligation can be estimated reliably.
VI) FOREIGN CURRENCY TRANSACTIONS
The functional currency of the Company is the Indian rupee. These financial statements are presented in
Indian rupees.
Transactions denominated in foreign currency are recorded at the exchange rate on the date of transaction.
The exchange gain/loss on settlement/negotiation during year is recognised in the Statement of Profit and
Loss. Foreign currency monetary transactions remaining unsettled at the end of the year are converted at
year-end rates. The resultant gain or loss is accounted for in the Statement of Profit and Loss.
VII) REVENUE RECOGNITION
i) The Company derives revenues primarily from sale of products and services.
ii) Revenue from sale of product is recognized on transfer of all significant risk and rewards of ownership
of the products on to the customers, which is generally after dispatch of goods and the Company
presents revenues net of GST in its statement of profit and loss.
iii) Revenue from service is recognised as and when services are rendered and related costs are
incurred.
iv) Interest income is recognised on time proportion method basis taking into account the amounts
outstanding and the rate applicable.
v) In case of export benefits which are in the nature of neutralisation of duties and taxes are grouped under
material costs. All other export incentives are grouped under other operating revenue.
VIII) RESEARCH & DEVELOPMENT
Revenue expenditure on research and development is charged to Statement of Profit and Loss in the year
in which it is incurred. Capital expenditure on research and development is considered as an addition to
property, plant and equipment.
IX) TAXATIONi) CURRENT TAX
The income tax expense or credit for the period is the tax payable on the current period’s taxable
income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred
tax assets and liabilities attributable to temporary differences and to unused tax losses. The current
income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
end of the reporting period in the countries where the company and its subsidiaries and associates
operate and generate taxable income. Management periodically evaluates position taken in tax returns
with respect to situations in which applicable tax regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
ii) DEFERRED TAX
Deferred income tax is provided in full, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the standalone financial
statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or
substantially enacted by the end of the reporting period and are expected to apply when the related
deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets
are recognised for all deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses. Current and
deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.
For items recognised in OCI or equity, deferred / current tax is also recognised in OCI or equity.
X) CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents includes Cash in hand, deposits with bank and interest accrued thereon.
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