2. Significant Accounting Policies
I. Basis of accounting and preparation of financial statements:-
The financial statements of the Company have been prepared in accordance with generally accepted accounting
principles in India (Indian GAAP). The company has prepared these financial statements to comply with the Accounting
Standards notified under Section 133 of the Companies Act, 2013 ('the Act') read with Rule 7 of the Companies
(Accounts) Rules, 2014 and presentation requirements of Division I of Schedule III to the Companies Act, 2013. The
financial statements have been prepared on going concern basis under the historical cost convention on accrual basis.
The accounting policies adopted in the preparation of the financial statements are consistent with those of previous year
unless otherwise specified. 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 III 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.
II. Use of Estimates
The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments,
estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the
disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the
management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could
result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.
III. Property, Plant and Equipment
Property, Plant and Equipment are stated at cost of acquisition, installation or construction including other direct expenses incurred to
bring the assets to its working condition for its intended use less accumulated depreciation, amortization, impairment, and compensation.
Gains or losses arising from derecognition of Property, plant and equipment 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.
IV. Intangible Assets
Intangible assets are reported at acquisition value with deductions for accumulated amortization and any impairment losses, if any.
V. Depreciation and Amortization
Depreciation is provided on the straight-line method over the estimated useful life prescribed under Schedule II to the Companies Act,
2013 as under:
VI. 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.
Revenue from sale of goods, both manufactured and traded is recognized when all the significant risks and rewards of ownership of the
goods have been passed to the buyer. The company collects Goods and Service Tax (GST) on behalf of the government and, therefore
no economic benefits owing to the company on that account, the same are excluded from revenue.
Interest income is recognized on accrual basis on a time proportion basis taking into Account the Amount outstanding and the rate
applicable. Interest income is included under the head Other Income in the statement of profit and loss.
VII. Investments
Investments are carried at cost of acquisition. The cost of investments comprises the purchase price and other
expenses directly attributable to the acquisition of such investments. Provision for diminution in the value of investments
is recognised only when, in the opinion of the management, such diminution is other than temporary in nature.
VIII. Cash and Cash Equivalent
The Company considers all highly liquid financial instruments, which are readily convertible into known amount of cash that are subject
to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash
equivalents.
IX. Statement of Cash Flow
Cash flows are reported using the indirect method, whereby profit/(loss) after extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are segregated based on the available information.
X. Inventories
Raw Materials, Chemicals, Packing and Stores & Spares Valued at lower of cost or net realisable value. Inventory of Scrap is valued at
Net realisable value.
Inventory of Finished goods is valued at lower of cost including underlying raw material and pro-rata overheads incurred thereon OR it's
Net Realisable value.
The cost of inventories is determined using Average Cost. Cost includes direct materials, labour, other direct cost and other overheads.
Inventories also includes applicable taxes, other than those which are subsequently recoverable from tax authorities.
Net realizable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated
costs necessary to make the sale.
XI. Retirement and other employee benefits
Defined Contribution Plan: Retirement benefit in the form of provident fund is defined contribution scheme. The Company's contribution
paid/ payable during the period towards provident fund is recognized in the Statement of Profit and Loss. The Company has no obligation
other than the contribution payable to provident fund.
Defined Benefit Plan: Gratuity liability and Leave Encashment is defined benefit obligation and is provided for on the basis of actuarial
valuation on projected unit credit method, made at the end of each financial year. Company's contribution towards gratuity is
determined based on actuarial valuation. Actuarial gains or losses for defined benefit plan is recognized in full in the Statement of
Profit and Loss in the period in which they occur. Provision has been made in Statement of Profit and Loss for such liability based on
the valuation and the same shall be disbursed during the normal course of business of the Company, as and when the same arises.
The Company maintains an approved Defined Benefit Gratuity Scheme through the ICICI Gratuity Fund. Annual contributions
are made based on actuarial valuation, and gratuity payments to eligible employees are settled directly from the fund.
XII. Borrowing Cost
Borrowing costs attributable to acquisition and construction of qualifying assets are capitalized as a part of the cost of such assets up
to the date when such assets are ready for its intended use. Other borrowing costs are charged to the statement of Profit and Loss in
the year in which they are incurred.
XIII. Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or
loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year is adjusted
for the effects of all dilutive potential equity shares.
XIV. Income taxes
Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax
authorities in accordance with the Income tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where
the Company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at
the reporting date.
Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the
current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted
or substantively enacted at the reporting date. Deferred income tax relating to items recognized directly in equity is recognized in equity
and not in the statement of profit and loss.
Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which
such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all
deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against
future taxable profits.
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 taxes relate to the same taxable entity and the same taxation authority.
XV. Segment Reporting
The Company operates in a single business segment and primarily within the geographical boundaries of India. Accordingly, the
requirements of Accounting Standard (AS) 17 "Segment Reporting” are not applicable.
XVI. Government Grants
Grants and subsidies from the government are recognized when there is reasonable assurance that the company will comply with the
conditions attached to them, and grant/subsidy will be received. Grant received against specific Fixed Assets are adjusted to the cost of
the Assets and those to the nature of Promoters contribution are credited to Capital reserve. Revenue grants are recognized as income on
a systematic basis in the Statement of Profit and loss in accordance with the related scheme and in the period in which these are accrued.
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