2.) Summary of Significant accounting policies.
A. Statement of compliance
The accompanying standalone financial statements have been prepared in accordance with the
accounting principles generally accepted in India, including the Accounting Standards as per the
Companies (Accounting Standards) Rules, 2006, as amended and notified under section 133 of the
Companies Act, 2013, (the 'Act') and other relevant provisions of the Act.
B. Basis of Preparation of Financial Statements
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
(‘Act’) read with the Companies (Accounts) Rules, as amended from time to time, other relevant
provisions of the Act. Accounting policies have been consistently applied except where a newly
issued accounting standard is initially adopted or a revision to an existing accounting standard
requires a change in the accounting policy hitherto in use.
C. Use of Estimates
The preparation of the financial statements in conformity with GAAP requires management to
make estimates and assumptions that affect the reported balances of assets and liabilities and
disclosures relating to contingent liabilities as at the date of the financial statements and reported
amounts of income and expenses during the period.
Accounting estimates could change from period to period. Actual results could differ from those
estimates. Appropriate changes in estimates are made as the Management becomes aware of
changes in circumstances surrounding the estimates. Changes in estimates are reflected in the
financial statements in the period in which changes are made and, if material, their effects are
disclosed in the notes to the financial statements.
D. Revenue Recognition
(a) Revenue is recognized only when it can be reliably measured and it is reasonable to expect
ultimate collection. Revenue from operations include sale of goods net of Goods and Service
Tax.
(b) Interest is recognized on a time proportion basis taking into account the amount outstanding
and the rate applicable.
E. Property, Plant and Equipment
Tangible assets are stated at cost, less accumulated depreciation and impairment, if any. Direct
costs are capitalized until such assets are ready for use. Capital work-in-progress comprises of the
cost of fixed assets that are not yet ready for their intended use at the reporting date.
F. Depreciation and Amortization
Depreciation on tangible assets is provided on the straight-line method over the useful lives of
assets as provided in schedule II of Companies Act 2013.
G. Inventories
Raw Material: Raw Material is valued at lower of cost or net realizable value.
Work-in-progress and Finished Goods: Cost includes direct materials and labor and a proportion
of manufacturing overheads based on the normal operating capacity but excluding borrowing costs.
H. Employee Benefit
(a) Short Term Employee Benefits
(i) Short-term employee benefits are recognized as an expense when employees render the related
services.
(b) Post-Employment Benefits:
Defined Contribution Plans - Contributions to defined contribution plans such as provident fund,
ESIC, etc., are recognized as expense when employees have rendered services entitling them to
such contributions.
Defined Benefit Plans- The liability recognized in the balance sheet in respect of gratuity is the
present value of the defined benefit obligation at the balance sheet date. The defined benefit
obligation is calculated at the balance sheet date by an independent actuary using the projected unit
credit method. Actuarial gains and losses arising from past experience and changes in actuarial
assumptions are charged to the Statement of Profit and Loss in the year in which such gains or
losses are determined.
I. Borrowing cost
Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the
arrangement of borrowing. Borrowing cost directly attributable to the acquisition, construction or
production of an asset that necessarily takes a substantial period of time to get ready for its intended
use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
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