The said estimates are based on the facts and events, that existed as at
the reporting date, or that occurred after that date but provide
additional evidence about conditions existing as at the reporting date.
2.3 Property, Plant & Equipment and Capital Work-in
Progress
Property, plant and equipment are stated at cost, net of recoverable
taxes, less depreciation and impairment losses, if any. Such cost includes
purchase price, borrowing cost and other cost directly attributable to
the acquisition of the items.
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 the Statement of Profit and Loss during the reporting period
in which they are incurred.
Capital work in progress is stated at cost incurred during the
construction/installation period relating to items or projects in progress.
NOTE NO. 2 - Material Accounting Policies
2. 1 Basis of Preparation:
Compliance with Ind AS
These financial statements have been prepared in accordance with
the Indian Accounting Standards (‘Ind AS’) as notified under the
Companies (Indian Accounting Standards) Rules, 2015 read with
Section 133 of the Companies Act, 2013 and presentation requirements
of Division II of Schedule III to the Companies Act, 2013 (as amended
from time to time). The financial statements have been prepared on an
accrual and going concern basis.
Historical cost convention
The financial statements have been prepared under the historical cost
basis, except for the following:¬
- certain financial assets and liabilities which are measured at its fair
values;
- defined benefit plans - plan assets measured at fair value.
Current and non-current classification
All assets and liabilities have been classified as current or non-current
as per the Company’s normal operating cycle (twelve months) and
other criteria set out in the Schedule III to the Act.
Functional currency
The financial statements are presented in Indian rupee (INR), which is
Company’s functional and presentation currency.
Rounding of amounts
All amounts disclosed in the financial statements and notes have been
rounded off to thenearest lakh as per the requirement of Schedule III,
unless otherwise stated.
2. 2 Use of estimates and critical accounting judgements
The estimates and judgements used in the preparation of the financial
statements are continuously evaluated by the Company and are based
on historical experience and various other assumptions and factors
(including expectations of future events) that the Company believes to
be reasonable under the existing circumstances. Differences between
actual results and estimates are recognised in the period in which the
The useful life as estimated above is aligned to the prescribed useful life
specified under Schedule II or is based on technical evaluation done
by the management’s expert in order to reflect the actual usage of the
asset.
The residual values are not more than 5% of the original cost of the
asset. The assets residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
Gains and losses on disposals are determined by comparing proceeds
with carrying amount. These are included in the Statement of Profit
and Loss.
2.4 Intangible Assets
Computer software are stated at cost, less accumulated amortisation
and impairments, if any.
Amortisation method and useful life
The Company amortizes computer software using the straight-line
method over the period of 6 years.
2.5 Inventories:
Items of inventories of Raw Material, Finished goods, Spares and Stores,
Packing Material, etc. are valued at lower of cost or net realizable value
except waste which is valued at estimated net realizable value. Cost is
determined on weighted average/FIFO basis, as considered appropriate
by the Company. Cost of inventories comprise of cost of purchase, cost
of conversion and other costs including manufacturing overheads
incurred in bringing them to their respective present location and
condition. The net realizable value is the estimated selling price in the
ordinary course of business less the estimated cost of completion and
estimated cost necessary to make the sale.
2.6 Financial Instruments
i. Recognition and initial measurement
All financial assets and financial liabilities are initially recognized
when the Company becomes a party to the contractual provisions
of the instrument.
A financial asset or financial liability is initially measured at fair
value plus, for an item not at fair value through profit and loss
(FVTPL), transaction costs that are directly attributable to its
acquisition or issue. Trade receivables that do not contain a
significant financing component are measured at the transaction
price determined under Ind AS 115.
ii. Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as measured
at
• amortized cost;
• Fair Value through Other Comprehensive Income (FVOCI) -
equity investment; or
• Fair Value Through Profit and Loss (FVTPL)
Financial assets are not reclassified subsequent to their initial
recognition, except if and in the period the Company changes its
business model for managing financial assets.
A financial asset is measured at amortized cost if it meets both of
the following conditions and is not designated as at FVTPL:
• the asset is held within a business model whose objective is to
hold assets to collect contractual cash flows; and
• the contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
On initial recognition of an equity investment that is not held for
trading, the Company may irrevocably elect to present subsequent
changes in the investment’s fair value in OCI. (designated as
FVOCI - equity investment). This election is made on an
investment-by-investment basis.
All financial assets not classified as measured at amortized cost or
FVOCI as described above are measured at FVTPL. This includes
all derivative financial assets. On initial recognition, the Company
may irrevocably designate a financial asset that otherwise meets
the requirements to be measured at amortized cost or at FVOCI or
at FVTPL if doing so eliminates or significantly reduces an
accounting mismatch that would otherwise arise.
Financial liabilities
Financial liabilities are classified as measured at amortized cost
or FVTPL. A financial liability is classified as at FVTPL if it is
classified as held-for-trading, or it is a derivative or it is designated
as such on initial recognition. Financial liabilities at FVTPL are
measured at fair value and net gains and losses, including any
interest expense, are recognized in profit orloss. Other financial
liabilities are subsequently measured at amortized cost using the
effective interest method. Interest expense and foreign exchange
gains and losses are recognized in profit or loss. Any gain or loss
on de-recognition is also recognized in profit or loss.
De-recognition
Financial assets
The company de-recognizes a financial asset when the contractual
rights to the cash flows from the financial asset expire, or it transfers
the rights to receive the contractual cash flows in a transaction in
which substantially all of the risks and rewards of ownership of
the financial asset are transferred or in which the company neither
transfers nor retains substantially all of the risks and rewards of
ownership and does not retain control of the financial asset.
If the company enters into transactions whereby it transfers assets
recognized on its balance sheet, but retains either all or
substantially all of the risks and rewards of the transferred assets,
the transferred assets are not derecognized.
Financial liabilities
The company de-recognizes a financial liability when its
contractual obligations are discharged or cancelled, or expire.
The company also de-recognizes a financial liability when its terms
are modified and the cash flows under the modified terms are
substantially different. In this case, a new financial liability based
on the modified terms is recognized at fair value. The difference
between the carrying amount of the financial liability extinguished
and the new financial liability with modified terms is recognized in
profit or loss.
Off-setting
Financial assets and financial liabilities are offset and the net
amount presented in the balance sheet when, and only when, the
company currently has a legally enforceable right to set off the
amounts and it intends either to settle them on a net basis or to
realize the asset and settle the liability simultaneously.
2.7 Revenue recognition
Revenue is measured at the value of the consideration received or
receivable, after deduction of any trade discount, volume rebates and
any taxes or duties collected on behalf of Government such as Goods
and Services Tax, etc.
The Company recognises revenue when the amount of revenue can be
reliably measured, it is probable that future economic benefits will flow
to the Company and specific criteria have been met for each of the
Company’s activities as described below.
Sale of goods
Revenue from sale of goods is recognised when control of the products
being sold is transferred to our customers and there are no longer any
unfulfilled obligations. The performance obligations in our contracts
are fulfilled at the time of dispatch, delivery or upon formal customer
acceptance depending on customer terms.
Other revenue
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the applicable rate of interest.
Revenue in respect of insurance/other claims etc., is recognized only
when it is reasonably certain that the ultimate collection will be made.
2.8 Income tax
Income tax expense represents the sum of tax currently payable and
deferred tax. Tax is recognized in the Statement of Profit and Loss,
except to the extent that it relates to items recognized directly in equity
or in other comprehensive income.
(a) Current Tax
Current tax includes provision for Income Tax computed under Special
provision (i.e., Minimum alternate tax) or normal provision of Income
Tax Act. Tax on Income for the current period is determined on the
basis on estimated taxable income and tax credits computed in
accordance with the provisions of the relevant tax laws and based on
the expected outcome of assessments/appeals.
(b) Deferred Tax
Deferred tax is recognised on temporary differences between the
carrying amounts of assets and liabilities in the balance sheet and the
corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for all taxable temporary
differences.
Deferred tax assets are generally recognised for all deductible
temporary differences, unabsorbed losses and unabsorbed
depreciation to the extent that it is probable that future taxable profits
will be available against which those deductible temporary differences,
unabsorbed losses and unabsorbed depreciation can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance
sheet date and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset
to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply in the period in which the liability is settled or the
asset realised, based on tax rates (and tax laws) that have been enacted
or substantively enacted by the balance sheet date. The measurement
of deferred tax liabilities and assets 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.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation
authority and the Company intends to settle its current tax assets and
liabilities on a net basis.
(c) Minimum Alternate Tax (MAT)
MAT is recognised as an asset only when and to the extent there is
convincing evidence that the Company will pay normal income tax
during the specified period. In the year in which the MAT credit becomes
eligible to be recognised, it is credited to the Statement of Profit and
Loss and is considered as (MAT Credit Entitlement). The Company
reviews the same at each Balance Sheet date and writes down the
carrying amount of MAT Credit Entitlement to the extent there is no
longer convincing evidence to the effect that the Company will pay
normal Income Tax during the specified period. Minimum Alternate
Tax (MAT) Credit are in the form of unused tax credits that are carried
forward by the Company for a specified period of time, hence, it is
presented as Deferred Tax Asset.
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