2. SIGNIFICANT ACCOUNTING POLICIES
2.01 BASIS OF ACCOUNTING AND PREPARATION OF FINANCIAL STATEMENTS
The financial statements of the Company have been prepared in accordance with the Generally Accepted
Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section
133 of the Companies Act, 2013 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act"), as
applicable. The financial statements have been prepared on accrual basis under the historical cost
convention. The accounting policies adopted in the preparation of the financial statements are consistent
with those followed in the previous year.
Accounting policies not specifically referred to otherwise are consistent and in consonance with generally
accepted accounting principles in India.
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 Schedule III to the Companies Act, 2013. Based on the nature of
products and the time between the acquisition of assets for processing and their realization in cash and cash
equivalents, the Company has determined its operating cycle as twelve months for the purpose of current -
non-current classification of assets and liabilities.
2.02 USE OF ESTIMATES
The preparation of the financial statements in conformity with Indian GAAP requires the Management to
make estimates and assumptions considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the year. The Management believes that
the estimates used in preparation of the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the actual results and the estimates are
recognised in the periods in which the results are known / materialise.
2.03 PROPERTY, PLANT & EQUIPMENT AND INTANGIBLE ASSETS
(i) Property, Plant & Equipment
All Property, Plant & Equipment are recorded at cost including taxes, duties, freight and other incidental
expenses incurred in relation to their acquisition and bringing the asset to its intended use.
2.04 DEPRECIATION
Depreciation on fixed assets is calculated on a Written - Down value method using the rates arrived at based
on the useful lives estimated by the management, or those prescribed under the Schedule II to the
Companies Act, 2013. Individual assets cost of which doesn't exceed Rs. 5,000/- each are depreciated in full in
the year of purchase.
2.05 IMPAIRMENT OF ASSETS
An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. Recoverable
amount is the higher of an asset's net selling price and its value in use. Value in use is the present value of
estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at
the end of its useful life. Net selling price is the amount obtainable from sale of the asset in an arm's length
transaction between knowledgeable, willing parties, less the costs of disposal. An impairment loss is charged
to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss
recognised in prior accounting periods is reversed if there has been a change in the estimate of the
recoverable value.
2.06 INVESTMENTS:
Non-current investments are carried at cost less any other-than-temporary diminution in value, determined
on the specific identification basis. Current Investments are carried at cost or fair value whichever is lower.
The Company has followed category-wise evaluation of cost vs fair value of investments. Provision for
diminution in the value of investments has been recorded wherever there is a decline in fair-value of
investments.
Profit or loss on sale of investments is determined as the difference between the sale price and carrying value
of investment, determined individually for each investment. Cost of investments sold is arrived using average
method.
2.07 DERIVATIVE CONTRACTS
The Company has entered into derivative contracts i.e. currency futures and options to hedge cash flows of
the company specifically to hedge the exposure to variability in cash flows of future probable forecasted
inflows and that could affect the statement of profit and loss. The derivatives are measured at fair value and
any gain or loss that is determined to be an effective hedge is recognised in equity as cash flow hedge
reserve. The changes in fair value of the hedging instrument recognised in equity must be recycled from
equity and recognised in the statement of profit and loss at the same time that the impact from the hedged
item is recognised/(recycled) in the statement of profit and loss.
The Company enters into derivative financial instruments, such as forward exchange contracts and foreign
exchange futures and options, to hedge its foreign currency risk exposures. These derivatives may be
designated as hedging instruments or remain un-designated for hedge accounting purposes.
Designated Hedging Instruments:
Derivative instruments that are formally designated and qualify for hedge accounting are accounted for as
cash flow hedges. These instruments are initially and subsequently measured at fair value. The effective
portion of changes in the fair value of such derivatives is recognised in equity as cash flow hedge reserve.
Amounts accumulated in equity are reclassified to the Statement of Profit and Loss in the period(s) during
which the hedged item affects profit or loss.
Non-designated Derivative Instruments:
Derivative contracts that are not designated as hedging instruments under hedge accounting are measured
at fair value, with changes in fair value recognised in the Statement of Profit and Loss in the period in which
they arise.
2.08 FOREIGN CURRENCY TRANSLATIONS
Income and expense in foreign currencies are converted at exchange rates prevailing on the date of the
transaction. Any income or expense on account of exchange difference either on settlement or on translation
at the balance sheet date is recognized in Profit & Loss Account in the year in which it arises.
2.09 BORROWING COSTS
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as
part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to
get ready for intended use. All other borrowing costs are recognised in Statement of Profit and Loss in the
period in which they are incurred.
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