(a) Basis of Preparation of Financial Statements:
The financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP)
under the historical cost convention on accrual basis. GAAP comprises mandatory Accounting Standards as specified
under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 as amended
from time to time and the Companies Act, 2013.
(b) Presentation and disclosure of Financial Statement:
All assets and liabilities have been classified as current & non-current as per Company’s normal operating cycle and
other criteria set out in the Schedule III of the Companies Act, 2013. Based on the nature of services and time between
acquisition of assets for rendering of services and their realization in cash and cash equivalents, operating cycle is less
than 12 months. However, for the purpose of current / non- current classification of assets and liabilities 12 months have
been considered as its operating cycle.
(c) 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.
(d) Property, plant and equipment (Tangible Assets) and depreciation:
Property, plant and equipment are stated at cost of acquisition / construction (or revalued amounts as the case may be)
less accumulated depreciation (amortization if applicable) and where applicable accumulated impairment losses. Gross
carrying amount of all property, plant and equipment are measured using cost model (except land and building).
Cost of an item of property, plant and equipment includes purchase price including non- refundable taxes and duties,
borrowing cost directly attributable to the qualifying asset, any costs directly attributable to bringing the asset to the
location and condition necessary for its intended use and the present value of the expected cost for the dismantling/
decommissioning of the asset.
Subsequent expenditure related to an item of fixed asset are added to its book value only if they increase the future
benefits from the existing asset beyond its previously assessed standard of performance. Parts (major components) of an
item of property, plant and Equipments having different useful lives are accounted as separate items of property, plant
and Equipments. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the
plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are
recognised in the statement of profit and loss as incurred.
Capital work-in-progress comprises of cost incurred on property, plant and equipment under construction / acquisition
that are not yet ready for their intended use at the Balance Sheet Date.
Property, plant and equipment are eliminated from financial statement either on disposal or when retired from active
use. Assets held for disposal are stated at net realizable value. Losses arising in case of retirement of property, plant and
equipment and gains or losses arising from disposal of property, plant and equipment are recognised in the Statement of
Profit and Loss in the year of occurrence.
Depreciation on the property, plant and equipment is provided on WDV basis over the useful life of the asset, which is
as follows-
Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted
prospectively.
(e) Inventories:
Inventories comprises of Raw Material, Work in Progress & Finished Goods has been valued at Cost or Net Realizable
Value whichever is lower.
(f) Intangible Assets and amortization:
Intangible assets are recognized only if it is probable that future economic benefits attributable to asset will flow to the
Company and the cost of the asset can be measured reliably. Intangible assets are stated at cost of acquisition less
accumulated amortization and impairment loss, if any.
(g) Impairment:
The carrying amounts of assets are reviewed at each balance sheet date for any indication of impairment based on
internal / external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its
recoverable amount. The recoverable amount is the greater of the asset’s net selling price and the value in use. Value in
use 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.
Based on the assessment done at each balance sheet date, recognized impairment loss is further provided or reversed
depending on changes in circumstances. After recognition of impairment loss or reversal of impairment loss as
applicable, the depreciation charge for the fixed asset is adjusted in future periods to allocate the asset’s revised carrying
amount, less its residual value (if any), on a systematic basis over its remaining useful life. If the conditions leading to
recognition of impairment losses no longer exist or have decreased, impairment losses recognized are reversed to the
extent it does not exceed the carrying amount that would have been determined after considering depreciation /
amortization had no impairment loss been recognized in earlier years.
(h) Revenue Recognition:
• Revenue is recognized based on the nature of activity, when consideration can be reasonably measured and there
exist a reasonable certainty of its recovery. Company derives the revenues from the sales of goods. Revenue
considered receivables are accounted for accrual basis except discount claims, rebates etc., which cannot be
determined with certainty during the year.
• Interest Income, and other Income is accounted on accrual basis except where it is uncertain, unforeseen,
immaterial or insignificant in nature.
(i) Income Taxes:
Tax expense comprises of current and deferred tax. Current tax is measured at the amount expected to be paid to the tax
authorities in accordance with the Indian Income Tax Act, 1961 enacted in India
The Company uses the asset and liability method of accounting for deferred income taxes. Under this method, deferred
tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets
and liabilities, as measured by the enacted/substantially enacted tax rates which will be in effect when those temporary
differences are expected to be recovered or settled. Deferred tax expense/income is the result of changes in the net
deferred tax assets and liabilities. 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 are reviewed for the appropriateness of their respective
carrying amounts at each balance sheet date.
Minimum Alternative Tax (MAT) credit, which is equal to the excess of MAT (calculated in accordance with the
provisions of section 115JB of the Income Tax Act, 1961 (the Act) over Normal income Tax is recognized as an asset
by crediting the Statement of profit and loss only when and to the extent there is convincing evidence that the Company
will be able to avail the said credit against normal tax payable during the period specified under the Act for utilization.
(j) Earnings Per share:
Basic earnings per share are 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 period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity
shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all
dilutive potential equity shares.
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