Material Accounting Policies
Impact of the initial application of new and
amended Ind ASs that are effective for the
current year:
Ministry of Corporate Affairs ("MCA") notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards)
Rules as issued from time to time. During the year
ended March 31, 2025, MCA has not notified any new
standards or amendments to the existing standards
applicable to the Company.
1.1 Basis Of Accounting
The financial statements have been prepared in
accordance with Indian Accounting Standards
(Ind AS) notified under the Section 133 of the 2013
Act read with the Companies (Indian Accounting
Standards) Rules 2015 and other relevant provisions
of the 2013 Act.
"These Financial Statements have been prepared on
the historical cost basis, except for certain financial
instruments which are measured at fair values
at the end of each reporting period, as explained
in accounting policies below. Historical cost is
generally based on the fair value of the consideration
given in exchange for goods and services.
Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date, regardless of whether that price
is directly observable or estimated using another
valuation technique. In estimating the fair value of an
asset or a liability, the Company takes into account
the characteristics of the asset or liability if market
participants would take those characteristics into
account when pricing the asset or liability at the
measurement date."
Going concern
The directors have, at the time of approving the
financial statements, a reasonable expectation that
the Company have adequate resources to continue
in operational existence for the foreseeable future.
Thus, they continue to adopt the going concern basis
of accounting in preparing the financial statements.
1.2 Basis of preparation of financial
statements
In addition, for financial reporting purposes, fair
value measurements are categorised into Level
1, 2, or 3 based on the degree to which the inputs
to the fair value measurements are observable
and the significance of the inputs to the fair value
measurement in its entirety, which are described as
follows:
• Level 1 inputs are quoted prices (unadjusted) in
active markets for identical assets or liabilities
that the entity can access at the measurement
date;
• Level 2 inputs are inputs, other than quoted prices
included within Level 1, that are observable for the
asset or liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the
asset or liability.
1.3 Use of Estimates:
The preparation of the financial statements
requires the Management to make estimates and
assumptions considered in the reported amounts of
assets and liabilities (including contingent liabilities)
as of the date of the financial statements and the
reported income and expenses during the reporting
period. Management believes that the estimates
used in the preparation of the financial statements
are prudent and reasonable. Future results may vary
from these estimates and the differences between
the actual results and the estimates are recognized in
the periods in which the results are known/materialize.
Revisions to accounting estimates are recoginized
prospectively in the year in which the estimate is
revised and/or in future years, as applicable.
1.4. Operating Cycle
Based on the nature of products/activities of the
Company and the normal time between acquisition of
assets and their realisation in cash or cash equivalents,
the Company has ascertained its operating cycle as
12 months for the purpose of classification of its assets
and liabilities as current and non-current.
1.5 Revenue recognition
(I) Sale of Goods/Services:
The Company derives revenues primarily from sale
of manufactuing of inorganic chemicals viz Caustic
Soda Lye, Chlorine, Hydrogen, Hydrochloric acid,
Sodium Hypo and Sodium Chlorate and also from
PVC-O pipes. Revenue is measured based on the
consideration specified in a contract with a customer
and excludes amounts collected on behalf of third
parties.
Revenue is recognized upon transfer of control of
promised products or services to customers in an
amount that reflects the consideration expected to be
received in exchange for those products or services.
Revenue is reduced for estimated customer returns,
rebates and other similar allowances. Accordingly,
the revenue is recognised on point in time basis.
a) Sale of products:
Revenues and costs relating to sale of products are
recognized as the related goods are delivered, and
titles have passed, at which time all the following
conditions are satisfied:
- The Company has transferred to the buyer the
significant risks and rewards of ownership of the
goods;
- The Company retains neither continuing
managerial involvement to the degree usually
associated with ownership nor effective control
over the goods sold;
- The amount of revenue can be measured reliably;
- It is probable that the economic benefits
associated with the transaction will flow to the
Company; and
- The costs incurred or to be incurred in respect of
the transactions can be measured reliably.
b) Income from service activities is accounted for
on rendering the service in accordance with the
contractual terms and when there is no uncertainty in
receiving the same.
(II) Other Income:
"Interest income from a financial asset is recognised
when it is probable that the economic benefits will
flow to the Company and the amount of income can
be measured reliably. Interest income is accrued on a
time basis, by reference to the principal outstanding
and at the effective interest rate applicable, which is
the rate that exactly discounts estimated future cash
receipts through the expected life of the financial
asset to that asset's net carrying amount on initial
recognition. Dividend Income is accounted when the
right to receive is established.
1.6 Inventories
Inventories are valued at the lower of cost and net
realizable value. Cost includes cost of purchase, cost
of conversion, and other costs incurred in bringing
the inventories to their present location and condition
and is net of taxes where applicable. The methods
of determination of cost of various categories of
inventory are as follows:
- Raw Materials, Fuel and Stores and Spares - On
weighted average basis.
- Finished goods and Work in Progress at lower
of Cost, which includes appropriate production
overheads and Net Realizable Value, the cost
being determined on weighted average basis.
Due allowance is estimated and made by the
Management for slow moving/non-moving items
of inventory, where ever necessary, based on the
technical assessment and such allowances are
adjusted against the closing inventory value. Net
realizable value represents the estimated selling price
for inventories less all estimated costs of completion
and cost necessary to make the sale.
1.7 Cash and Cash Equivalent (For the
purpose of Cash Flow Statement)
"Cash comprises of cash on hand and demand
deposits with banks. Cash Equivalents are short
term balances (with an original maturity of three
months or less from the date of acquisition), highly
liquid investments that are readily convertible
into known amounts of cash which are subject
to an insignificant risk of changes in value.
Bank balances other than the balance included in
cash and cash equivalents represents balance on
account of unpaid dividend and margin money
deposit with banks."
1.8 Cash Flow Statement
Cash flows are reported using the indirect method,
whereby profit/(loss) after 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.
1.9 Property, Plant and Equipment (PPE)
and Depreciation on Property Plant and
Equipment
Property, Plant and Equipment (PPE's) are recorded at
cost less accumulated depreciation and accumulated
impairment loss (if any). The Company capitalizes
all costs relating to acquisition and installation of
Property, Plant and Equipment. The cost of Property,
Plant and Equipment comprises its purchase price net
of any trade discounts and rebates, any import duties
and other taxes (other than those subsequently
recoverable from the tax authorities), any directly
attributable expenditure on making the asset ready
for its intended use, other incidental expenses and
interest on borrowings attributable to acquisition of
qualifying Property, Plant and Equipment up to the
date the Propery, Plant and Equipment is ready for its
intended use.
Cost of spares relating to specific item of Property, Plant
and Equipment is capitalized. Cost of modifications
that enhance the operating performance or extend
the useful life of Property, Plant and Equipment are
also capitalized, where there is a certainty of deriving
future economic benefits from the use of such assets.
Any part or components of Property, Plant and
Equipment which are separately identifiable and
expected to have a useful life which is different
from that of the main assets are capitalized
separately, based on the technical assessment of the
Management.
Advances paid towards the acquisition of Property,
Plant and Equipment outstanding at each balance
sheet date are disclosed as "Capital Advances" under
Other Non Current Assets and cost of Property, Plant
and Equipment not ready to use before such date are
disclosed under "Capital Work- in- Progress".
Depreciation:
Depreciable amount for assets is the cost of an asset
less its estimated residual value.
Depreciation on Property, Plant and Equipment
has been provided on the straight-line method as
per the useful life prescribed in Schedule II to the
Companies Act, 2013 except in respect of Continuous
Process Plant, in whose case the life of the assets
has been assessed as 18 years based on technical
advice, taking into account the nature of the asset,
the estimated usage of the asset, the operating
conditions of the asset, past history of replacement,
anticipated technological changes, manufacturers
warranties and maintenance support, etc.
Depreciation is also accelerated on Property,Plant
& Equipment, based on their condition, usability etc.
as per the technical estimates of the Management,
where necessary.
Intangible Assets:
Intangible fixed assets acquired separately are
carried at cost less accumulated amortisation and
accumulated impairment losses(If any). Amortisation
is recognised on a straight-line basis over their
estimated useful lives. The estimated useful life of
intangible assets and the amortisation period are
reviewed at the end of each financial year and the
amortisation period is revised to reflect the changed
pattern.
Research and Development:
Research costs are expensed as incurred.
Development expenditures on an individual project
are recognised as an intangible asset when the
Company can demonstrate:
• The technical feasibility of completing the
intangible asset so that the asset will be available
for use or sale
• Its intention to complete and its ability and
intention to use or sell the asset
• How the asset will generate future economic
benefits
• The availability of resources to complete the
asset
• The ability to measure reliably the expenditure
during development
Following initial recognition of the development
expenditure as an asset, the asset is carried at cost
less any accumulated amortisation and accumulated
impairment losses. Amortisation of the asset begins
when development is complete and the asset is
available for use. It is amortised over the period of
expected future benefit. Amortisation expense is
recognised in the statement of profit and loss. During
the period of development, the asset is tested for
impairment annually.
Derecognition of Property, Plant and Equipment:
An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected to arise from the
continued use of the asset. Any gain or loss on
disposal or retirement of an item of property, plant
and equipment is determined as the difference
between the sale proceeds and the carrying amount
of the asset and is recognised in the Statement of
Profit and Loss.
1.10 Borrowing Cost
Borrowing costs include interest, amortisation of
ancillary costs incurred and exchange differences
arising from foreign currency borrowings to the extent
they are regarded as an adjustment to the interest
cost. Costs in connection with the borrowing of funds
to the extent not directly related to the acquisition of
qualifying assets are charged to the Statement of
Profit and Loss over the tenure of the loan. Borrowing
costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of
activities relating to construction/development of
the qualifying asset upto the date of capitalisation
of such asset are added to the cost of the assets.
Capitalisation of borrowing costs is suspended and
charged to the Statement of Profit and Loss during
extended periods when active development activity
on the qualifying assets is interrupted.
1.11 Government Grants, Subsidies and Export
Incentives
Government grants and subsidies are recognised
when there is reasonable assurance that the
Company will comply with the conditions attached
to them and the grants/subsidies will be received.
Government grants whose primary condition is that
the Company should purchase, construct or otherwise
acquire capital assets are presented by deducting
them from the carrying value of the assets. The grant
is recognised as income over the life of a depreciable
asset by way of a reduced depreciation charge.
Export benefits, if any, are accounted for in the year
of exports based on eligibility and when there is no
uncertainty in receiving the same.
Government grants in the nature of promoters'
contribution like investment subsidy, where no
repayment is ordinarily expected in respect thereof,
are accounted in Reserves and Surplus in Other Equity.
Government grants in the form of non-monetary
assets, given at a concessional rate, are recorded
on the basis of their acquisition cost. In case the
non-monetary asset is given free of cost, the grant is
recorded at a nominal value.
Other government grants and subsidies are
recognised as income over the periods necessary to
match them with the costs for which they are intended
to compensate, on a systematic basis.
1.12 Foreign Currency Transactions
Initial Recognition:
On initial recognition, all foreign currency transactions
are recorded by applying to the foreign currency
amount the exchange rate between the reporting
currency and the foreign currency at the date of the
transaction.
Subsequent Recognition:
As at the reporting date, non monetary assets and
liabilities which are carried in terms of historical cost
denominated in a foreign currency are reported
using the exchange rate prevalent at the date of
the transaction. Foreign currency monetary assets
and liabilities are reported using the exchange rate
prevalent at the date of the balance sheet.
Treatment of Exchange Differences:
Foreign exchange gains and losses resulting from
the settlement/restatement of monetary assets and
liabilities of the Company are recognised as income
or expense in the statement of profit and loss.
1.13 Employee Benefits
Retirement benefit costs and termination benefits:
i) Defined Benefit Plans:
Employee defined benefit plans include gratuity.
For defined benefit retirement benefit plans, the
cost of providing benefits is determined using the
projected unit credit method, with actuarial valuations
being carried out at the end of each annual reporting
period. Remeasurement, comprising actuarial gains
and losses, the effect of the changes to the asset
ceiling (if applicable) and the return on plan assets
(excluding net interest), is reflected immediately in
the balance sheet with a charge or credit recognised
in other comprehensive income in the period in which
they occur. Remeasurement recognised in other
comprehensive income is reflected immediately in
retained earnings and is not reclassified to profit or
loss. Past service cost is recognised in the Statement
of profit or loss in the period of a plan amendment. Net
interest is calculated by applying the discount rate at
the beginning of the period to the net defined benefit
liability or asset. Defined benefit costs are categorised
as follows:
• Service cost (including current service cost,
past service cost, as well as gains and losses on
curtailments and settlements);
• Net interest expense or income; and
• Remeasurement comprising actuarial gains
or losses and return on plan assets (excluding
amounts included in net interest on the net
defined benefit liability).
The Company presents the first two components of
defined benefit costs in profit or loss in the line item
'Employee benefits expense'. Curtailment gains and
losses are accounted for as past service costs.
The retirement benefit obligation recognised in the
balance sheet represents the actual deficit or surplus
in the Company's defined benefit plans. Any surplus
resulting from this calculation is limited to the present
value of any economic benefits available in the form
of refunds from the plans or reductions in future
contributions to the plans.
A liability for a termination benefit is recognised at the
earlier of when the entity can no longer withdraw the
offer of the termination benefit and when the entity
recognises any related restructuring costs.
The Company makes contribution to a scheme
administered by the insurer to discharge gratuity
liabilities to the employees.
Short-term employee benefits:
A liability is recognised for benefits accruing to
employees in respect of wages and salaries in
the period the related service is rendered at the
undiscounted amount of the benefits expected to be
paid in exchange for that service.
ii) Defined Contribution Plans
Employee defined contribution plans include
Provident Fund, Employee state insurance and Super
Annuation Fund.
Provident Fund and Employee State Insurance:
All employees of the Company receive benefits from
Provident Fund and Employee's State Insurance
(where applicable), which are defined contribution
plans. Both, the employee and the Company make
monthly contributions to the plan, each equalling to
a specified percentage of employee's basic salary.
The Company has no further obligations under the
plan beyond its monthly contributions. The Company
contributes to the Employee Provident Fund and
Employee's State Insurance (where appplicable)
scheme maintained by the Central Government of
India and the contribution thereof is charged to the
Statement of Profit and Loss in the year in which the
services are rendered by the employees.
Super Annuation Fund:
The Company makes contribution to a scheme
administered by the insurer to discharge its liabilities
towards super annuation to the eligible employees.
The Company has no other liability other than its
annual contribution."
1.14 Employee Share Based Payments
"Employees of the Company receive remuneration
in the form of share-based payments, whereby
employees render services as consideration for equity
instruments (equity-settled transactions).
Equity-settled transactions:
The cost of equity-settled transactions is determined
by the fair value at the date when the grant is made
using an appropriate valuation model.
That cost is recognised, together with a corresponding
increase in share-based payment (SBP) reserves
in equity, over the period in which the performance
and/or service conditions are fulfilled in employee
benefits expense. The cumulative expense recognised
for equity-settled transactions at each reporting date
until the vesting date reflects the extent to which
the vesting period has expired and the Company's
best estimate of the number of equity instruments
that will ultimately vest. The statement of profit
and loss expense or credit for a period represents
the movement in cumulative expense recognised
as at the beginning and end of that period and is
recognised in employee benefits expense Service and
non-market performance conditions are not taken
into account when determining the grant date fair
value of awards, but the likelihood of the conditions
being met is assessed as part of the Company's best
estimate of the number of equity instruments that
will ultimately vest. Market performance conditions
are reflected within the grant date fair value. Any
other conditions attached to an award, but without
an associated service requirement, are considered
to be non-vesting conditions. Non-vesting conditions
are reflected in the fair value of an award and lead to
an immediate expensing of an award unless there are
also service and/or performance conditions.
No expense is recognised for awards that do not
ultimately vest because non-market performance
and/or service conditions have not been met. Where
awards include a market or non-vesting condition,
the transactions are treated as vested irrespective
of whether the market or non-vesting condition is
satisfied, provided that all other performance and/or
service conditions are satisfied.
When the terms of an equity-settled award are
modified, the minimum expense recognised is the
expense had the terms had not been modified, if the
original terms of the award are met. An additional
expense is recognised for any modification that
increases the total fair value of the share-based
payment transaction, or is otherwise beneficial to the
employee as measured at the date of modification.
Where an award is cancelled by the entity or by the
counterparty, any remaining element of the fair value
of the award is expensed immediately through profit
or loss.
The dilutive effect of outstanding options is reflected
as additional share dilution in the computation of
diluted earnings per share."
1.15 Taxation
"Income taxes comprise Current and deferred tax.
Income tax expense/credit is recognised in the
statement of profit and loss, except when they relate
to items that are recognised in other comprehensive
income or directly in equity, in which case, the income
taxes are also recognised in other comprehensive
income or directly in equity, respectively.
Current Tax and Prior Period Tax:
Current income tax liability/(asset) for the current and
prior periods are measured at the amount expected to
be recovered from or paid to the taxation authorities
based on the taxable income for the period. The tax
rates and tax laws used to compute the current tax
amount are those that are enacted or substantively
enacted by the reporting date and applicable for the
period. The Company offsets current tax assets and
current tax liabilities, where it has a legally enforceable
right to set off the recognized amounts and where it
intends either to settle on a net basis or to realize the
asset and liability simultaneously."
Deferred Tax:
Deferred income tax is recognised using the balance
sheet approach. Deferred income tax assets and
liabilities are recognized on deductible and taxable
temporary differences between the carrying amounts
of assets and liabilities in the Ind AS financial statements
and the corresponding tax bases of such assets and
liabilities. Deferred tax liabilities are recognised for all
taxable temporary differences. Deferred income tax
assets are recognised to the extent that it is probable
that taxable profit will be available against which
the deductible temporary differences, and the carry
forward of unused tax credits and unused tax losses
can be utilized.
The carrying amount of deferred tax assets is reviewed
at the end of each reporting period 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 liabilities and assets 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 end of the
reporting period.
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
end of the reporting period, to recover or settle the
carrying amount of its assets and liabilities.
Minimum Alternate Tax (MAT):
Minimum Alternate Tax (MAT) paid as current tax
expense in accordance with the tax laws, which gives
future economic benefits in the form of adjustment
to future income tax liability, is considered as tax
credit and recognised as deferred tax asset when
there is reasonable certainty that the Company will
pay normal income tax in the future years and future
economic benefit associated with it will flow to the
Company. The carrying amount is reviewed at the end
of each reporting period 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."
1.16 Segment Reporting
Operating segments reflect the Company's
management structure and the way the financial
information is regularly reviewed by the Company's
Chief operating decision maker (CODM). The CEO
of the Company has been identified as the Chief
Operating Decision Maker (CODM) as defined by Ind
AS 108, Operating Segments. The CODM considers
the business from both business and product
perspective based on the dominant source, nature
of risks and returns and the internal organisation and
management structure. The operating segments are
the segments for which separate financial information
is available and for which operating profit/(loss)
amounts are evaluated regularly by the CODM in
deciding how to allocate resources and in assessing
performance.
The accounting policies adopted for segment
reporting are in line with the accounting policies of
the Company. Segment revenue, segment expenses,
segment assets and segment liabilities have been
identified to segments on the basis of their relationship
to the operating activities of the segment.
Inter-segment revenue, where applicable, is
accounted on the basis of transactions which are
primarily determined based on market/fair value
factors.
Revenue, expenses, assets and liabilities which relate
to the Company as a whole and are not allocable to
segments on reasonable basis have been included
under "unallocated revenue/expenses/assets/
liabilities".
1.17 Leases
The Company assesses whether a contract contains
a lease, at inception of a contract. A contract is, or
contains, a lease if the contract conveys the right to
control the use of an identified asset for a period of
time in exchange for consideration. To assess whether
a contract conveys the right to control the use of an
identified asset, the Company assesses whether: (l)
the contract involves the use of an identified asset (2)
the Company has substantially all of the economic
benefits from use of the asset through the period of
the lease and (3) the Company has the right to direct
the use of the asset.
At the date of commencement of the lease, the
Company recognizes a right-of-use asset ("ROU")
and a corresponding lease liability for all lease
arrangements in which it is a lessee, except for leases
with a term of twelve months or less (short-term
leases) and low value leases. For these short-term and
low value leases, the Company recognizes the lease
payments as an operating expense on a straight-line
basis over the term of the lease.
Certain lease arrangements includes the options to
extend or terminate the lease before the end of the
lease term. ROU assets and lease liabilities includes
these options when it is reasonably certain that they
will be exercised.
The right-of-use assets are initially recognized at
cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or
prior to the commencement date of the lease plus
any initial direct costs less any lease incentives. They
are subsequently measured at cost less accumulated
depreciation and impairment losses.
Right-of-use assets are depreciated from the
commencement date on a straight-line basis over
the shorter of the lease term and useful life of the
underlying asset. Right of use assets are evaluated
for recoverability whenever events or changes in
circumstances indicate that their carrying amounts
may not be recoverable. For the purpose of
impairment testing, the recoverable amount (i.e. the
higher of the fair value less cost to sell and the value-
in-use) is determined on an individual asset basis
unless the asset does not generate cash flows that
are largely independent of those from other assets.
In such cases, the recoverable amount is determined
for the Cash Generating Unit (CGU) to which the asset
belongs.
The lease liability is initially measured at amortized
cost at the present value of the future lease
payments. The lease payments are discounted using
the interest rate implicit in the lease or, if not readily
determinable, using the incremental borrowing rates
in the country of domicile of the leases. Lease liabilities
are remeasured with a corresponding adjustment to
the related right of use asset if the Company changes
its assessment if whether it will exercise an extension
or a termination option.
1.18 Earnings per share
Basic earnings per share is computed by dividing
the profit/(loss) after tax by the weighted average
number of equity shares outstanding during the
year. Diluted earnings per share is computed by
dividing the profit/(loss) after tax as adjusted for
dividend, interest and other charges to expense or
income relating to the dilutive potential equity shares,
by the weighted average number of equity shares
considered for deriving basic earnings per share
and the weighted average number of equity shares
which could have been issued on the conversion of all
dilutive potential equity shares. Potential equity shares
are deemed to be dilutive only if their conversion to
equity shares would decrease the net profit per share
from continuing ordinary operations. Potential dilutive
equity shares are deemed to be converted as at the
beginning of the period, unless they have been issued
at a later date. The dilutive potential equity shares are
adjusted for the proceeds receivable had the shares
been actually issued at fair value (i.e. average market
value of the outstanding shares). Dilutive potential
equity shares are determined independently for each
period presented. The number of equity shares and
potentially dilutive equity shares are adjusted for
share splits/reverse share splits and bonus shares, as
appropriate.
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