2 MATERIAL ACCOUNTING POLICIES:
I) Basis of Preparation and Presentation
i) The financial statements are prepared on historical cost basis in accordance with applicable Indian Accounting Standards
(Ind AS) and on accounting principles of going concern. These financial statements have been prepared to comply with all
material aspects with the Indian accounting standards notified under section 133 of the Act, (the "Act") read with Rule 7 of
the Companies (Accounts) Rules, 2014, and the other relevant provisions of the Act.
ii) Accounting policies have been consistently applied except where a newly issued IND-AS is initially adopted or a revision
to an existing IND-AS requires a change in the accounting policies hitherto in use.
iii) 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 the Schedule III to the Act. 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 ascertained its operating cycle
as 12 months for the purpose of current classification of assets and liabilities.
II) REVENUE RECONGNTION
i) Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue
can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the
consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or
duties collected on behalf of the government
ii) Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have
passed to the buyer. Revenue from the sale of goods is measured at the fair value of the consideration received or
receivable, net of returns and allowances, trade discounts and volume rebates.
iii) Interest on overdue debtors, dividend and other income is accounted for as and when received, as the collection cannot
be ascertained with reasonable certainty.
iv) Income from export incentives such as duty drawback etc. are recognised on accrual basis.
v) Dividend is recognised when the right to receive the payment is established, which is generally when shareholders
approve the dividend.
III) PROPERTY, PLANT AND EQUIPMENTS
i) Property, plant and equipment have been measured at cost at the date of transition to Ind AS.
ii) Assets are carried at cost less accumulated depreciation and accumulated impairment losses, if any. Cost includes
expenditure that is directly attributable to the acquisition of the items.
iii) 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 entity 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. When significant parts of plant and equipment are required to be replaced at intervals, the entity depreciates them
separately based on their specific useful lives. 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. Refer to note 1.24 regarding significant
accounting judgements, estimates and assumptions.
iv) 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 arising on the disposal or retirement of an item of
property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the
asset and is recognised to the standalone statement of profit and loss.
IV) CAPITAL WORK-IN-PROGRESS
Capital work in progress is stated at cost, less accumulated impairment losses, if any. Such cost includes the cost of
replacing part of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria
are met.
V) DEPRECIATION / AMORTIZATION
i) Depreciation on tangible property, plant and equipments is provided for on the basis of useful life specified in Schedule II
to the Act.
iii) Depreciation is charged as per the provisions of Schedule II to the Act based upon useful life of assets exept Plant &
Machineries, for which useful life has been taken as decided by the Management. The useful life adopted for the purpose of
depreciation is as under.
Assets Useful life year
i) Factory Building 30
ii) Buildings other than (i) above 60
iii) Plant & Machineries 25
iv) Canteen Equipment's / Office Equipment's 5
v) Electrical Equipment's / Electrical Installation 10
vi) Computers 3
vii) Furniture & Fixture 10
viii) Vehicles 8
ix) Lease hold land 95
VI) Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a
business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried
at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding
capitalised development costs, are not capitalised and the related expenditure is reflected in profit or loss in the period in
which the expenditure is incurred.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is
an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an
intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected
useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to
modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The
amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such
expenditure forms part of carrying value of another asset.
VII) IMPAIRMENT
Assessment is done at each Balance Sheet date as to whether there is any indication that an asset may be impaired. For
the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing
use that are largely independent of the cash inflows from other assets or groups of assets, is considered as a cash
generating unit. If any such indication exists, an estimate of the recoverable amount of the asset/cash generating unit is
made. Assets whose carrying value exceeds their recoverable amount are written down to the recoverable amount.
Recoverable amount is higher of an asset's or cash generating unit'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 an asset and from its disposal
at the end of its useful life. Assessment is also done at each Balance Sheet date as to whether there is any indication that
an impairment loss recognised for an asset in prior accounting periods may no longer exist or may have decreased.
VIII) NON-CURRENT ASSETS CLASSIFIED AS HELD
Assets which are available for immediate sale and its sale must be highly probable are classified as “Assets held for
Disposal”. Such assets or group of assets are presented separately in the Balance Sheet, in the line “Assets held for
Disposal”. Once classified as held for disposal, such assets are no longer amortised or depreciated. Such assets are stated
at the lower of carrying amount and fair value less costs to sell.
IX) INVENTORIES:
i) Inventories are valued at the lower of cost and net realisable value.
ii) Cost of finished goods and work -in- process includes cost of conversion and other expenses incurred in bringing the
goods to their location and condition. The cost in respect of raw materials is determined under the specific identification of
cost method.
iii) The cost in respect of work-in-progress, finished goods and stores and spares is determined using the weighted average
cost method and includes direct materials and labour and a proportion of manufacturing overheads based on normal
operating capacity, where applicable.
iv) Waste is valued at estimated net realizable value.
X) EMPLOYEES BENEFITS:
Liability as at the year end in respect of retirement benefits in respect of gratuity is provided for based upon acturial
valuation and charged to Statement of Profit and Loss. Retirement benefit in compensated absences is calculated based on
the company's policy and provided for. Other retirement benefits are charged as follows:
i) Provident Fund / Family Pensions:
At a percentage of salary/wages for eligible employees.
ii) Retirement benefit costs and termination benefit in respect of gratuity
The Company determines the present value of the defined benefit obligation and recognizes the liability or asset in the
balance sheet.
The present value of the obligation is determined using the projected unit credit method, with actuarial valuations being
carried out at the end of each year
Defined benefit costs are composed of:
(a) service cost - recognized in profit or loss; service cost comprises (i) current cost which is the increase in the present
value of defined benefit obligations resulting from employee service in the current period, (ii) past service cost which is the
increase in the present value of defined benefit obligations resulting from employee service in the prior periods resulting
from a plan amendment, and (iii) gain or loss on settlement.
(b) remeasurements of the liability or asset - recognized in other comprehensive income.
(c) remeasurements of the liability or asset essentially comprise of actuarial gains and losses (i.e. changes in the present
value of defined benefit obligations resulting from experience adjustments and effects of changes in actuarial assumptions).
Short-term benefits: A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual
leave and sick leave and other short term benefits in the period the related service is rendered at the undiscounted amount
of the benefits expected to be paid in exchange for that service.
Other long-term benefits: Liabilities recognised in respect of other long-term employee benefits are measured at the
present value of the estimated future cash outflows expected to be made by the Group in respect of services provided by
employees up to the reporting date.
iii) Bonus
The company recognises a liability and expense for bonus. The company recognises a provision where contractually
obliged or where there is past practice that has created a constructive obligation.
XI) BORROWING COST
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their intended use, are added to the cost of those assets, until
such time as the assets are substantially ready for their intended use. All other borrowing costs are recognised in the
Statement of Profit and Loss in the period in which they are incurred. The Company determines the amount of borrowing
costs eligible for capitalisation as the actual borrowing costs incurred on that borrowing during the period less any interest
income earned on temporary investment of specific borrowings pending their expenditure on qualifying assets, to the extent
that an entity borrows funds specifically for the purpose of obtaining a qualifying asset. In case if the Company borrows
generally and uses the funds for obtaining a qualifying asset, borrowing costs eligible for capitalisation are determined by
applying a capitalisation rate to the expenditures on that asset. The Company suspends capitalisation of borrowing costs
during extended periods in which it suspends active development of a qualifying asset
XII) EARNING PER SHARE
Basic earnings per share is 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 year. Earnings considered in ascertaining the Company's
earnings per share is the net profit for the year attributable to equity share holders. The weighted average number of equity
shares outstanding during the year and for all years presented is adjusted for events, such as bonus shares, other than the
conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding
change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable
to equity shareholders and the weighted average number of shares outstanding during the year is adjusted for the effects of
all dilutive potential equity shares.
XIII) TAXATION
INCOME TAX
Provision for Current Tax is made and retained in the accounts on the basis of estimated tax liability as per applicable
provisions of Income Tax Act 1961.
DEFERRED TAX
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial
statements 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 to the extent that it is probable that taxable profits will be available against which those deductible temporary
differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from
the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the
taxable profit nor the accounting profit.
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
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of
adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay
normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is highly probable that future
economic benefit associated with it will flow to the Company.
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
end of the reporting period.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other
comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting
for a business combination, the tax effect is included in the accounting for the business combination.
The Company recognises interest levied and penalties related to Income Tax assessments in the tax expanse.
XIV) USE OF ESTIMATES
The preparation of Financial Statements requires estimates and assumptions to be made that affect the reported amounts of
assets and liabilities on the date of Financial Statements and the reported amounts of revenues and expenses during the
reporting period. Difference between the actual results and the estimates are recognised in the period in which the results
are known/ materialised.
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