B. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements of the company have been prepared in accordance with generally accepted accounting
principles in India (Indian GAAP). GAAP comprises mandatory accounting standard as prescribed under
section 133 of the Companies Act 2013 read with rule 7 of the Companies (Accounts) Rules, 2014, the
Provision of Act (to extent notified). The financial statements have been prepared under the historical cost
convention on an accrual basis. The accounting policies adopted in the preparation of financial statements are
consistent with those used in the previous year.
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 Companies Act, 2013. Based on the nature of products
and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents,
the Company has ascertained its operating cycle as 12 months for the purpose of current - noncurrent
classification of assets and liabilities.
2. USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles (‘GAAP’)
in India requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent liabilities on the date of the financial statements, and the reported
amount of revenue and expenses during the reporting period. The estimates and assumptions used in the
accompanying financial statements are based upon management’s evaluation of the relevant facts and
circumstances as of the date of the financial statements which in management’s opinion are prudent and
reasonable. Actual results may differ from the estimates used in preparing the accompanying financial
statements. Any revision to accounting estimates is recognized prospectively in current and future periods.
3. PROPERTY, PLANT & EQUIPMENT
Property, Plant & Equipment arc stated at historical cost less accumulated depreciation and impairment losses.
Cost includes purchase price and all other attributable cost to bring the assets to its working condition for the
intended use.
Subsequent expenditures related to an item of tangible asset arc added to its book value only if they increase the
future benefits from the existing asset beyond its previously assessed standard of performance.
4. DEPRECIATION
Depreciation is provided on a written down value basis over the useful lives of assets, which is as stated in
Schedule II of the Companies Act 2013 or based on technical estimation made by the Company.
Depreciation and amortization methods, useful lives and residual values are reviewed at each reporting date.
5. BORROWING COSTS
Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalized 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 recognized as an expense in the period in which they are incurred.
Capitalization of borrowing costs is suspended during the extended period in which active development is
interrupted. Capitalization of borrowing costs is ceased when substantially all the activities necessary to prepare
the qualifying asset for its intended use or sale are complete. Other borrowing costs are charged to statement of
profit and loss as and when incurred.
6. IMPAIRMENT OF ASSETS
In accordance with AS 28 on ‘Impairment of assets’ as prescribed in the Companies (Accounting Standards)
Rules, 2006, the Company assesses at each balance sheet date, whether there is any indication that an asset may
be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. The
recoverable amount of the assets (or where applicable that of the cash generating unit to which the asset
belongs) is estimated as the higher of its 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 assets and from its disposal at the
end of its useful life. An impairment loss is recognized whenever the carrying amount of an asset or the cash-
generating unit to which it belongs, exceeds it recoverable amount. Impairment loss is recognized in the
statement of profit and loss or against revaluation surplus, where applicable. If at the balance sheet date, there is
an indication that a previously assessed impairment loss no longer exists, the recoverable amount is re-assessed
and the asset is reflected at the recoverable amount subject to a maximum of the depreciated historical cost.
7. INVESTMENTS
Investments, which are readily realizable and intended to be held for not more than one year from the date on
which such investments are made, are classified as current investments. All other investments are classified as
long-term investments.
On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly
attributable acquisition charges such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of cost and fair value determined on an
individual investment basis. Long-term investments are carried at cost. However, provision for diminution in
value is made to recognize a decline other than temporary in the value of the investments.
On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged
or credited to the statement of profit and loss.
8. INVENTORIES
Raw materials, stores and spares and trading goods arc valued at lower of cost and net realizable value.
Work-in-Progress and finished goods arc valued at the lower of cost and net realizable value. Cost includes
direct materials and labour and a part of manufacturing overheads based on normal operating capacity.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of
completion and estimated costs necessary to make the sale.
Cost comprises of cost of Purchase & other costs incurred in bringing them to their respective present location
and condition and is determined on Average basis.
9. CURRENT/NON CURRENT CLASSIFICATIONS
The Schedule III to the Act requires assets and liabilities to be classified as either Current or Non-current. An
asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realized in, or is intended for sale or consumption in, the entity’s normal operating
cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realized within twelve months after the balance sheet date; or
d) It is cash or a cash equivalent unless it is restricted from being exchanged or used to settle a liability for
at least twelve months after the balance sheet date.
Current assets include the current portion of non-current financial assets. All other assets are classified as non-
current.
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in, the entity’s nonrial operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within twelve months after the balance sheet date; or
d) The Company does not have an unconditional right to defer settlement of the liability for at least twelve
months after the balance sheet date.
Current liabilities include current portion of non-current financial liabilities. All other liabilities arc classified as
non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash
equivalents.
10. REVENUE RECOGNITION
i) Revenue from sale of goods is recognizing when the significant risks and rewards of ownership have
been transferred to the buyer. Revenue from sale of goods is net of sales tax, trade discounts, rebates
etc.
ii) Service income is recognized as and when services are rendered in accordance with the terms of the
specific contracts, net of all contractual deductions. Revenue is recognized net of all taxes and levies.
iii) Interest income is recognized on a time proportion basis.
iv) Export of goods is eligible for incentives from Government as per Import-Export policies declared by
the Government from time to time. Company's export products are eligible for duty drawback. Rates
for duty drawback vary according to products and destinations. The Company recognizes duty
drawback amount on accrual basis for this financial year, However, in respect of preceding years
benefits are recognized on receipt basis.
11. FOREIGN CURRENCY TRANSACTIONS
Initial recognition
Foreign currency transactions arc recorded in the reporting currency which is Indian Rupee, by applying to the
foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date
of the transaction.
Conversion
Monetary assets and liabilities in foreign currency, which arc outstanding as at the year-end, arc translated at the
year-end at the closing exchange rate and the resultant exchange differences are recognized in the Statement of
Profit and Loss. Non-monetary foreign currency items are carried at cost.
Exchange Differences
Exchange differences arising on the settlement of monetary items or on reporting monetary items of the
Company at rates different from those at which they were initially recorded during the year, or reported in
previous financial statements, are recognized as income or as expenses in the year in which they arise.
12. EMPLOYEE BENEFITS
Short Term Employee Benefits
The short term employee benefits expected to be paid in exchange for the services rendered by employees are
recognised as an expense during the period when the employees render the services.
Post-Employment Benefits
Defined Contribution Plans
The company has no policy of encashment and accumulation of leave. Therefore, no provision of leave
Encashment is made.
Company's contribution to Provident Fund and other Funds for the year is accounted on accrual basis and
charged to the Statement of Profit & Loss for the year.
Defined Benefits Plans
The cost of the defined benefit plan and other post-employment benefits and the present value of such obligation
are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may
differ from actual developments in the future. These include the determination of the discount rate, future salary
increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its
long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All
assumptions are reviewed at each reporting date.
The company has recognized the gratuity payable to the employees as defined benefit plans. The liability in
respect of these benefits is calculated using the Projected Unit Credit Method and spread over the period during
which the benefit is expected to be derived from employees' services.
13. SEGMENT ACCOUNTING
(i) Business Segment
The Company operates in one Business Segment only and hence no separate information for business segment
wise disclosure is required.
(ii) Geographical Segment
The Company operates in one Geographical Segment namely “within India” and hence no separate information
for geographic segment wise disclosure is required.
14. ACCOUNTING FOR TAXES ON INCOME
Current Tax
Current tax is determined as the amount of tax payable under the provisions of Income Tax Act, 1961, in respect
of taxable income for the year.
Deferred income taxes reflect the impact of current year timing difference between taxable income and
accounting income for the year and reversal of timing difference of earlier year. Deferred tax is measured based
on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets
are recognized only to the extent there is reasonable certainty that the assets can be realized in the future;
however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets
are recognized only if there is virtual certainty of realization of such assets. Deferred tax assets are reviewed at
each balance sheet date and written down or written up to reflect the amount that is reasonably / virtually certain
(as the case may be) to be realized.
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