2.2.Summary of Significant accounting policies:
2.2.1. Basis of Accounting:
The financial statements are prepared as per historical cost convention and ongoing concern
basis and comply with the applicable accounting standards specified under section 133 of the
companies Act, 2013 read with Rules 7 of companies (Accounts) Rules 2014 as amended from
time to time.
2.2.2. Use of estimates:
The preparation of financial statements requires the management to make estimates and
assumptions considered in the reported amounts of assets and liabilities (including contingent
liabilities) as on the date of the financial statements and the reported income and expenses
during the reporting period. The estimates and assumptions used in the financial statements
are based upon the Management’s evaluation of the relevant facts and circumstances as on the
date of financial statements. Management believes that the estimates used in the preparation
of the financial statements are prudent and reasonable. Future results may vary from these
estimates.
2.2.3. Inventories:
Inventories are valued at cost or net realizable value, whichever is lower after providing for
obsolescence and other anticipated losses, if any. Cost of Inventory comprises of Cost of
Purchase, Cost of Conversion and other Costs incurred to bring them to their respective present
location and condition.
Raw Materials and Spares have been valued on the basis of Weighted Average Cost Method.
Work in Progress has been valued as per Absorption Costing Method and includes all allocable
overheads up to the stage of completion.
Finished Goods have been valued as per the Absorption Cost Method.
2.2.4. Revenue recognition:
Sales are recognized when significant risks and rewards of ownership of goods has passed
to the buyer, which coincides with delivery. Sales are net of trade discount, rebates and value
added tax but inclusive of GST.
Other Operating Income comprise of Export incentives. Export incentives available under
prevalent schemes are accounted on entitlement basis
Interest income and other income (if any) have been recognized on accrual basis.
2.2.5. Property, Plant and Equipment:
Property Plant and Equipment are stated at cost less accumulated depreciation. The cost
includes purchase consideration, financing costs till commencement of commercial production
and other directly attributable costs incurred to bring an Asset to its working condition for its
intended use. Subsidy received towards specific assets is reduced from the cost of fixed assets.
Depreciation has been provided on the Written Down Value method as per useful life prescribed
in Schedule II to the Companies Act, 2013.
Depreciation is charged on pro rata basis on assets, from / up to the date of capitalization / sale,
disposal and dismantled during the year.
2.2.6. Intangible Assets:
Intangible assets comprise of computer software. The Company has acquired computer software
for internal use and the same is recognized as an intangible asset. The costs of application
software purchased comprise its purchase price, including any import duties and other taxes
and any directly attributable expenditure on making the software ready for its use. Computer
software is amortised fully within three years from the date of purchase.
2.2.7. Foreign Currency Transaction:
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign
currency amount the exchange rate between the reporting currency and the foreign currency at
the date of transaction.
Monetary assets and monetary liabilities denominated in foreign currencies remaining unsettled
at the end of the year are converted at the exchange rate prevailing on the reporting date
2.2.8. Investments:
Investments are long term and are stated at cost except where there is diminution in value other
than of temporary nature, in which case a provision is made to the carrying value to recognize
the diminution.
2.2.9. Employee Benefits:
Employee benefits includes salary, wages, contribution to provident fund, gratuity and other
compensated absences
A. Long Term Employment Benefits
(a.) Defined Benefit Obligation Plans:
Gratuity
By virtue of Accounting Standard 15 (Revised) on employee benefits, during the year the
company has carried out an actuarial valuation of gratuity liability and expense of amount Rs.
17.22 in Lakhs has been included in statement of Profit and Loss and an amount of Rs. 27.83
in Lakhs has been disclosed as liability in financial statements.
Change in value of assets:
No planned assets are held by the company. Therefore, the information required to be given
under this is not provided
(i.) Provident Fund:
Retirement benefits in the form of Provident Fund are a defined contribution scheme. The
provisions of provident or pension funds is accounted on mercantile basis.
(b.) Defined Contribution plan
B. The contribution to Pension fund, ESIC and Labour Welfare fund are recognised as an expense
in the Statement of Profit and Loss.
2.2.10. Short Term Employment Benefits:
Short Term benefits payable before twelve months after the end of the reporting period in which
the employee have tendered service are accounted as expense in statement of profit and loss.
2.2.11. Taxation:
Provision for taxation is made for both current and deferred taxes.
Current tax is provided on the basis of the taxable income in accordance with provisions
laid down in The Income Tax Act, 1961 using the applicable tax rates and tax laws.
Deferred tax assets and liabilities arising on account of timing difference, and which are capable
of reversal in subsequent periods, are recognized using the tax rates and tax laws that have
been enacted or substantively enacted as on the Balance Sheet date.
Deferred Tax Assets are recognized and carried forward only if there is a virtual certainty that
they will be realized and are reviewed for the appropriateness of their respective carrying values
at each Balance Sheet date.
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