2. Significant accounting policies
2.1 Basis of preparation & presentation
The financial statements have been prepared to comply in all material respects with the Accounting Standards issued as per the provisions of Section 133 of the Companies Act, 2013 read with rule 7 of Companies (Accounts) Rules 2014.The financial statements are prepared on going concern basis under the historical cost convention on the accrual basis except in case of assets for which provision for impairment is made and revaluation is carried out. The accounting policies have been consistently applied by the Company .
2.2 Functional and Presentation Currency
These financial statements are presented in Indian Rupees (INR), which is also the Company's functional currency. All amounts are mentioned in lakhs and rounded off to 2 decimals unless, otherwise stated.
2.3 Use of estimates
The preparation of financial statements in conformity with Indian GAAP requiresjudgements, estimates and assumptions to be made that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognized in the year in which the results are known / materialized.
2.4 Property, Plant & Equipment
Tangible assets
Tangible assets are stated at cost net of recoverable taxes, trade discounts and rebates and include amounts added on revaluation, less accumulated depreciation and impairment loss, if any. The cost of tangible assets comprises its purchase price, borrowing cost and any cost directly attributable to bring the asset to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to assets.
Subsequent expenditures related to an item of Tangible 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.
Projects under which assets are not ready for its intended use are disclosed under capital work in progress.
Intangible assets
Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization / depletion and impairment loss, if any. The cost comprises purchase price, borrowing cost and any cost directly attributable to bring the asset to its working condition for its intended use and net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to intangible assets.
2.5 Leases
Leases of assets, where the company assumes substantially all the risk and benefits of ownership are classified as finance leases. Finance leases are capitalized at the lower of fair value of the leased assets at inception and the present value of minimum lease payments. Lease payments are apportioned between the finance charge and the outstanding liability. The finance charge is allocated periods during the lease term at a constant periodic rate of interest on the remaining balance of the liability.
Leases where the lessor effectively retains substantially all the risk and benefits of ownershipare classified, as operating leases. Lease rentals in respect of assets taken under operating leases are charged to statement of profit & loss on a straight line basis over the lease term.
2.6 Depreciation
Depreciation is provided on a pro-rata basis under the Written Down Value method over the useful life of the assets as prescribed under part C of Schedule II of the Companies Act,2013.
Fixed assets individually costing Rupees Five Thousand or less are depreciated at 100% over a period of one year.
Assets under finance lease are amortized over their estimated useful life or the lease term whichever is lower.
2.7 Impairment
As asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the Profit & Loss Statement in the year in which as asset is treated as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
2.8 Foreign Currency Transactions
i. Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of transaction or that approximates the actual rate at the date of transaction.
ii. Monetary items denominated in foreign currencies at the year- end are restated at year end rates. In case of items which are covered by forward exchange contracts, the difference between the year- end rate and the rate on the date of contract is recognized as exchange difference and the premium paid on forward contracts is recognized over the life of contract.
iii. Non-monetary foreign currency assets are carried at cost.
iv. Any income or expense on account of exchange differences either on settlement or on translation is recognized in the Profit & Loss Statement, except in the case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.
2.9 Investments
Current investments are carried at lower of cost and quoted / fair value, computed category-wise. Non- current investments are stated at cost. Provision for diminution in the value of Non-Current Investments is made only if such a decline is other than temporary.
2.10 Cash and Cash equivalents
Cash and cash equivalents comprise cash and cash on deposit with banks. The company considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.
2.11 Revenue recognition
i. Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.
ii. Revenue from sale of goods is recognized 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.
iii. Revenue from services is recognized as and when the services are rendered in accordance with the terms of the specific contracts, net of all contractual deductions. Revenue from Services is recognized net of all taxes and levies..
iv. Income from interest on deposits is recognized on a time proportion basis.
v. Dividend income is recognized when the right to receive payment is established.
2.12 Employee benefits
(i) Short term employment benefits
The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by the employees are recognized as expense during the period when the employee render the services. These benefits include performance incentive and compensated absences.
(ii) Post-employment benefits
a) Defined contribution plans
A defined contribution plan is a post-employmentbenefit plan under which the Company pays specified contributions to a separate entity. The Company makes specified monthly contribution towards Provident Fund and pension scheme. The Company’s contribution is recognized as an expense in the Profit and Loss Statement during the period in which the employee renders the related service.
b) Defined benefit plans Gratuity
Benefits payable to eligible employees of the Company with respect to gratuity, a defined benefit plan is accounted for on the basis of an actuarial valuation as at the balance sheet date. In accordance with the Payment of Gratuity Act, 1972, the plan provides for lump sum payments to vested employees upon retirement, death while in service or upon termination of employment in an amount equivalent to 15 days salary for each completed year of service. Vesting occurs upon completion of five years of service. The company contributes premium towards gratuity liability arrived by actuarial valuation performed by an independent actuary.
Acturial Valuation
The actuarial valuation method used for measuring the liability either Gratuity or Compensated absence is the Projected Unit Credit method. The estimate of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors. The expected rate of return on plan assets is the Company’s expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations. Actuarial gain/losses are recognized in the Statement of Profit and Loss in the year they are determined.
2.13 Borrowing costs
Borrowing costs include exchange difference arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs that are 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 recognised as an expense in the period in which they are incurred. Capitalisation of borrowing costs is suspended during the extended period in which active development is interrupted. Capitalisation 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.
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