2. Summary of significant accounting policies
a. Use of estimates
The preparation of financial statements in conformity with Ind-AS requires the management to make judgments, estimates
and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and the disclosure of contingent
liabilities, at the end of the reporting period. Although these estimates are based on the management's best knowledge of
current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a
material adjustment to the carrying amounts of assets or liabilities in future periods.
b. Property, Plant and Equipment
Property, Plant and Equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any.
The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing
the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase
price.
Gains or losses arising from sale of fixed assets are measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of profit and loss when the asset is sold.
c. Depreciation on tangible fixed assets
Depreciation on Fixed Assets is being provided on Straight Line Method on "Useful Life" in the manner prescribed under the
Schedule II of the Companies Act, 2013.
d. Borrowing costs
Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings
and exchange difference arising from currency borrowings to the extent they are regarded as an adjustment to the interest
cost.
e. Impairment of tangible and intangible assets
The company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is required, the company estimates the asset's recoverable amount.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
f. 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 investment.
Current investments are carried in the financial statement at lower of cost and fair value determined on an individual
investment basis. Long-term investment is carried at cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of the investment.
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.
g. Financial Assets:
i. Financial Assets
A. Initial recognition and measurement
All financial assets and liabilities are initially recognized at fair value. Transaction costs that are directly attributable to
the acquisition or issue of financial assets and financial liabilities, which are not at fair value through profit or loss, are
adjusted to the fair value on initial recognition. Purchase and sale of financial assets are recognised using trade date
accounting.
B. Subsequent measurement
a) Financial assets carried at amortised cost (AC)
A financial asset is measured at amortised cost if it is held within a business model whose objective is to hold the
asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of principal and interest on the principal amount
outstanding.
b) Financial assets at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at FVTOCI if it is held within a business model whose objective is achieved by both
collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give
rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount
outstanding.
c) Financial assets at fair value through profit or loss (FVTPL)
A financial asset which is not classified in any of the above categories are measured at FVTPL.
C. Other Equity Investments
All other equity investments are measured at fair value, with value changes recognised in Statement of Profit and Loss,
except for those equity investments for which the Company has elected to present the value changes in 'Other
Comprehensive Income'.
D. Impairment offinancial assets
In accordance with Ind AS 109, the Company uses 'Expected Credit Loss' (ECL) model, for evaluating impairment of
financial assets other than those measured at fair value through profit and loss (FVTPL).
Expected credit losses are measured through a loss allowance at an amount equal to:
Ý The 12-months expected credit losses (expected credit losses that result from those default events on the
financial instrument that are possible within 12 months after the reporting date); or
Ý Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life
of the financial instrument)
For trade receivables Company applies 'simplified approach'which requires expected lifetime losses to be
recognised from initial recognition of the receivables. The Company uses historical default rates to determine
impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are
reviewed and changes in the forward looking estimates are analysed.
The Company uses 12 month ECL to provide for impairment loss where there is no significant increase in credit
risk. If there is significant increase in credit risk full lifetime ECL is used.
ii. Financial liabilities
A. Initial recognition and measurement
All financial liabilities are recognized at fair value and in case of loans, net of directly attributable cost. Fees of recurring
nature are directly recognised in the Statement of Profit and Loss as finance cost.
There is no significant impact on valuation of Financial Assets at fair value through comprehensive income and hence not
profit or loss on such valuation booked.
B. Subsequent measurement
Financial liabilities are carried at amortized cost using the effective interest method. For trade and other payables
maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short
maturity of these instruments.
There is no significant impact on valuation of Financial Assets at fair value through comprehensive income and hence not
profit or loss on such valuation booked.
h. Revenue recognition
Revenue is recognized to the extent that is probable that the economic benefits will flow to the company and the revenue can
be reliable measured. The following specific recognition criteria must also be met before revenue is recognized:
i. Sale of goods
Revenue from sale of goods is recognized when all the risks and rewards of ownership of the goods have been passed to the
buyer, usually on delivery of the goods and performance of services to customers. If company collects GST on behalf of the
government and, therefore, these are not economic benefits flowing to the company. Hence, they are excluded from revenue.
j. Interest
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable
interest rate. Interest income is included under the head"other income" in the statement of profit and loss.
k. Dividends
Dividend income is recognized with the company's right to receive dividend is established by the reporting date.
l. Foreign currency translation
Foreign currency transaction and balances
Initial recognition
Foreign currency transaction 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 the transaction.
Conversion
Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary
items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate
at the date of the transaction.
Exchange differences
The company accounts for exchange difference arising on translation/settlement of foreign currency monetary items as
below:
Exchange difference arising on long-term foreign currency monetary items related to acquisition of a fixed asset are capitalized
and depreciated over the remaining useful life of the asset.
All other exchange differences are recognized as income or as expenses in the period in which they arise.
m. Retirement and other employee benefits
Retirement benefit in the form of provident fund, Employee State Insurance Contribution and Labour Welfare Fund are defined
contribution scheme. The contribution to the above is charged to the statement of profit and loss for the year when the
contributions are due.
The company operates defined benefit plan for its employee, viz., gratuity. The costs of providing benefits under this plan are
determined on the basis of actuarial valuation at each year-end. Separate actuarial valuation is carried out for each plan using
the projected unit credit method. Contribution towards gratuity fund for eligible employees is made by way of premium to Life
Insurance Corporation of India and charged to the statement of profit and loss. Actuarial gains and losses, (if any) for the defined
plan are recognized in full in the period in which they occur in the statement of profit and loss.
Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short - term employee benefit. The
company measures the expected cost of such absences as the additional amount that is except to pay as a result of the unused
entitlement that has accumulated at the reporting date.
The company treats accumulated leave excepted to be carried forward beyond twelve months, as long-term employee benefit
for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the
projected unit credit method at the year-end. Actuarial gains/losses are immediately taken to the statement of profit and loss
and are not deferred. The company presents the entire leave as a current liability in the balance sheet, since it does not have an
unconditional right to defer its settlement for 12 months after the reporting date.
Expenses incurred towards voluntary retirement scheme are charged to the statement of profit and loss immediately.
n. Income taxes
Tax expenses comprise current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax
authorities in accordance with the Income-tax Act, 1961 enacted in India.
Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating
during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and
the tax laws enacted or substantively enacted ay the reporting date. Deferred income tax relating to items recognized in equity
and not in the statement of profit and loss.
Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible
timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized. In situation where the company has unabsorbed or carry forward tax
losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be
realized against future taxable profits.
At each reporting date, the company re-assesses unrecognized deferred tax assets. It recognized unrecognized deferred asset
to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income
will be available against which such deferred tax assets can be realized.
o. Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the
weighted average number of equity shares outstanding during the period.
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