3 Summary of Significant accounting policies1. Revenue Recognition
Revenue from contract with customer is recognized when control of the goods or services are transferred to the customer at an amount that
reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Revenue from contract with
customer is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are exclusive of taxes &
duties and net of returns, trade discounts, rebates. The inter-divisional transfer between Unit-1, 2 and 3 of the company are deducted from
respective sales & purchases, it has no impact on profit or loss.
The Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow
to the Company and specific criteria have been met for each of the Company's activities as described below. The Company bases its estimates
on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
Sale of Products:- Revenue from sale of products is recognized when the significant risks and rewards of ownership of the products have
passed to the buyer as per the terms of contract. The company considers whether there are other promises in the contract that are separate
performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price for the sale of
goods, the company considers the effects of variable consideration, the existence of significant financing components, non-cash considera¬
tion, and consideration payable to the customer (if any).
Sales is net of inter branch transfers. It has no impact on profit or loss.
Sale of Services: - Revenue from services rendered is recognized as the services are rendered and is booked based on agreements/ arrange¬
ments with the concerned parties.
Other Operating Revenues
Export entitlements under various schemes notified by government are recognized when the right to receive credit as per the terms of the
schemes is established in respect of the exports made by the Company and where there is no significant uncertainty regarding the ultimate
collection of the relevant export proceeds.
Rent income
Rental income is accounted on the basis of lease terms and is included in other income in the statement of profit and loss.
Interest Income
Interest income from debt instruments is recognized using the effective interest rate method. The effective interest rate is the rate that exactly
discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset.
When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the
financial instrument but does not consider the expected credit losses.
Dividend
Dividend is recognized in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associ¬
ated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.
2. Property, Plant and Equipment:
Freehold/ GIDC Lease hold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less
accumulated depreciation and accumulated impairment losses, if any. Historical cost includes expenditure that is directly attributable to the
acquisition of the items. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be meas¬
ured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and
maintenance are charged to profit or loss during the reporting period in which they are incurred.
Depreciation Method, Estimated Useful Lives and Residual Values
Depreciation is calculated on a pro-rata basis using the straight-line method to allocate their cost, net of their estimated residual values, over
their estimated useful lives in accordance with Schedule II to the Act. Each component of an item of property, plant and equipment with a cost
that is significant in relation to the cost of that item is depreciated separately if its useful life differs from the other components of the
item.
Estimated useful lives of the assets are taken as per Schedule II of the Companies Act 2013, which is broadly defined as under:-
Buildings - 3 to 60 years
Plant and equipment - 5 to 40 years
Furniture and Fixtures - 10 years
Vehicles - 8 to 10 years
Office Equipment - 3 to 6 years
Leasehold land is from GIDC and has not been amortized, as the lease cost has been fully paid. The useful lives, residual values and the method
of depreciation of property, plant and equipment are reviewed, and adjusted if appropriate, at the end of each reporting period. Gains and
losses on disposals are determined by comparing proceeds with carrying amount and are included in profit or loss within 'Other Income'/'Oth-
er Expenses'. Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as
'Capital Advances' under other non- current assets.
a. Intangible Assets
Intangible assets (Computer Software) has a finite useful life and are stated at cost less accumulated amortization and accumulated impair¬
ment losses, if any.
Computer Software
Software for internal use, which is primarily acquired from third-party vendors is capitalized. Subsequent costs associated with maintaining
such software are recognized as expense as incurred. Cost of software includes license fees and cost of implementation/system integration
services, where applicable.
Amortization Method and Period
Computer software are amortized on a pro-rata basis using the straight-line method over their estimated useful life of 5 years, from the date
they are available for use. Amortization method and useful lives are reviewed periodically at each financial year end.
b. Impairment of Non-Financial assets
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an asset's fair value less costs of disposal and value in use. Subsequently, if there is a change in the indication, since the last im¬
pairment was recognized, so that recoverable amount of an asset exceeds its carrying amount, an impairment recognized for an asset in prior
accounting period is reversed for the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows which are largely independent of the cash inflows from other assets or group of assets (cash generating units).
c. Leases
The Company applied a single recognition and measurement approach for all leases for which it is the lessee, except for short-term leases and
leases of low value assets. The Company recognised lease liabilities to make lease payments and right-of-use assets representing the right to
use the underlying assets.
The Company elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of 12 months
or less and do not contain a purchase option (short-term leases), and lease contracts for which the underlying asset is of low value (low-value
assets).
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as oper¬
ating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease unless the
payments are structured to increase in line with expected general inflation to compensate for the lessor's expected inflationary cost increases.
This is not applicable to GIDC Lease, as there is no periodic payments are made for uses of leased asset, which is GIDC Land. Land (Leasehold)
is carried at cost less amortization; Leasehold land is amortized on the straight line method over the period of lease.
d. Inventories
Inventories are stated at the lower of cost and net realizable value. Cost of inventories comprises cost of purchases and all other costs incurred
in bringing the inventories to their present location and condition. Cost of work-in-progress and finished goods comprises direct materials,
direct labor and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal oper¬
ating capacity. Costs are assigned to individual items of inventory on approximation average basis. Net realizable value is the estimated selling
price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
e. Investments in Subsidiaries
Investments in subsidiaries are carried at cost less provision for impairment, if any. Investments in subsidiaries are tested for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for
the amount by which the carrying amount of investments exceeds its recoverable amount.
f. Investments (Other than Investments in Subsidiaries) and Other Financial Assets(i) Classification
The Company classifies its financial assets in the following measurement categories:¬
- those to be measured subsequently at fair value (either through other comprehensive income or through profit or loss), and
- those to be measured at amortized cost.
The classification depends on the Company's business model for managing the financial assets and the contractual terms of the cash flows. For
assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. Though the Company
do not have any debt instruments, but for investments in debt instruments, this will depend on the business model in which the investment is
held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial
recognition to account for the equity investment at fair value through other comprehensive income.
(ii) Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through prof¬
it or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried
at fair value through profit or loss are expensed in profit or loss. Financial assets with embedded derivatives are considered in their entirety
when determining whether their cash flows are solely payment of principal and interest.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy,
described as under, based on the lowest level input that is significant to the fair value measurement as a whole:
• Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
• Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly ob¬
servable.
• Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have
occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting period.
The Company's management determines the policies and procedures for both recurring fair value measurement, such as unquoted financial
assets measured at fair value, and for non-recurring measurement, such as assets held for distribution in discontinued operations.
Debt Instruments
Subsequent measurement of debt instruments depends on the Company's business model for managing the asset and the cash flow charac¬
teristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
1. Amortized Costs
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are
measured at amortized cost. A gain or loss on a debt instrument that is subsequently measured at amortized cost is recognized in profit or
loss when the asset is derecognized or impaired.
2. Fair Value through other comprehensive income (FVOCI):
Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets' cash flows represent solely
payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying
amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses
which are recognized in the profit or loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is
reclassified from equity to profit or loss and recognized in 'Other Income'.
3. Fair value through Profit & Loss A/c
Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt
investment that is subsequently measured at fair value through profit or loss is recognized in profit or loss and presented net in the Statement
of Profit and Loss within 'Other Income' in the period in which it arises.
Equity Instruments
The Company subsequently measures all equity investments at fair value. Where the Company's management has elected to present fair
value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and
losses to profit or loss. Changes in the fair value of financial assets at fair value through profit or loss are recognized in 'Other Income' in the
Statement of Profit and Loss.
(iii) Impairment of Assetsa) Impairment of Financial Assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets which are not fair valued through profit
or loss. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note given herein after
details how the Company determines whether there has been a significant increase in credit risk. For trade receivables only, the Company
applies the simplified approach permitted by Ind AS 109, 'Financial Instruments', which requires expected lifetime losses to be recognized
from initial recognition of the receivables.
b) Impairment of financial assets (other than at fair value)
The Company assesses at each date of balance sheet whether a financial asset or a group of Financial Assets is impaired.
Ind AS 109 requires expected credit losses to be measured through a loss allowance. The Company recognizes lifetime expected losses for all
contract assets and / or all trade receivables that do not constitute a financing transaction. In determining the allowances for doubtful trade
receivables, the Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a
provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The
expected credit loss allowance is based on the ageing of the receivables that are due and allowance rates used in the provision matrix. For all
other financial assets, expected credit losses are measured at an amount equal to the 12-months expected credit losses or at an amount equal
to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.
(iv) De-recognition of Financial Assets
A financial asset is de-recognized only when
- the Company has transferred the rights to receive cash flows from the financial asset or
- Retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash
flows to one or more recipients.
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership
of the financial asset. In such cases, the financial asset is de-recognized. Where the entity has not transferred substantially all risks and re¬
wards of ownership of the financial asset, the financial asset is not de-recognized.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset,
the financial asset is de-recognized if the Company has not retained control of the financial asset. Where the Company retains control of the
financial asset, the asset is continued to be recognized to the extent of continuing involvement in the financial asset.
(v) Fair Value of Financial Instruments
In determining the fair value of financial instruments, the Company uses a variety of methods and assumptions that are based on market
conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analysis and avail¬
able quoted market prices. All methods of assessing fair value result in general approximation of value, and such value may never actually be
realized.
g. Derivative Instruments-
Company has no Derivative Instruments during the year.
h. Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount is reported in the Balance Sheet where there is a legally enforceable right to offset
the recognized amounts and there is an intention of the management to settle on a net basis or realize the asset and settle the liability simul¬
taneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business
and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
i. Trade Receivables
Trade receivables are amounts due from customers for goods sold or services rendered in the ordinary course of business. Trade receivables
are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for im¬
pairment.
j. Cash and Cash Equivalents
For the purpose of presentation in the Cash Flow Statement, cash and cash equivalents includes cash on hand, deposits held at call with Banks
and financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convert¬
ible to known amounts of cash and which are subject to an insignificant risk of changes in value.
k. Trade Payables
Trade Payables represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade
and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recog¬
nized initially at their fair value and subsequently measured at amortized cost using the effective interest method.
l. Borrowings
Borrowings are recognized at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount
is recognized in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan
facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In
this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility
will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates.
Borrowings are removed from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12
months after the reporting period.
m. Financial Guarantee Contracts
Financial guarantee contracts are recognized as a financial liability at the time the guarantee is issued. The liability is initially measured at fair
value and subsequently at the higher of the amount determined in accordance with Ind AS 37 and the amount initially recognized less cumu¬
lative amortization, where appropriate.
n. Borrowing Costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are cap¬
italized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets
that necessarily take a substantial period of time to get ready for their intended use or sale.
Other borrowing costs are expensed in the period in which they are incurred.
o. Foreign Currency Transactions and Translation(i) Functional and Presentation Currency
Items included in the standalone financial statements of the Company are measured using the currency of the primary economic environment
in which the Company operates ('the functional currency'). The standalone financial statements are presented in Indian Rupee in Lakhs (Rs. in
Lakhs), which is the Company's functional and presentation currency.
(ii) Transactions and Balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. At the year-
end, monetary assets and liabilities denominated in foreign currencies are restated at the year - end exchange rates. The exchange differences
arising from settlement of foreign currency transactions and from the year-end restatement are recognized in profit and loss.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair
value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.
p. Employee benefits(i) Short Term Employee Benefits
Liabilities for short-term employee benefits that are expected to be settled wholly within 12 months after the end of the period in which the
employees render the related service are recognized in respect of employees' services up to the end of the reporting period and are measured
at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as 'Employee Benefits Payable' within 'Other
Current Liabilities' in the Balance Sheet.
(ii) Post-Employment Benefits
Defined Benefit Plans
The liability or asset recognized in the Balance Sheet in respect of defined benefit plans is the present value of the defined benefit obligation
at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the
projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market
yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan
assets. This cost is included in 'Employee Benefits Expense' in the Statement of Profit and Loss.
Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in
which they occur, directly in Other Comprehensive Income. These are included in 'Retained Earnings' in the Statement of Changes in Equity.
Defined Contribution Plans
Contributions under Defined Contribution Plans payable in keeping with the related schemes are recognized as expenses for the period in
which the employee has rendered the service.
(iii) Other Long term Employee Benefits
The liabilities for leave which are not expected to be settled wholly within 12 months after the end of the period in which the employees
render the related service. They are therefore measured annually by actuaries as the present value of expected future benefits in respect of
services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted
using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Re-measure¬
ment as a result of experience adjustments and changes in actuarial assumptions are recognized in profit or loss.
The liabilities are presented as 'Employee Benefits Payable' within 'Other Non-Current Liabilities' in the Balance Sheet.
q. Income Tax
The income tax expense for the period is the tax payable on the current period's taxable income based on the applicable income tax rate
adjusted by changes in deferred tax assets and liabilities attributable to temporary differences, unused tax credits and to unused tax losses.
The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Man¬
agement periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to inter¬
pretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax is provided in full, using the balance sheet approach, on temporary differences arising between the tax bases of assets and liabil¬
ities and their carrying amounts in the standalone financial statements. However, deferred tax liabilities are not recognized if they arise from
the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a
transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss).
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting
period and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled.
Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses only if
it is probable that future taxable amounts will be available to utilize those temporary differences, tax credits and losses.
Deferred tax assets are not recognized for temporary differences between the carrying amount and tax bases of investments in subsidiaries
where it is not probable that the differences will reverse in the foreseeable future and taxable profit will not be available against which the
temporary difference can be utilized.
The carrying amount of deferred tax assets is reviewed at each balance sheet date 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 utilized.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the
deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are offset where the entity has a legally enforce¬
able right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Current and deferred tax are recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive in¬
come or directly in equity, if any. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.
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