(ii) SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Preparation of Financial Statements:
The financial statements have been prepared under the historical cost convention and are prepared on accrual basis
and in accordance with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of
India (ICAI) and the relevant provisions of the Companies Act, 2013.
B. Use of Estimates:
The preparation of financial statements requires management to make estimates & assumptions that affect the
reported amount of assets, liabilities including disclosure of contingent liabilities at the end of reporting period
and revenue, expenses during the reporting period. Although such estimates and assumptions are made on a
reasonable & prudent basis taking into account all available information, actual results could differ from these
estimates & assumptions, and such differences are recognized in the period in which the results are materialised.
C. Property Plant and Equipment & Capital Work in Progress:
a. Fixed Assets (Both Tangible and Intangible Assets) are stated at cost net of recoverable taxes less accumulated
depreciation/amortization and impairment loss, if any.
b. Capital Work in Progress: All indirect and direct expenditures including borrowing costs directly attributable
to Projects under commissioning till the commencement of commercial production are carried at costs
under Capital work in Progress. The trial run expenditures constituting of costs of manufacturing and cost of
materials consumed reduced by any sales or income earned during the trial run period are capitalized along
with other pre-operative expenditures incurred till the commencement of commercial production. The long¬
term advances towards Capital Expenditures are shown under Long Term Advances.
c. Incidental expenditure prior to construction like preliminary project expenditures and indirect expenses like
corporate office administrative expense are charged as period costs in the financial year to which they pertain.
D. Depreciation and Amortization:
a. As per the provisions of Companies Act, 2013, depreciation calculation has been done based on the Useful life
given in the Schedule II of Companies Act, 2013.
b. Depreciation on all assets pertaining to the manufacturing facility is provided on the 'Straight Line Method' in
the manner specified in Schedule II to the Companies Act 2013.
c. Depreciation on additions to the Fixed Assets or on Assets sold, discarded, demolished is being provided on
pro-rata basis from the date of addition.
d. Assets costing up to Rs.5000/- are expensed out in the period they pertain to.
e. Capital & Machinery spares procured with an item of fixed asset are depreciated along with the related plant
and machinery.
E. Impairment of Assets:
The carrying amount of assets are reviewed at the balance sheet date and if there is any indication of impairment
based on internal/external factors, an impairment loss will be recognized wherever the carrying amount of the
assets exceeds its recoverable value.
F. Investment:
Current Investments are carried at lower of cost and quoted/fair value if any. Non Current Investments are stated
at costs. Provision of diminution in the value of Non current investments is made only if the decline is other than
temporary.
G. Inventories:
a. Finished Goods -
Cost of Inventories comprises of cost of purchases, cost of conversion and other costs including manufacturing
overheads incurred in bringing them to their respective location and condition. The items of finished goods
and Semi Finished stock are measured at lower of cost and net realizable value.
b. Raw Materials, Stores and Spares and Other Consumables -
Raw Materials and Other Stores and Consumables are valued at average cost in bringing the goods to the
place of its location and condition (Net of Refundable taxes and Duties)
c. By Products -
By products are valued at net realizable value.
H. Borrowing Cost
Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalized
as part of the cost of that asset till the commencement of commercial production. The amounts of borrowing costs
eligible for capitalization are determined in accordance with Accounting Standard 16 on Borrowing Costs. Other
borrowing costs are recognized as an expense in the period in which they are incurred.
I. Revenue Recognition
Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection.
Revenue from operations shall not include sale during trial run period. Expenses are accounted for on the accrual
basis with necessary provisions of all the known liabilities and losses.
Revenue from operations includes sales of goods which is shown inclusive of excise duty and it excludes Taxes on
Sales and is net of trade discounts, if any.
Interest Income on deposits is recognized on time proportion basis taking into account the amount outstanding
and rate applicable.
Dividend income from investments is recognized when the right to receive payment has been established
(provided that it is probable that the economic benefits will flow to the company and the amount of income can
be measured reliably).
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