B Significant Accounting Policies:
a) Basis of preparation of financial statements:
These financial statements have been prepared
in accordance with IND-AS as notified under the
Companies (Indian Accounting Standards) Rules,
2015 read with Section 133 of the Companies Act,
2013 and Rule 7 of the Companies (Accounts) Rules,
2014 ("Indian GAAP").
Accounting policies have been consistently applied
except where a newly issued Accounting Standard
is initially adopted or a revision to an existing
Accounting Standard requires a change in the
accounting policy hitherto in use. The financial
statements have been prepared on accrual basis
under historical cost convention except for certain
assets and liabilities which have been measured at
fair value amount.
Company's financial statements are presented
in Indian Rupees, and values are rounded to the
nearest lakh, except when otherwise indicated.
b) Summary of Significant accounting Policies
i) Use of estimates
The preparation of financial statements in
conformity with Ind-AS requires that the
management of the company make estimates
and assumptions that affect the reported
amounts of income and expenses of the period,
the reported balances of assets and liabilities
and the disclosures relating to contingent
liabilities as of the date of the financial
statements. The estimates and underlying
assumptions are reviewed on an on-going
basis. Revisions to accounting estimates
include useful lives of property, plant and
equipment, intangible assets, allowance for
doubtful debts/advances, future obligations
in respect of retirement benefit plans and fair
value measurement etc. Difference, if any,
between the actual results and estimates is
recognised in the period in which the results
are known.
ii) Property, Plant and Equipment's (PPE)
Property, Plant and Equipment are stated at
cost, net of recoverable taxes, trade discount
and rebate less accumulated depreciation and
impairment losses, if any. Such cost includes
purchase price, borrowing cost and any other
cost directly attributable to bringing the assets
to its working conditions for its intended use,
net charges on foreign exchange contracts
and adjustments arising from exchange rate
variations attributable to the assets. In case of
land, the Company has availed fair value on the
date of transition to Ind-AS as deemed cost.
Subsequent costs are included in the asset's
carrying amount or recognised as separate
asset, as appropriate, only when it is probable
that future economic benefits associated with
the item will flow to the entity and cost can be
measured reliably.
iii) Depreciation
Depreciation on Property, Plant and
Equipment is provided at the rates determined
in accordance with the provisions of the
Companies Act, 2013. Depreciation on tangible
assets is provided on the straight-line method
as prescribed in Schedule II to the Companies
Act, 2013 over the remaining useful life of
the assets.
iv) Lease
The Company evaluates if an arrangement
qualifies to be a lease as per the requirements
of Ind-AS 116. Identification of a lease requires
significant judgment. The Company uses
significant judgement in assessing the lease
term (including anticipated renewals) and
the applicable discount rate. The Company
determines the lease term as the non¬
cancellable period of a lease, together with
both periods covered by an option to extend
the lease if the Company is reasonably certain
to exercise that option; and periods covered
by an option to terminate the lease if the
Company is reasonably certain not to exercise
that option. In assessing whether the Company
is reasonably certain to exercise an option to
extend a lease, or not to exercise an option to
terminate a lease, it considers all relevant facts
and circumstances that create an economic
incentive for the Company to exercise the
option to extend the lease, or not to exercise
the option to terminate the lease. The Company
revises the lease term if there is a change in the
non-cancellable period of a lease. The discount
rate is generally based on the incremental
borrowing rate.
The right-to-use assets are measured at
cost less any accumulated depreciation and
accumulated impairment losses, if any and
are adjusted for any re-measurement of the
lease liability.
The right-to-use assets are depreciated
using the straight-line method from the
commencement date over the shorter of lease
term or useful life of the asset. Right-to-use
assets are tested for impairment whenever
there is any indication that their carrying
amounts may not be recoverable. Impairment
loss, if any, is recognised in the statement of
profit and loss.
The company recognises the amount of the
re-measurement of lease liability due to
modification as an adjustment to the value
of right-to-use asset and/or statement of
profit and loss depending upon the nature
of modification.
The Company has adopted Ind AS 116-Lease
with effect from 1st April 2019. The adoption of
Ind AS 116 did not have any material impact on
the standalone results of the Company.
The Company has elected not to apply the
requirements of Ind-AS 116 to short-term
leases of all assets that have a lease term of
12 months or less and leases for which the
underlying asset is of low value. The lease
payments associated with these leases are
recognized as an expense in the statement of
profit and loss.
v) Finance Cost
Borrowing costs include exchange rate
difference arising from foreign currency
borrowings to the extent they are regarded as
an adjustment to the interest cost. Borrowing
costs that are directly attributable to the
acquisition or construction of qualifying assets
are capitalised as part of the cost of such assets.
A qualifying asset is one that necessarily takes
substantial period of time to get ready for its
intended use.
Interest income earned on the temporary
investment of specific borrowing pending its
utilisation for qualifying assets is deducted from
the borrowing costs eligible for capitalisation.
All other borrowing costs are charged to the
statement of profit and loss for the period for
which they are incurred.
vi) Inventories
(a) Stocks of raw-materials, packing
materials, stores & spares are valued
at cost.
(b) Stock of work-in progress is valued
at cost.
(c) Finished goods are valued at lower of cost
and net realisable value after providing for
obsolescence, if any.
Cost of work-in-progress and finished
goods comprises of cost of purchase,
cost of conversion and other cost
including manufacturing overheads net
of recoverable taxes incurred in bringing
those goods to their respective present
location and conditions.
vii) Impairment
(i) Financial Assets
The Company assesses at each reporting
date as to whether a financial asset or a
group of financial assets is impaired. Ind-
AS 109 requires expected credit losses
to be measured through loss allowance.
In determining the ECL allowance for
doubtful trade receivables that are due,
the Company uses a practical provision
matrix that takes into account ageing
of receivable and historical credit loss
experience and is adjusted for forward
looking information. For all other
financial assets, expected credit losses
are measured at an amount equal to 12
month 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.
(ii) Non-Financial Assets-Property, Plant and
Equipment and Intangible Assets
The Company assesses at each reporting
date as to whether there is any indication
that any Property, Plant and Equipment
and Intangible Asset or group of Assets,
called Cash Generating Units (CGU) may
be impaired. If any such indication exists,
the recoverable amount of asset of CGU
is estimated to determine the extent of
impairment, if any. When it is not possible
to estimate the recoverable amount of an
individual asset, the Company estimates
the recoverable amount of the CGU to
which the asset belongs.
An impairment loss is recognised in
the Statement of Profit and Loss to the
extent, asset's carrying amount exceeds
its recoverable amount. The recoverable
amount is higher of an asset's fair value
less cost of disposal and value-in-use.
Value-in-use is based on the estimated
cash flow, discounted to their present
value using pre-tax discount rate that
reflects current market assessments
of the time value of money and risk
specific to the asset. The impairment loss
recognised in prior accounting period is
reversed if there has been a change in the
estimate of recoverable amount.
viii) Employee Benefits Expenses
Short Term Employee Benefits
Employee benefits payable wholly within
twelve months of rendering of service are
classified as short-term employee benefits
and are recognised in the period in which the
employee renders the related service.
Post-Employment Benefits
Defined Contribution Plans
Contribution to Provident fund, which is defined
contribution plan, is recognised as an employee
benefit expense in the statement of profit and
loss in the period in which the contribution
is due.
Defined Benefit Plans
The liability in respect of gratuity and other
post-employment benefits is determined
on actuarial valuation using the projected
unit credit method, which recognises each
period of service as giving rise to additional
unit of employee benefit entitlement and
measures each unit separately to build up the
final obligation.
The Company presents the above liability/
(assets) as current and non-current in the
balance sheet as per actuarial valuation by the
independent actuary.
Re-measurements, comprising of actuarial
gains and losses, the effect of the assets
ceiling, excluding, amounts included in net
interest on the net defined benefit liability and
the return on plan assets (excluding amounts
included in net interest on the net defined
benefit liability), are recognised immediately
in the balance sheet with corresponding debit
or credit to retained earnings through other
comprehensive income (OCI) in the period in
which they occur. Re-measurements are not
reclassified to the statement of profit and loss
in subsequent periods.
ix) Tax Expenses
The tax expense for the period comprises of
current tax and deferred income tax. Tax is
recognised in the statement of profit and loss,
except to the extent that it relates to items
recognised in the Other Comprehensive Income
or in equity, in which case, the tax is also
recognised in Other Comprehensive Income
or Equity.
i) Current tax
Current tax assets and liabilities are
measured at the amount expected to
be recovered from or paid to the Income
Tax authorities, based on tax rates and
laws that are enacted at the Balance
Sheet date.
ii) Deferred tax
Deferred tax is recognised on temporary
differences between the carrying amounts
of assets and liabilities in the Financial
Statements and the corresponding
tax bases used in the computation of
taxable profit.
Deferred tax liabilities and assets are
measured at the tax rates that are
expected to apply in the period in which
the liability is settled or the assets
realised, based on tax rates (and tax laws)
that have been enacted or substantively
enacted by the end of reporting period. The
carrying amount of deferred tax liabilities
and assets are reviewed at the end of each
reporting period. Deferred tax represents
the effect of temporary difference
between carrying amount of assets and
liabilities in the financial statement and
the corresponding tax base used in the
computation of taxable income. Deferred
tax liabilities are generally accounted
for all taxable temporary differences.
Deferred tax asset is recognised for all
deductible temporary differences, carry
forward of unused tax credits and unused
tax losses, to the extent that it is probable
that taxable profit will be available
against which such deductible temporary
differences can be utilised.
x) Foreign currency transactions and
balances
Transactions in foreign currency are recorded
at exchange rates prevailing at the date of
transaction. Exchange difference arising on
foreign exchange transactions settled during
the year are recognised in the statement of
profit and loss of the year.
Monitory assets and liabilities denominated in
foreign currencies which are outstanding as at
reporting period are translated at the closing
exchange rates and the resultant exchange
differences are recognised in the statement of
profit and loss.
Non-monetary assets and liabilities
denominated in foreign currencies that are
measured in terms of historical cost are
translated using the exchange rate at the date
of transaction.
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