I (b) Significant Accounting Policies
1 Basis of Preparation
The Financial Statements have been prepared in accordance with Indian Generally Accepted Accounting Principles (IGAAP) under historical cost convention on the accrual basis. GAAP comprises mandatory accounting standards prescribed by the Companies (Accounting Standards) Rules, 2021.
2 Revenue Recognition
Revenue is recognized only when risks and rewards incidental to ownership are transferred to the customer, it can be reliably measured and it is reasonable to expect ultimate collection. Revenue from operations includes sale of goods, services, service tax, excise duty, and sales during trail run period, adjusted for discounts
(net), and gain/loss on corresponding hedge contracts.
The following other revenues are recognized and accounted on their accrual with necessary provisions for all known liabilities and losses as per AS 9.
Interest Income : Revenue is recognized on the time proportion basis after taking into account the amount outstanding and the rate applicable.
Other Income : Other items of income and expenditure are recognized on accrual basis and as a going concern basis, and the accounting policies are consistent with the generally accepted accounting policies.
Export benefits are recognised on post shipment basis under prevalent schemes under exim/foreign trade policies
3 Property Plant and Equipment Including Intangible Assets
Property Plant and Equipment's are stated at cost, less accumulated depreciation. Cost includes cost of acquisition including material cost, freight, installation cost, duties and taxes, and other incidental expenses, incurred up to the installation stage, related to such acquisition. Property Plant and Equipment's purchased in India in foreign currency are recorded in Rupees, converted at the exchange rate prevailed on the date of purchase. Intangible assets that are acquired by the Company are measured initially at cost. After initial recognition, an
intangible asset is carried at its cost less any accumulated amortisation and any accumulated impairment loss. Subsequent expenditure if any, is capitalized if it increases the future economic benefits.
4 Depreciation & Amortisation
The Company has applied the estimated useful lives as specified in Schedule II of the Companies Act 2013 and calculated the depreciation as per the Straight Line Value (SLV) method. Depreciation on new assets acquired during the year is provided at the rates applicable from the date of acquisition to the end of the financial year. In respect of the assets sold during the year, depreciation is provided from the beginning of the year till the date of its disposal. Leasehold land is amortized over the Lease period of the asset.
5 Impairment of Assets
The Management periodically assesses using, external and internal sources, whether there is an indication that an asset may be impaired. An impairment loss is recognised wherever the carrying value of an asset exceeds its recoverable amount. The recoverable amount is higher of the asset's net selling price and value in use, which means the present value of future cash flows expected to arise from the continuing use of the asset and its eventual disposal. Reversal of impairment loss is recognised immediately as income in the profit and loss account.
6 Use of Estimates
The preparation of the financial statements in conformity with Generally Accepted Accounting Principles requires the Management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent assets and liabilities as at the date of the financial statements and the reported amounts of income and expenses during the year. Examples of such estimates include provisions for doubtful debts, income taxes, post - sales customer support and the useful lives of Property Plant and Equipments and intangible assets.
7 Foreign Currency Transactions: Domestic Operation
I . Initial Recognition
A foreign currency transactions are recorded, on initial recognition 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.
II . Measurement
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction
Non-monetary items which are carried at fair value or other similar
valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
III . Treatment of Foreign Exchange
Exchange differences arising on settlement / restatement of foreign currency monetary assets and liabilities of the Company are recognised as income or expenses in the Statement of Profit and Loss.
8 Employee Benefits Defined Contribution Plan
The Company provides for ESI, PF and Super annuation Plan for eligible employees for which the company makes contribution on monthly basis and the same is charged to profit and loss Account.
Defined Benefit Plan
The Company provides for Gratuity, a Defined benefit plan (The Grauity Plan) covering eligible employees in accordance with payment of Gratuity Act, 1972. Gratuity liability is a defined benefit obligation and is funded through LIC of India. The Company accounts for liability for future gratuity benefits based on the actuarial valuation using Projected Unit Credit Method carried out as at the end of each financial year. The expenditure is passed to Profit and Loss account
9 Taxes on Income
Income Tax expense is accounted for in accordance with AS-22 “Accounting
for Taxes on Income" for both Current Tax and Deferred Tax stated below:
A. Current Tax
Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961. As per the provisions applicable, MAT Assets are not recognised.
B. Deferred Tax
Deferred tax is recognised, subject to the consideration of prudence, as the tax effect of timing difference between the taxable income and accounting income computed for the current accounting year using the tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date.
Deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty, except arising from unabsorbed depreciation and carried forward losses, that sufficient future taxable income will be available against which such deferred tax assets can be realised.
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