2. Significant Accounting Policies
2.1 Basis of Preparation
The financial statements have been prepared on a “Going Concern” basis.
The financial statements have been prepared on historical cost basis, except certain financial
instruments which are measured at fair value or amortised cost at the end of the each reporting period,
as explained in the accounting policies below. All asserts and liabilities are classified as current and
non-current as per the Company’s normal operating cycle.
2.2 Functional and Presentation Currency
These financial statements are presented in Indian National Rupee ('INR'), which is the Company's
functional currency. All amounts have been rounded to the nearest rupees, unless otherwise indicated.
2.3 Use of Judgements and Estimates
In preparing these financial statements, management has made judgements, estimates and
assumptions that affect of the company's accounting policies and the reported amounts of assets,
liabilities, income and expenses. Management believes that the estimates used in the preparation of
the financial statements are prudent and reasonable. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are
recognised prospectively.
Judgements
Information about the judgements made in applying accounting policies that have the most significant
effects on the amounts recognised in the financial statements have been given below:
- Classification of leases into finance and operating lease.
- Classification of financial assets: assessment of business model within which the assets are held and
assessment of whether the contractual terms of the financial asset are solely payments of principal and
Notes to the financial statements for the year ended March 31*', 2024
interest on the principal amount outstanding.
Assumptions and Estimation Uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a
material adjustment in the financial statements for the every period ended is included below:¬
- Recognition of deferred tax assets: availability of future taxable profit against which carryforward
tax losses can be used;
- Impairment test: key assumptions underlying recoverable amounts;
- Useful life and residual value of Property, Plant and Equipment;
- Recognition and measurement of provisions and contingencies: key assumptions about the
likelihood and magnitude of an outflow of resources.
2.4 Classification of Assets and Liabilities as Current and Non-Current
The Company presents assets and liabilities in the balance sheet based on current/non-current
classification. An asset/ liabilities is treated as current when it is:
- Expected to be realised / settled (liabilities) or intended to be sold or consumed in normal operating
cycle;
- Held primarily for the purpose of trading;
- Expected to be realised / settled within twelve months after the reporting period, or
- Cash and Cash equivalents unless restricted from being exchanged or used to settle a liability for
at least twelve months after the reporting period or there is no unconditional right to defer the
settlement of the liability for at least twelve months after the reporting period.
All other assets /liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets / liabilities.
The operating cycle is the time between the acquisition of the assets for processing and their realisation
in cash and cash equivalents.
2.5 Property, Plantand Equipment
Recognition and Measurement
Items of property, plant and equipment are stated at cost less accumulated depreciation and
accumulated impairment loss, if any. The cost of assets comprises of purchase price and directly
attributable cost of bringing the assets to working condition for its intended use including borrowing cost
Notes to the financial statements for the year ended March 31”, 2024
and incidental expenditure during construction incurred upto the date when the assets are ready to use.
Capital work in progress includes cost of assets at sites, construction expenditure and interest on the
funds deployed less any impairment loss, if any.
If significant parts of an item of property, plant and equipment have different useful lives, then they are
accounted for as a separate item (major components) of property, plant and equipment.
Subsequent Measurement
Subsequent expenditure is capitalised only if it is probable that there is an increase in the future
economic benefits associated with the expenditure will flow to the Company.
Depreciation
Depreciation is calculated on Straight Line Method using the rates arrived at on the basis of estimated
useful lives given in Schedule II ofthe Companies Act, 2013.
Depreciation on additions to or on disposal of assets is calculated on pro-rata basis.
Depreciation methods, useful lives and residual values are reviewed in each financial year end and
changes, if any, are accounted for prospectively.
The management believes that these estimated useful lives are realistic and reflect a fair approximation
ofthe period over which the assets are likely to be used.
Capital work-in-progress
Expenditure incurred during the construction period, including all expenditure direct and indirect
expenses, incidental and related to construction, is carried forward and on completion, the costs are
allocated to the respective property, plant and equipment.
De-recognition
An item of property, plant and equipment is de-recognised upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the
disposal or retirement of an item of property, plant and equipment is determined as the difference
between net disposal proceeds and the carrying amount ofthe asset and is recognised in the Statement
of Profit and Loss.
2.6 Intangible Assets
Intangible Assets (Other than Goodwill) acquired separately are stated at cost less accumulated
amortization and impairment loss, if any. Intangible assets are amortized on straight line method basis
over the estimated useful life. Estimated useful life of the Software is considered as 10 years.
Amortisation methods, useful lives and residual values are reviewed in each financial year end and
changes, if any, are accounted for prospectively.
An intangible asset is de-recognised on disposal, or when no future economic benefits are expected
from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the
difference between the net disposal proceeds and the carrying amount of the asset are recognised in
the Statement of Profit and Loss when the asset is derecognised.
2.7 Impairment of Non-financial Assets
At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other
than inventories and deferred tax assets) to determine whether there is any indication on impairment. If
any such indication exists, then the recoverable amount of assets is estimated.
For impairment testing, assets are grouped together into the smallest group of assets that generates
cash inflows from continuing use that are largely independent of the cash inflows of other assets or
Cash Generating Unit (CGUs).
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs
to sell. Value in use is based on the estimated future cash flows, discounted to their present value using
a pretax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset or CGU. An impairment loss is recognised if the carrying amount of an asset or CGU
exceeds its recoverable amount.
Impairment loss in respect of assets other than goodwill is reversed only to the extent that the assets
carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised in prior years. A reversal of
impairment loss is recognised immediately in the Statement of Profit & Loss.
2.8 Foreign Currency Transactions
Transactions in foreign currencies are recorded by the Company at their respective functional currency
at the exchange rates prevailing at the date of the transaction first qualifies for recognition. Monetary
assets and liabilities denominated in foreign currency are translated to the functional currency at the
exchange rates prevailing at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in the
Statement of Profit and Loss.
2.9 Employee Benefits
As per INDAS-19 Employee Benefits, the Company is required to make provisions for post employment
benefits such as gratuity and other retirement benefits. However, the company has only 3-4 employees
and does not operate any formal post employment benefit plan. Due to the immaterial nature of the
obligation, the company has not made any provision for post employment benefits like gratuity, leave
pay in financial statements. This approach is in accordance with materiality principle and has been
consistently applied.
2.10 Revenue Recognition
The Company recognises revenue from sale of goods when;
i) the Company has transferred to the buyer the significant risks and rewards of ownership of the
goods;
ii) the amount of revenue can be measured reliably;
iii) it is probable that the economic benefits associated with the transaction will flow to the Company;
and
iv) the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue (other than sale of goods) is recognised to the extent that it is probable that the economic
benefits will flow to the company and the revenue can be reliably measured. Claim on insurance
companies, interest and others, where quantum of accrual cannot be ascertained with reasonable
certainty, are accounted for on acceptance basis.
Revenue represents net value of goods and services provided to customers after deducting for certain
incentives including, but not limited to discounts, volume rebates, incentive programs etc.
Interest incomes are recognised on an accrual basis using the effective interest method.
Dividends are recognised at the time the right to receive payment is established.
2.11 Inventories
Inventories are valued at lower of cost and net realisable value except waste/scrap which is valued at
net realisable value. Cost of traded goods is determined by taking cost of purchases and related
overheads. Net realisable value is the estimated selling price in the ordinary course of business, less
estimated costs of completion and to make the sale.
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