2 Significant accounting policies
2.1 Basis of Preparation of Financial Statements
The financial statements are prepared under the historical cost convention on accrual basis to comply in all material
aspects and in accordance with Indian Generally Accepted Accounting Principles (GAAP), which comprises of
mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 read with Rule 7 of
the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified). The accounting policies
have been consistently applied by the Company unless otherwise stated.
2.2 Use of Estimates
The preparation of financial statements requires estimates and assumptions to be made that affect the reported
amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and
expenses during the reporting period. The estimates and assumptions used in the accompanying financial
statements are based upon management's evaluation of the relevant facts and circumstances as of the date of the
financial statements. The examples of such estimates include, the useful life of tangible and intangible fixed assets,
allowances for doubtful debts / advances, future obligations in respect of retirement benefit plans etc. Actual
results may differ from the estimates and assumptions and in such case, the difference is recognised in the period in
which the results are known.
2.3 Revenue Recognition
(a) The company recognises revenues on the sale of products, net of discounts, when the products are dispatched
/delivered to the customer/ dealer or when delivered to the carrier for export sales, which is when risks and
rewards of ownership pass to the customer/ dealer.
(b) Revenue is recognized when it is earned and no significant uncertainty exists as to its realization or collection.
(c) Interest is recognized on a time proportion basis taking into account the amount outstanding and the rate
applicable.
(d) Dividend income is recognized when the company's right to receive dividend is established.
(e) Export entitlements under the duty remission scheme are recognized as income on accrual basis
2.4 Recognition of Expenditure
Expenses are accounted for on an accrual basis and provision is made for all known losses and liabilities.
2.5 Tangible fixed assets
(a) Tangible fixed assets are stated at cost less accumulated depreciation and impairment loss, if any.
(b) The cost of Fixed Asset comprises its purchase price including non-refundable taxes & duties and directly
attributable cost of bringing the asset (including leasehold improvements) to its working condition for its intended
use. Subsequent upgradation / enhancements which results in an increase in the future benefits from such assets,
beyond the previously assessed standard of performance, are also capitalised. Machinery spares which can be used
only in connection with an item of tangible assets and whose use is not regular nature are written off over the
estimated useful life of relevant assets.
2.6 Intangible Assets and amortization
Intangible assets are stated at cost less accumulated amortization. Intangible assets are amortized on a straight line
basis over their estimated useful life of 3 years
2.7 Impairment of Assets
The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment
based on internal / external factors. An asset is impaired when the carrying amount of the asset exceeds the
recoverable amount. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset
is identified as impaired. An impairment loss recognized in prior accounting periods is reversed if there has been
change in the estimate of the recoverable amount.
2.8 Capital Work-in-Progress
Capital work-in-progress comprises cost of fixed assets that are not yet ready for their intended use at the balance
sheet date.
2.9 Depreciation and amortization
(a) Owned assets
(i) Depreciation on fixed assets is provided on straight line method, at the rates and in the manner prescribed in
Schedule II to the Companies Act,. 2013. In case of plant and machinery used for double or triple shift, depreciation
is increased to 150% and 200% of normal depreciation respectively.
(ii) Significant components of assets having a life shorter than the main asset, if any is depreciated over the shorter
life.
(b) Leased assets:
(i) . Leasehold lands are amortised over the period of lease.
(ii) . Buildings constructed on leasehold land are depreciated based on the useful life specified in Schedule II to the
Companies Act, 2013, where the lease period is beyond the life of the building.
(iii) . In other cases, buildings constructed on leasehold lands are amortized over the primary lease period of the
lands.
2.10 Investments
Current investments that are readily realisable and are intended to be held for not more than one year from the
date on which such investments are made, are carried at lower of cost and quoted / fair value, computed category
wise. Long Term Investments are stated at cost. However, provision for diminution in the value of long term
investments is made only if such a decline is other than temporary.
2.11 Inventories
Inventories are valued at the lower of cost and net realizable value. Obsolete, slow moving and defective inventories
are identified at the time of physical verification and necessary provision is made for such inventories. The cost is
determined using the weighted average cost method for all categories of inventories. Cost includes in case of Raw
materials, Stores & spares, Packing material and consumables the purchase price and attributable direct cost less
discounts. In case of Work-in-Progress and finished goods cost includes direct labour, material costs and production
overheads
2.12 Foreign Currency Transactions
(a) Transactions denominated in foreign currencies are normally recorded on the initial recognition in the
reported currency using the exchange rates prevailing on the date of transaction.
(b) Monetary assets & liabilities denominated in foreign currencies are restated at the appropriate rates of exchange
prevailing on the date of Balance Sheet. The Company uses exchange rates from Foreign Exchange Dealer's
Association of India (FEDAI) and the resultant gain or loss is accounted in the period in which they arise.
(c) Any income or expense on account of exchange difference either on settlement or on translation of monetary items
are recognized in the Statement of Profit and Loss for the period in which they arise.
(d) In respect of Forward Exchange contracts entered into to hedge foreign currency risks, the difference between the
forward rate and exchange rate at the inception of the contract is recognized as income or expense over the life of
the contract. Further, the exchange differences arising on such contracts are recognized as income or expense along
with the exchange differences on the underlying assets / liabilities. Further, in case of other contracts with
committed exchange rates, the underlying is accounted at the rate so committed. Profit or loss on cancellations /
renewals of forward contracts is recognized during the year. In case of option contracts, the losses are accounted on
mark to market basis.
2.13 Earning Per Share
Basic earnings per share is calculated by dividing the net profit for the period attributable to equity shareholders by
the weighted average number of equity shares outstanding during the period.
As per Accounting Standard -20 on Earning Per Share, If the number of equity or potential equity shares outstanding
increases as a result of a bonus issue or share split or decreases as a result of a reverse share split (consolidation of
shares), the calculation of basic and diluted earnings per share should be adjusted for all the periods presented. If
these changes occur after the balance sheet date but before the date on which the financial statements are
approved by the board of directors, the per share calculations for those financial statements and any prior period
financial statements presented should be based on the new number of shares. Accordingly the EPS has been
calculated on number of shares after bonus issue made on 29 December 2023 for all reporting period.
2.14 Borrowing Cost
Interest and other borrowing costs attributable to qualifying assets are capitalized. A qualifying asset is an asset that
necessarily requires a substantial period of time (generally over 12 months) to get ready for its intended use or sale.
Other interest and borrowing costs are charged to statement of Profit & Loss.
2.15 Employee Benefits
(a) Short Term Employee Benefits:
All employee benefits payable wholly within 12 months of rendering service are classified as short term employee
benefit. Benefits such as Salaries, Wages, performance incentives, expected cost of bonus, exgratia are recognised
during the period in which employee renders related service.
(b) Post-employment Benefits:
Defined contribution plans: Company's contribution paid / payable during the year to employees state insurance
scheme and Provident Fund are recognised during the period.
Defined benefit plans: For defined benefit schemes in the form of gratuity, the cost of providing benefits is
determined using the Project Unit Credit Method, with actuarial valuations being carried out at each balance sheet
date, 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 obligation is measured at the present value of the estimated future cash flows. The discounting rate used for
determining the present value of the obligation under defined benefit plans, is based on the market yields on
government securities as at the balance sheet date, having maturity periods approximately to the terms of related
obligations.
Actuarial gains/losses are recognised in full in the statement of profit and loss, for the period in which they occur.
Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is
amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit
obligations recognised in the balance sheet represents that present value of the defined benefit obligation as
adjusted for unrecognised past service cost.
(c) Termination benefits
Termination benefits are recognised as an expense in the period in which they are incurred.
2.16 Leases
A lease is classified at the inception date as finance lease or an operating lease. A lease that transfers substantially
all the risks and rewards incidental to ownership to the Company is classified as a finance lease. The Company as a
lessee:
(i) Operating lease: Rentals payable under operating leases are charged to the statement of profit and loss on a
straight line basis over the term of the relevant lease.
(ii) Finance leases: Finance leases are capitalised at the commencement of lease, at the lower of the fair value of
the property or the present value of the minimum lease payments. The corresponding liability to the lessor is
included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance
charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance
of the liability. Finance charges are charged directly against income over the period of the lease.
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