2 SIGNIFICANT ACCOUNTING POLICIES
a Basis of Preparation
The accounts have been prepared in accordance with Indian Generally Accepted Accounting Principles(GAAP) under historical
cost convention on accrual basis.GAAP comprise mandatory accounting standards as prescribed under section 133 of the
Companies Act,2013 ("the Act") read with Rule 7 of the Companies (Accounts) Rules,2014 and the provisions of the Act (to the
extent notified).Accounting policies have been consistently applied except where newly issued standard initially adopted or
revision to an existing accounting standard requires a change in accounting policy hitherto in use.
b Use of estimates
The preparation of financial statements requires the management of the Company to make estimates and assumptions that
affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the
financial statements and reported amounts of income and expense during the year. Examples of such estimates include
provisions for doubtful receivables, provision for income taxes, the useful lives of depreciable Property, Plant and Equipment
and provision for impairment. Future results could differ due to changes in these estimates and the difference between the
actual result and the estimates are recognised in the period in which the results are known / materialise.
c Property, Plant and Equipment
Property, Plant and Equipment are stated at cost, less accumulated depreciation / amortisation. Costs include all expenses
incurred to bring the asset to its present location and condition.
d Depreciation / amortisation
In respect of Property, Plant and Equipment (other than freehold land and capital work-in-progress) acquired during the year,
depreciation/amortisation is charged on a straight line basis so as to write-off the cost of the assets over the useful lives.
e Leases
Assets taken on lease by the Company in its capacity as lessee, where the Company has substantially all the risks and rewards of
ownership are classified as finance lease. Such a lease is capitalised at the inception of the lease at lower of the fair value or the
present value of the minimum lease payments and a liability is recognised for an equivalent amount. Each lease rental paid is
allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability
for each year.
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor, are
recognised as operating leases. Lease rentals under operating leases are recognised in the statement of profit and loss on a
straight-line basis.
f Impairment
At each balance sheet date, the management reviews the carrying amounts of its assets included in each cash generating unit to
determine whether there is any indication that those assets were impaired. If any such indication exists, the recoverable amount
of the asset is estimated in order to determine the extent of impairment. Recoverable amount is the higher of an asset's net
selling price and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the
asset and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market
assessments of time value of money and the risks specific to the asset. Reversal of impairment loss is recognised as income in the
statement of profit and loss.
g Investments
Long-term investments and current maturities of long-term investments are stated at cost, less provision for other than
temporary diminution in value. Current investments, except for current maturities of long-term investments, comprising
investments in mutual funds, government securities and bonds are stated at the lower of cost and fair value.
h Revenue recognition
Revenue from repairing, servicing is generally recognised as and when service is performed based on agreements/ arrangements
with respective parties.
Interest on investments is recognized on a time proportion basis taking into account the amounts invested and the rate of
interest.
i Taxation
Current income tax expense comprises taxes on income from operations in India and in foreign jurisdictions. Income taxpayable
in India is determined in accordance with the provisions of the Income Tax Act, 1961. Tax expense relating to foreign operations
is determined in accordance with tax laws applicable in countries where such operations are domiciled.
Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which gives rise to future economic benefits in the
form of adjustment of future income tax liability, is considered as an asset if there is convincing evidence that the Company will
pay normal income tax after the tax holiday period. Accordingly, MAT is recognised as an asset in the balance sheet when the
asset can be measured reliably and it is probable that the future economic benefit associated with it will fructify.
Deferred tax expense or benefit is recognised on timing differences being the difference between taxable income and accounting
income that originate in one period and is likely to reverse in one or more subsequent periods. Deferred tax assets and liabilities
are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.
Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and
income tax provision arising in the same tax jurisdiction for relevant tax paying units and where the Company is able to and
intends to settle the asset and liability on a net basis.
The Company offsets deferred tax assets and deferred tax liabilities if it has a legally enforceable right and these relate to taxes
on income levied by the same governing taxation laws.
j Foreign currency transactions
Income and expense in foreign currencies are converted at exchange rates prevailing on the date of the transaction. Foreign
currency monetary assets and liabilities other than net investments in non-integral foreign operations are translated at the
exchange rate prevailing on the balance sheet date and exchange gains and losses are recognised in the statement of profit and
loss. Exchange difference arising on a monetary item that, in substance, forms part of an enterprise's net investments in a non¬
integral foreign operation are accumulated in a foreign currency translation reserve.
k Inventories
Raw materials are carried at the lower of cost and net realisable value. Cost is determined on a weighted average basis.
Purchased goods-in-transit are carried at cost. Work-in-progress is carried at the lower of cost and net realisable value. Stores
and spare parts are carried at lower of cost and net realisable value. Cost includes direct material and labour cost and a
proportion of manufacturing overheads. Company does not have Finished Goods in its inventory due to the nature of its
operations
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