2 Summary of significant accounting policies
(a) Basis of preparation
The standalone financial statements have been prepared to comply in all material respects with the Accounting Standards notified under Section 133 of the
Companies Act, 2013 {'the Act"), read with relevant rules. The standalone financial statements have been prepared under the historical cost convention on an
accrual basts. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.
(b) Current/Non-eurrent classification of assets/liabi/ities
All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in the Schedule III
to the Act. The Company has ascertained its operating cycle as 12 months for the purpose of current/non-current classification of assets and liabilities.
The Schedule III to the Act requires assets and liabilities to be classified as either Current or Non-current.
Assets
An asset is classified as current when it satisfies any of the following criteria:
It is expected to be realised in, or is intended for sale or consumption in, the Company's normal operating cycle;
It is held primarily for the purpose of being traded;
It is expected to be realised within twelve months after the reporting date; or
It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.
Current assets include the current portion of non-current financial assets.
All other assets are classified as non-current
Liabilities
A liability is classified as current when it satisfies any of the following criteria:
It is expected to be settled in the Company's normal operating cycle;
It is held primarily for the purpose of being traded;
It is due to be settled within twelve months after the reporting date; or
The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
Current liabilities include the current portion of non-current financial liabilities.
All other liabilities are classified as non-current.
(cj Use of estimates
The preparation of standalone financial statements in conformity with Generally Accepted Accounting Principles in India (Indian GAAP) requires the management
to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the reported date and the reported
amounts of revenues and expenses during the reporting period. Although, these estimates are based on the management's best knowledge of current events
and actions, actual results could differ from these estimates. Any revision in accounting estimate is recognised prospectively.
(d) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and revenue can be reliably measured.
Revenue from sales of goods is recognised when significant risks and rewards of ownership of goods are transferred to the customer, net of trade discounts,
rebates, excise duties and taxes on sale, as applicable.
Revenue from services is recognised in accordance with the terms and conditions of the agreements/arrangements with the concerned parties.
Revenue from interest on time deposits is recognised on the time proportion basis taking into consideration the amount outstanding and the applicable interest
rates.
(e) Property Plant and Equipment
Tangible fixed assets are stated at cost of acquisition net of recoverable taxes (wherever applicable), less accumulated depreciation and impairment losses, if any.
Cost comprises the purchase price and any cost (including power 8c fuel, material consumed, salary , interest, travelling exp. etc.) attributable to bringing the
assets to its working condition for its intended use.
Subsequent expenditure related to an item of tangible asset is added to its book value only if it increases the future benefits from the existing asset beyond its
previously assessed standard of performance. All other expenses on existing fixed assets, including day to day repair and maintenance and cost of replacing
parts are charged to the Statement of Profit and Loss for the year during which such expenses are incurred.
Tangible assets retired from active use and held for disposal are stated at lower of book value and net realisable value as estimated by the Company and are
shown separately in the financial statements under other current assets. Loss determined, if any, is recognised immediately in the Statement of Profit and Loss,
whereas profit or loss on sale of such assets is recognised only upon completion of sale thereof.
Intangible Asset under Development
Research is original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding. Expenditure on
research activities is recognised in the statement of profit and loss as incurred.
Development is the application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials,
devices, products, processes, systems or services prior to the commencement of commercial production or use. Development expenditure is capitalised as part
of the cost of the resulting intangible asset only if the expenditure can be measured reliably, the product or process is technically and commercially feasible,
future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset.
Otherwise, it is recognised in the statement of profit and loss as incurred. Subsequent to initial recognition, the asset is measured at cost less accumulated
amortisation and any accumulated impairment losses.
(f) Depreciation
Depreciation has been calculated on Written down value method at the useful lives, which are equal to useful lives specified as per schedule II to the Act except
certain plant and machinery which are depreciated based on useful lives applicable to continuous process plant. Further, in case of certain assets of Plant and
Equipment where useful life as estimated by management and also certified by Independent valuer then such useful life is followed for computing depreciation
on such asset.
Depreciation on addition to fixed assets is provided on pro-rata basis from the date on which the assets are ready for intended use. Depreciation on sale/discard
from fixed assets is provided for up to the date of sale, deduction or discard of fixed assets as the case may be.
(g) Impairment
The carrying amounts of assets (tangible and intangible) are reviewed at each Balance Sheet date if there is any indication of impairment based on
intemal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the
weighted average cost of capital.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
(ft) Borrowing cost
Borrowing costs directly attributable to acquisition or construction or production of assets which takes substantial period of time to get ready for its intended
use are included as cost of such assets to the extent they relate to the period till such assets are ready to be put to use. Other borrowing costs are recognised as
an expense in the year in which they are incurred.
(i) Leases (as a Lessee)
Operating lease:
Lease arrangements, where the risks and rewards incidental to ownership of an asset substantially vest with the lessor, are recognized as an operating lease.
Lease payments under operating lease are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term.
Assets taken on finance lease are capitalized at an amount equal to the fair value of the leased assets or the present value of minimum lease payments at the
inception of the lease, whichever is lower. Such leased assets are depreciated over the lease tenure or the useful life, whichever is shorter. The lease payment is
apportioned between the finance charges and reduction to principal, i.e., outstanding liability. The finance charge is allocated to the periods over the lease
tenure to produce a constant periodic rate of interest on the remaining liability.
(j) Inventory
Inventories comprising of traded goods are measured at the lower of cost and net realisable value. The cost of inventories is computed on weighted average
basis formula.
The Cost comprises all costs of purchases and other costs incurred in bringing the inventory to their present location and condition. Net realisable value is the
estimated selling price in the ordinary course of business less estimated costs necessary to make the sale, The comparison of cost and net realisable value Is
made on an item-by-Item basis.
(k) Employee Benefits
Short term employee benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries,
wages, and bonus etc are recognised in the Statement of Profit and Loss in the year in which the employee renders the related service.
Long term employee benefits:
i) Defined contribution plan: Provident fund
All employees of the Company are entitled to receive benefits under the Provident Fund, which is a defined contribution plan. Both the employee and the
employer make monthly contributions to the plan at a predetermined rate as per the provisions of The Employees Provident Fund and Miscellaneous Provisions
Act, 1952. These contributions are made to the fund administered and managed by the Government of India. The Company has no further obligations under the
plan beyond its monthly contributions.
ii) Defined Benefit Plan: Gratuity
The Company provides for retirement benefits in the form of Gratuity. Benefits payable to eligible employees of the company with respect to gratuity, a defined
benefit plan is accounted for on the basis of an actuarial valuation by an independent actuary as at the balance sheet date. In accordance with the Payment of
Gratuity Act, 1972, the plan provides for lump sum payments to vested employees on retirement, death while in service or on termination of employment in an
amount equivalent to 15 days basic salary for each completed year of service. Vesting occurs upon completion of five years of service. The present value of such
obligation is determined by the projected unit credit method and adjusted for past service cost and fair value of plan assets as at the balance sheet date through
which the obligations are to be settled. The resultant actuarial gain or loss on change in present value of the defined benefit obligation or change in return of the
plan assets is recognised as an income or expense in the Statement of Profit and Loss. The expected return on plan assets is based on the assumed rate of return
of such assets. The Company contributes to a trust set up by the Company which further contributes to a policy taken from the Life Insurance Corporation of
India.
(!) Taxation
i) Current tax
Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961.
ii) Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accounting income and taxable income for the year, The deferred tax charge
or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the
balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realized in future, However, where
there is unabsorbed depreciation or carry forward of losses, deferred tax assets are recognised only if there is a virtual certainty backed by convincing evidence
of realization of such assets. Deferred tax assets are reviewed at each Balance Sheet date and are written-down or written-up to reflect the amount that is
reasonably / virtually certain (as the case may be) to be realized.
The break-up of the major components of the deferred tax assets and liabilities as at Balance Sheet date has been arrived at after setting off deferred tax assets
and liabilities where the entity has a legally enforceable right to set-off assets against liabilities and where such assets and liabilities relate to^taxes on income
levied by the same governing taxation laws.
Minimum alternate tax (MAT) under the Income Tax Act, 1961, payable for the year is charged to the Statement of Profit and Loss as current tax. The company
recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the period in which the Company recognizes MAT credit as an asset in
accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the "Income-tax Act, 1961", the said asset is
created by way of credit to the Statement of Profit and Loss and shown as "MAT Credit Entitlement" The Company reviews the "MAT Credit Entitlement" asset at
each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified
period.
(m) Foreign exchange transactions
a) Foreign currency transactions are recorded at the rate of exchange prevailing at the date of transaction. Foreign Currency Assets and Liabilities are converted
at the exchange rates prevailing at the year end except those covered under firm commitment which are stated at contracted rate. Exchange difference is
charged to the revenue account except arising on account of such conversion related to (r) the purchase of fixed assets is adjusted.
In view of the option allowed by the Ministry of Corporate Affairs vide its notification dated 29th December, 2011 on Accounting Standard -11 'The Effects of
Changes in the Foreign Exchange Rates’, the Company had availed the irrevocable option.(refer e)
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