(a) Basis of Accounting and Preparation of the Financial Statements
The financial statements of the Company have been prepared in accordance with the Generally Accepted
Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under
Section 133 of the Companies Act, 2013 (“the 2013 Act”) and the relevant provisions of the 1956 Act /
2013 Act, as applicable. The financial statements of the Company are prepared under the historical cost
convention using the accrual method of accounting. The accounting policies adopted in the preparation
of the financial statements are consistent with those of the previous year. 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 Schedule III to the 2013 Act.
(b) Use of Estimates
The presentation of the financial statements, in conformity with Indian GAAP, requires the Management
to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and
expenses and disclosure of contingent liabilities. Management believes that the estimates used in the
preparation of the financial statements are prudent and reasonable, future results could differ, the
differences between the actual results and the estimates are recognised in the period in which the results
are known / materialise.
(c) Property, plant and equipment (PPE)
Tangible assets are carried at cost less accumulated depreciation and accumulated impairment losses, if
any. Cost comprises of the purchase price including import duties and non-refundable taxes, and directly
attributable expenses incurred to bring the asset to the location and condition necessary for it to be
capable of being operated in the manner intended by management. Capital expenditure incurred on rented
properties is classified as ‘Leasehold improvements’ under property, plant and equipment.
Subsequent costs related to an item of Property, Plant and Equipment are recognised in the carrying
amount of the item if the recognition criteria are met. Items of Property, Plant and Equipment that have
been retired from active use and are held for disposal are stated at the lower of their net carrying amount
and net realisable value and are shown separately in the financial statements under the head ‘Other current
assets’. Any write-down in this regard is recognised immediately in the Statement of Profit and Loss. An
item of Property, Plant and Equipment is derecognised on disposal or when no future economic benefits
are expected from its use or disposal. The gain or loss arising on derecognition is recognised in the
Statement of Profit and Loss.
Depreciation on tangible asset is recognised on a straight line basis based on a useful life of the assets
prescribed in Schedule II to the Act. If the management’s estimates of the useful life of an asset at the
time of acquisition of assets or of the remaining useful life on a subsequent review is shorter than that
envisaged in the aforesaid schedule, depreciation is provided at a higher rate owing to their risk of higher
obsolesce / wear & tear. The useful life of the assets has been reassessed based on the number of years
for which the assets have already been put to use and the estimated minimum balance period for which
the assets can be used in the Company. The estimated life of property, plant and equipment has been
determined as follows:
(d) Intangible assets
Intangible assets are stated at acquisition cost, net of accumulated amortization and accumulated
impairment losses, if any. Intangible assets are amortised on a straight line basis over their estimated
useful lives. A rebuttable presumption that the useful life of an intangible asset will not exceed fifteen
years from the date when the asset is available for use is considered by the management. The amortisation
period and the amortisation method are reviewed at least at each financial year end. If the expected useful
life of the asset is significantly different from previous estimates, the amortisation period is changed
accordingly.
Gains or losses arising from the retirement or disposal of an intangible asset are determined as the
difference between the net disposal proceeds and the carrying amount of the asset and recognized as
income or expense in the Statement of Profit and Loss. The estimated useful lives of intangible assets are
as follows:
(e) Impairment
The Company assesses at each balance sheet date whether there is any indication that an asset may be
impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the
asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount
and the reduction is treated as an impairment loss and is recognized in the Statement of Profit and Loss
account. If at the balance sheet date there is an indication that if a previously assessed impairment loss no
longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount
subject to a maximum of depreciated historical cost.
(f) Inventories
Inventories are valued at cost or net realizable value whichever is lower and on FIFO method and
provision for slow moving stock.
(g) Revenue Recognition
1) Revenue from sale of product
Revenue is recognized in respect of sales on dispatch of product to the customers. Quality rebates,
claims and other discounts, if any, are disclosed separately.
2) Other revenue
Interest on bank deposits is recognized on the time proportion basis taking into account the amounts
invested and the rate of interest as applicable.
(h) Employee Benefits
1) Gratuity
Gratuity is a post-employment benefit and is in the nature of a defined benefit plan. The liability
recognized in the balance sheet in respect of gratuity is the present value of the defined benefit
obligation at the balance sheet date. The defined benefit obligation is calculated at the balance sheet
date by an independent actuary using the projected unit credit method. Actuarial gains and losses
arising from past experience and changes in actuarial assumptions are charged to the Statement of
Profit and Loss in the year in which such gains or losses are determined.
2) Other Short Term Benefits
All employee benefits payable wholly within twelve months of rendering the service are classified as
short-term employee benefits and are recognized in the Statement of Profit and Loss in the period in
which the employee renders the related service.
(i) Taxation
The tax expense comprises of current tax and deferred tax. Current tax is the amount of income tax
determined to be payable in respect of taxable income for a period as per the provisions of Income Tax
Act, 1961. Deferred tax is the effect of timing differences between taxable income and accounting income
that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is
measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet
date. Deferred tax assets are reviewed at each balance sheet date and recognised/derecognised only to the
extent that there is reasonable/virtual certainty, depending on the nature of the timing differences, that
sufficient future taxable income will be available against which such deferred tax assets can be realised.
Minimum Alternate Tax (‘MAT5) credit is recognised as an asset only when and to the extent there is
convincing evidence that the Company will pay normal income tax during the specified period. In the year
in which MAT credit becomes eligible to be recognised as an asset in accordance with the
recommendations contained in 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 a credit to
the Statement of Profit and Loss and shown as MAT credit entitlement. The Company reviews the same
at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent it
is not reasonably certain that the Company will pay normal income tax during the specified period.
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