Note 2 : Significant Accounting Policies
a. Basis of Preparation
These financial statements have been prepared in accordance with the generally accepted accounting
principles in India under the historical cost convention on accrual basis, except for certain tangible assets
which are being carried at revalued amounts. Pursuant to section 133 of the Companies Act, 2013 read
with Rule 7(1) of the Companies (Accounts) Rules, 2014, till the standards of accounting or any addendum
thereto are prescribed by Central Government in consultation and recommendation of the National
Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act, 1956
shall continue to apply. Consequently, these financial statements have been prepared to comply in all
material aspects with the accounting standards notified under Section 211(3C) of the Companies Act,
1956 [Companies (Accounting Standards) Rules, 2006, as amended] and other relevant provisions of the
Companies Act, 2013.
All assets and liabilities have been classified as current or non-current as per the Company's operating
cycle and other criteria set out in the Schedule III (Division I) to the Companies Act, 2013. Based on the
nature of products and the time between the acquisition of assets for processing and their realisation
in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the
purpose of current - non-current classification of assets and liabilities.
b. Functional and Presentation currency
These standalone Ind AS financial statements are presented in Indian Rupees (INR), which is the
Company's functional currency
c. Basis of measurement
The standalone Ind AS financial statements have been prepared on a historical cost basis, except for the
following that are measured at fair values at the end of each reporting period: - (i) certain financial assets
and liabilities and contingent consideration that is measured at fair value
d. First-time adoption
In accordance with Ind AS 101 on First-time adoption of Indian Accounting Standards, the Company's first
Ind AS financial statements include, the opening balance sheet as at 1 April,2019; Balance sheet as at 31
March 2020 and 31 March 2021; two statements each of profit and loss, cash flow and changes in Equity
for the year ended 31 March 2020 and 31 March 2021 together with related notes.
The same accounting policies have been used for all periods presented, except where the Company has
made use of exceptions or exemptions allowed under Ind AS 101 in the presentation of the opening Ind
AS balance sheet.
The balance sheets, statements of profit and loss, statements of cash flows and statements of changes
in equity of the prior years presented have been recast in accordance with Ind AS.
e. Tangbile Assets
Plant, Property and Equipment are stated at cost, net of accumulated depreciation and accumulated
impairment losses, if any, except in case of land which is carried at revalued amount. 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 management23. 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.
Depreciation is provided on a pro-rata basis on the straight-line method over the estimated useful lives
of the assets, based on technical evaluation done by management's expert, which are higher than those
specified by Schedule II to the Companies Act, 2013, in order to reflect the actual usage of the assets. The
depreciation charge for each period is recognised in the Statement of Profit and Loss, unless it is included
in the carrying amount of any other asset. The useful life, residual value and the depreciation method
are reviewed atleast at each financial year end. If the expectations differ from previous estimates, the
changes are accounted for prospectively as a change in accounting estimate.
f. Investments
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 classified as current investments. All other investments
are classified as non-current investments. Current investments are valued at fair value. Non-current
investments are carried at cost. However, provision for diminution is made to recognise a decline, other
than temporary, in the value of non-current investments, such reduction being determined and made for
each investment individually.
g. Inventories
Raw materials, packing materials, stores, spares and consumables are valued at lower of cost and net
realisable value. However, these items are realisable at cost if the finished products in which they will be
used are expected to be sold at or above cost. Finished goods, stock-in-trade and work-in-progress are
valued at lower of cost and net realizable value. Cost is ascertained on weighted average method and in
case of finished products and work-in-progress; it includes appropriate production overheads and duties.
h. Ind AS 115, Revenue from contracts from Customers
Ind AS 115 supersedes Ind AS 11, Construction Contracts and Ind AS 18, Revenue. Ind AS 115 requires an
entity to report information regarding nature, amount, timing and uncertainty of revenue and cash flows
arising from a contract with customers. The principle of Ind AS 115 is that an entity should recognise
that demonstrates the transfer of promised goods and services to customer at an amount that reflects
the consideration to which the entity expects to be entitled in exchange for those goods or services. The
standard can be applied either retrospectively to each prior reporting period presented or can be applied
retrospectively with recognition of cumulative effect of contracts that are not completed contracts at the
date of initial application of the standard.
Revenue is recognised upon transfer of control of promised services or products to customers in an
amount that reflects the consideration which Company expects to receive in exchange for those services
or products.
Revenue from sale of goods is recognised when the significant risks and rewards of ownership of the
goods have been passed to the customer. Sales are net off sales returns, free quantities delivered and
trade discounts.
Interest Income:
Interest income is recognized on a time proportion basis taking into account the amount outstanding and
the rate applicable. For all debt instruments measured either at amortized cost or at fair value through
other comprehensive income, interest income is recorded using the effective interest rate (EIR).
Dividend Income:
Dividend income is accounted for when the right to receive the same is established, which is generally
when shareholders approve the dividend.
Other Income:
Other income is accounted for on accrual basis except where the receipt of income is uncertain in which
case it is accounted for on receipt basis.
i. Current Tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year
and any adjustment to the tax payable or receivable in respect of previous years. The amount of current
tax reflects the best estimate of the tax amount expected to be paid or received after considering the
uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or
substantively enacted by the reporting date. Current tax assets and current tax liabilities are offset only
if there is a legally enforceable right to set off the recognised amounts, and it is intended to realize the
asset and settle the liability on a net basis or simultaneously. Minimum Alternate Tax ('MAT') under the
provision of Income tax Act,1961 is recognised as current tax in the statement of profit and loss. MAT
paid in accordance with the laws, which gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is a convincing evidence that the company will pay
normal tax. Accordingly, MAT is recognised as an asset in the balance sheet when it is probable that
the future economic benefit associated with it will flow to the company and included under Deferred tax
assets. Current tax assets and liabilities are offset only if, the Company:
1. has a legally enforceable right to set off the recognised amounts; and
2. intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
j. Deferred Tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes.
Deferred tax is also recognised in respect of carried forward tax losses and tax credits. Deferred tax is not
recognised for:
• temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not
a business combination and that affects neither accounting nor taxable profit or loss at the time of the
transaction;
• temporary differences related to investments in subsidiaries, associates and joint arrangements to the
extent that the Company can control the timing of the reversal of the temporary differences and it is
probable that they will not reverse in the foreseeable future; and
• taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be
available against which they can be used. The existence of unused tax losses is strong evidence
that future taxable profit may not be available. Therefore, in case of a history of recent losses, the
Company recognises a deferred tax asset only to the extent that it has sufficient taxable temporary
differences or there is convincing other evidence that sufficient taxable profit will be available against
which such deferred tax asset can be realised. Deferred tax assets - unrecognized or recognised,
are reviewed at each reporting date and are recognised/ reduced to the extent that it is probable/
no longer probable respectively that the related tax benefit will be realised. Deferred tax is measured
at the tax rates that are expected to apply to the period when the asset is realised or the liability is
settled, based on the laws that have been enacted or substantively enacted by the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in
which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets
and liabilities. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset
current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the
same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets
on a net basis or their tax assets and liabilities will be realised simultaneously.
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