2.2 Significant Accounting Policies:
a) Current versus non-current classification: _
The Company presents assets and liabilities in the balance shefet basedgn
current/ non current classification. An asset is treated as current
• Expected to be realized or intended to be sold or consumed in normal
operating cycle.
• Held primarily for the purpose of trading.
• Expected to be realized within twelve months after the reporting period, or.
• Cash or cash equivalent unless restricted from being exchanged or used to
settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
Liability is current when:
• It is expected to be settled in normal operating cycle.
• It is held primarily for the purpose of trading.
• It is due to be settled within twelve months after the reporting period, or
• There is no unconditional right to defer the settlement of the liability for at
least twelve months after the reporting period.
The Company classifies all other liabilities as non-current.
• Deferred tax assets and liabilities are classified as non current assets and
liabilities.
• The operating cycle is the time between the acquisition of assets for
processing and their realization in cash and cash equivalents. The
Company has identified twelve months as its operating cycle.
b) Use of estimates and Judgements;
The preparation of the standalone financial statements in conformity with
Ind AS requires management to make estimates, judgements and
assumptions. These estimates, judgements and assumptions affect the
application of accounting policies and the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of revenues and expenses
during the period. Management believes that the estimates used in
preparation of financial statements are prudent and reasonable Actual
future periods results could differ from those estimates, Changes in
estimates are reflected in the financial statements in the period in which
changes are made, and if material, their effects are disclosed in the notes to
the financial statements.
c) Cash and Cash Equivalents:
Cash comprise cash on hand and demand deposits with banks. Cash
equivalents are short term (with an original maturity of three months or less
from the date of acquisilion), highly liquid investments that ^re readily
convertible into known amounts of cash and which are , subje^^^fl™^^^
insignificant risk of changes in value. ' \
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d) Tangible Fixed Asset*- i.e. Property, Plant and Equipment:
Property, Plant and Equipments are stated at cost of acquisition or
construction or cost of improvement inclusive of incidental costs related to
acquisition and installation or at revalued amounts wherever such assets
have been revalued less accumulated depreciation and impairment loss.
Advances paid towards acquisition of fixed assets are disclosed as Capital
Advances under Other Non-Current Assets. Subsequent expenditure is
capitalized only if it ts probable that the future economic benefits associated
with expenditure will flow to the Company. Any gain or loss on disposal of an
item of property, plant and equipment is recognized in the Statement of
Profit and Loss.
e) Intangible Assets:
Intangible Assets are tamed at cost less accumulated depreciation
impairment losses, if any. The cost of intangible assets comprises its
purchase price, including any import duties and other taxes (other than
those subsequently recoverable from the taxing authorities) and any direct
attributable expenditure on making the asset ready for its intended use and
net of any trade discounts and rebates. Subsequent expenditure on an
intangible asset after its purchase / completion is recognized as an expense
when incurred unless it is probable that such expenditure will enable the
asset to generate future economic benefits in excess of its originally assessed
standards of performance and such expenditure can be measured and
attributable to the assets reliably, in which case such expenditure is added
to the cost of the asset.
f) Depreciation and Amortization:
i. Depreciation is calculated on cost of items of property, plant and
equipment less their estimated residual value as per Companies Act,
2013 at the rate in the manner prescribed in schedule 11 of the said Act.
ii. Depreciation on additions/ disposal during the period is provided on
prorate basis according to the period during which assets are put to
use/ being used.
iii. No Depreciation has been provided in respect of Capital Work in
Progress.
g) Investments:
Non-current investments are carried at cost. Provision for diminution is not
made to recognize a decline m value of non-current investments and is
determined separately for each individual investment wherever and
whenever necessary.
Current investments are carried individually, at the cost,' Cost of
Investments includes acquisition charges such as brokerage,
duties.
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h| Revenue Recognition:
i. The Company recognizes revenue on the sale of products when risks and
rewards of the ownership are transferred to the customer. Sales are
accounted exclusive of goods and service tax and net of sates return.
ii. Sales returns are accounted on actual receipt of return goods/
settlements of claims.
iti.Other income like dividend income and interest income is recognized
when the right to receive payment is established.
1) Cost Recognition:
Costs and expenses are recognized when incurred and have been classified
according to their nature. The costs of the Company are broadly categorized
in purchase of goods and land for resale (purchase of stock in trade!,
employee benefit expense, finance cost and other expenses. Other expenses
mainly include fees to external consultants, vehicle or conveyance expense
and other expenses.
j) Foreign Currency Transaction:
There is no foreign currency transaction during the year.
k) Valuation of Inventories:
i. Raw materials are valued at cost or net realizable value whichever is
lower.
ii. Work in progress has been valued at cost of materials and labour
charges together with relevant factory overheads.
iii. Finished Goods are valued at cost or net realizable value whichever is
lower.
The cost of traded goods is determined on FIFO basis. The inventories
are as taken, valued and certified by the Management.
1) Employee Benefits:
1, Short Term Employee Benefits:
All the employee benefits payable wholly within twelve months of
rendering the service arc classified as short-term employee benefits.
Benefits such as salat a s, wages and the expected cost of bonus are
recognised in the period in which an employee renders the related
services.
Ii. Post-Employment Benefits:
Defined Contribution Plans:
The Company s Statutory Provident Fund, Employees Superannuation
Fund and Employee State Insurance Scheme are defined contribujjjgfr^-g^^
plans. The Com pan \ h.ts informed and explained that such bene>frJvG£--iJC^\\
not applicable to the Company and hence provisions of such benefits
have not been done.
Defined Benefit Plan:
The Employees Group Gratuity Fund is the Company s defined benefit
plan for which Company has not taken Group Gratuity cum Life
Insurance Policy from Life Insurance Corporation of India. The Company
has informed that any gratuity or any benefits are not applicable to the
Company and hence not provided.
iii. The employees are nol paid any benefits other than salary and bonus
during the year.
m) Taxes on Income:
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 uncertainly, if any related to income taxes. It is measured
using tax rates and tax laws enacted or substantively enacted by the
reporting date.
Minimum alternate tax (MAT), if any, paid in a 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.
Accordingly, MAT credit 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 the asset can be measured reliably.
Deferred tax is recognized on liming differences, being the differences
between the taxable income and the accounting income that originate in one
period and are capable of reversal in one or more subsequent periods.
Deferred tax is measured using the tax rates and the tax laws enacted or
substantially enacted as at the reporting date. Deferred tax liabilities are
recognized for all timing differences. Deferred tax assets in respect of
unabsorbed depreciation and carry forward of losses are recognized only if
there is virtual certainty that there will be sufficient future taxable income
available to realize such assets. Deferred tax assets are recognized for timing
differences of other items only to the extent that reasonable certainty exist
that sufficient future taxable income will be available against which these
can be realized. Deferred tax assets are reviewed at each Balance Sheet date
for their reliability. •
n| Segment Reporting
The Company has no other segment; hence, nothing is to be required to be
reported in accordance with Ind AS 108. Operating Segments.
o) Borrowing Cost:
The amendments in Ind AS 23 clarify that if any specific borrowing remains
outstanding after the related asset are ready for its intended use or sale, that
borrowing becomes part of the funds that an entity borrows generally when
calculating the capitalisation rale on general borrowings. The Company does
not expect any impact from this amendment.
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