Note - 2 - Material Accounting Policies
a. Basis of preparation of financial statements
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as per
the Companies (Indian Accounting Standard) Rules, 2015 notified under section 133 of the Companies Act, 2013 as amended
and other relevant provisions of the Act.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a
revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
b. Use of estimate and judgements
The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments
and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported
amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the period. Accounting estimates could change from period to period.
Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of
changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period
in which changes are made. Differences between actual results and estimates are recognised in the period in which the results
are known/ materialised.
c. Revenue recognition
Revenue is recognised at the transaction price of the goods sold or service rendered. The amount disclosed as revenue is net of
return and variable consideration on account of various discounts and schemes offered by the company.
The company recognizes revenue when the amount of revenue can be measured reliably and it is probable that the economic
benefits associated with the transaction will flow to the entity.
(i) Sales of goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods are
transferred to the buyer and the entity retains neither continuing managerial involvement to the degree usually associated
with ownership nor effective control over the goods sold.
The performance obligation in case of sales of goods is satisfied at a point in time i.e. Revenue from export sales is
recognized when the material is shipped to the customer while Domestic sales is recognized on the basis of ex-factory
dispatch as may be specified in the contract.
(ii) Export Incentives
Export benefits/incentives are accounted for on accrual basis.
(iii) Exceptional Items
When items of income and expenses within statement of Profit and loss from ordinary activities are of such size, nature
or incidence that their disclosure is relevant to explain the performance of the enterprises for the period, the nature and
amount of such material items are disclosed separately as exceptional items.
(iv) sale of services
Revenue from services is accounted for on the basis of work performed and rendering of services as per the terms of the
specific contract.
(v) Insurance and Other Claims
In accordance with the consistent practice, insurance and other claims, to the extent considered recoverable, are accounted
for in the year relevant to claim while the balance is accounted for on settlement.
d. Employee benefits
(i) Short term Employee Benefits
Short Term Employee Benefits are recognized as an expense on an undiscounted basis in the statement of profit and loss
of the year in which the related service is rendered.
(ii) Post Employment Benefits
(a) Defined Contribution Plans
Provident Fund
Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation,
other than the contribution payable to the provident fund. The Company recognizes contribution payable to the
provident fund scheme as an expense, when an employee renders the related service.
(b) Defined benefit plans
Gratuity
Liabilities with regard to the Gratuity Plan are determined by actuarial valuation, performed by an independent actuary,
at each balance sheet date using the projected unit credit method. The Company recognizes the net obligation of a
defined benefit plan in its balance sheet as an asset or liability. Remeasurements comprising of actuarial gains and
losses, on the net defined benefit liability are recognised in Other Comprehensive Income which are not reclassified
to profit or loss in subsequent periods.
Compensated Absences
The liability with regard to accumulated compensated absences is determined by actuarial valuation, performed by
an independent actuary at each balance sheet date using projected unit credit method. The Company recognizes the
net obligation of a defined benefit plan in its balance sheet as an asset or liability. Remeasurements are recognised
in statement of profit & loss in the period in which they arise.
e. Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation / impairment loss, if any. Cost includes
freight, duties, taxes, and other incidental expenses. Pre-operative expenses including eligible borrowing cost incurred during
construction period are charged to Capital Work-in-Progress and on completion, the cost is allocated to the respective property,
plant and equipment. Machinery spares which are specific to a particular item of the property, plant and equipment and if their
use is expected to be irregular are capitalized as applicable.
f. Intangible assets
Intangible assets are stated at cost less accumulated amount of amortization. Intangible assets are amortized over their
respective individual estimated useful lives on a straight-line basis, from the date that they are available for use.
g. Depreciation and amortisation expenses
Depreciation on property, plant and equipment is provided on straight line method at the rate and in the manner prescribed in
Schedule II of the Companies Act, 2013, w.e.f. 1st April, 2014 except in case of continuous Process plant. The depreciation on
continuous Process Plant has been provided as per useful life technically evaluated by chartered engineer. Cost of leasehold
land is amortized over the period of lease.
The Company has applied for the one-time transition exemption of considering the carrying cost on the transition date i.e. April
1,2016 as the deemed cost under IND AS and hence regarded thereafter as historical cost.
h. Inventories
Raw materials, stores and spares are valued at lower of cost and net realizable value.
Work in progress and finished goods, stock in trade and stock in transit are valued at lower of cost and net realizable value. The
costs of work in progress and finished goods include costs of raw material, conversion cost and other costs incurred in bringing
the inventories to their present location and condition. Waste is valued at net realizable value.
Cost of inventories is computed on weighted average.
i. Borrowing costs
Borrowing cost attributable to acquisition and construction of qualifying assets are capitalized as a part of the cost of such asset
up to the date when such asset is ready for its intended use. Other borrowing costs are charged to the Statement of Profit and
Loss Account.
j. Income taxes
Income tax expense represents the sum of current and deferred tax (including MAT). Tax is recognised in the Statement of Profit
and Loss, except to the extent that it relates to items recognised directly in equity or other comprehensive income, in such cases
the tax is also recognised directly in equity or in other comprehensive income.
Current tax is measured at the amount of tax expected to be payable on the taxable income for the year as determined in
accordance with provision of Income tax Act,1961
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the Balance sheet and the
corresponding tax bases used in the computation of taxable profit and are accounted for using the balance sheet approach.
Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally
recognized for all deductible temporary differences, carry forward tax losses and allowances to the extent that it is probable
that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses and
allowances can be utilised. Deferred tax assets and liabilities are measured at the applicable tax rates. Deferred tax assets and
deferred tax liabilities are off set and presented as net.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available against which the temporary differences can be utilised.
Credit of MAT 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, i.e., the period for which MAT credit is allowed to be carried forward. In the year
in which the MAT credit becomes eligible to be recognized as an asset, the said asset is created by way of a credit to the profit
and loss account 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 there is no longer convincing evidence to the effect that the
Company will pay normal income tax during the specified period.
k. Earnings per share
Basic earnings per equity share is computed by dividing the net profit attributable to the equity holders of the company by
the weighted average number of equity shares outstanding during the period. Diluted earnings per equity share is computed
by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares
considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have
been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares are adjusted for the
proceeds receivable had the equity shares been actually issued at fair value.
l. Foreign Currency Transactions
The functional currency of the company is Indian rupee. These financial statements are presented in Indian rupee.
In preparing the financial statements, transaction in foreign currencies are recognised at the rates of exchange prevailing at
the dates of the transactions. Exchange differences arising on foreign exchange transactions settled during the period are
recognised in the Statement of profit & loss of the period.
The foreign currency monetary items are translated using the closing rate at the end of each reporting period. Non-monetary
items that are measured in terms of historical cost in a foreign currency shall be translated using the exchange rate at the date
of the transaction. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates
different from those at which they were translated on initial recognition during the period or in previous financial statements shall
be recognised in profit or loss in the period in which they arise. All other foreign exchange gains and losses are presented in the
statement of profit and loss on net basis.
m. Cash and cash equivalents
The Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with a maturity
period of three months or less from the balance sheet date, which are subject to an insignificant risk of changes in value.
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