Note 1 C: Significant accounting policies and key accounting estimates
(A) Significant accounting policies
1. Current / non-current classification
The Company presents assets and liabilities in the balance sheet based on current and non- current classification. An asset is
treated as current when it is:
a) expected to be realised or intended to be sold or consumed in normal operating cycle;
b) held primarily for the purpose of trading;
c) expected to be realised within twelve months after the reporting period; or
d) 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. A liability is treated as current when it is:
a) expected to be settled in normal operating cycle;
b) held primarily for the purpose of trading;
c) due to be settled within twelve months after the reporting period; or
d) there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
2. Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets/materials for processing and their realisation in cash and cash
equivalents. As the Company’s normal operating cycle is not clearly identifiable, it is assumed to be twelve months.
3. Foreign currencies
Company has not made any transaction in foreign exchange during the year.
4. Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell
the asset or transfer the liability takes place either:
a) In the principal market for the asset or liability, or
b) In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits
by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest
and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to
measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair
value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
a) Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
b) Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly
or indirectly observable; and
c) Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
5. Property, plant and equipment
Property, plant and equipment are carried at cost less accumulated depreciation and impairment losses, if any. Depreciation in
current year is not charged due to very minor amount. The cost of Property, plant and equipment comprises its purchase price net
of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax
authorities).
6. Inventories
Inventories are valued at lower of cost and net realisable value. Cost is determined on a First in First out (FIFO) . Cost includes
cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Obsolete, slow
moving and defective inventories are identified and provided for.
Net Realizable value is the estimated selling price in the ordinary course of business, less estimated cost of completion and
estimated costs necessary to make sale.
7. Impairment of non- financial assets
The Company assesses, at each reporting date, whether there is any indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is required, the Company estimates the asset's recoverable amount. An
asset's recoverable amount is the higher of an asset's or cash-generating unit's (CGU) fair value less costs of disposal or its value in
use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less
costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate
valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded
companies or other available fair value indicators. The Company bases its impairment calculation on detailed budgets and
forecast calculations.
The Company has not impaired any asset, so there is no losses due to impairment.
8. Revenue recognition
Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue can be
reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration
received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on
behalf of the government. The Company has concluded that it is the principal in all of its revenue arrangements since it is the
primary obligor in all the revenue arrangements as it has pricing latitude and is also exposed to inventory and credit risks.
Sale of products
Revenue from the sale of products is recognised when the significant risks and rewards of ownership of the products have passed
to the buyer, usually on delivery of the products. Revenue from the sale of products is measured at the fair value of the
consideration received or receivable, net of returns and allowances, trade discounts and volume rebates.
9. Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and term deposits with an original maturity of
three months or less, which are subject to an insignificant risk of changes in value.
10. Taxes on Income
Tax on Income comprises current tax. It is recognised in statement of profit and loss except to the extent that it relates to a
business combination, or items recognised directly in equity or in other comprehensive income.
Current tax
Tax on income for the current period is determined on the basis on estimated taxable income and tax credits computed in
accordance with the provisions of the relevant tax laws and based on the expected outcome of assessments / appeals. Current
income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities.
The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax
regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is recognized for the future tax consequences of deductible temporary differences between the carrying values of
assets and liabilities and their respective tax bases at the reporting date, using the tax rates and laws that are enacted or
substantively enacted as on reporting date. Deferred tax liability are generally recorded for all temporary timing differences.
There is No deffered tax in current year.
The Company recognizes tax credits in the nature of MAT credit 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 tax credit is allowed to be
carried forward. In the year in which the Company recognizes tax credits as an asset, the said asset is created by way of tax credit
to the Statement of profit and loss. The Company reviews such tax credit 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. Deferred tax
includes MAT tax credit.
11. Employee benefits
Short T erm Employee Benefits
The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by
employees are recognised as an expense during the period when the employees render the services.
Post- Employment Benefits
Defined Contribution Plans
The Company recognizes contribution payable to the provident fund scheme as an expense, when an employee renders the
related services.
The gratuity liability is paid in terms of insurance premium and the company does not have any liability once the contribution in
terms of premium is paid.
12. Earnings Per Share
The basic earnings per share is computed by dividing the net profit attributable to equity shareholders for the period by the
weighted average number of equity shares outstanding during the period. The number of shares used in computing diluted
earnings per share comprises the weighted average shares considered for deriving basic earnings per share, and also the
weighted average number of equity shares which could be issued on the conversion of all dilutive potential equity shares. Dilutive
potential equity shares are deemed converted as of the beginning of the period, unless they have been issued at a later date. In
computing dilutive earnings per share, only potential equity shares that are dilutive and that would, if issued, either reduce future
earnings per share or increase loss per share, are included.
13. Dividend distribution
The Company recognises a liability to make cash distributions to equity holders of the parent when the distribution is authorised
and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised
when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
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