2.2 Summary of accounting policies and estimates
a) Revenue recognition
The Company earns revenue primarily from manufacturing
chemical product.
Revenue is recognised upon transfer of control of promised
products or services to customers in an amount that reflects the
consideration which the Company expects to receive in exchange
for those products or services.
Revenue is measured based on the transaction price, which is
the consideration, adjusted for volume discounts, performance
bonuses, price concessions and incentives, if any, as specified
in the contract with the customer. Revenue also excludes taxes
collected from customers.
As the Company is engaged only in chemical manufacturing
business and operating from single location only therefore
disaggregates revenue based on geography location and
industrial vertical are not require.
The specific recognition criteria described below must also be met
before revenue is recognised.
Sale of product
Revenue from the sale of products is recognised when the
significant risks and rewards of ownership of the product have
passed to the buyer. Revenue from the sale of product is measured
at the fair value of the consideration received or receivable, net of
returns and allowances, trade discounts, and volume rebates.
Rendering of services
Income from services is recognized as and when the services are
rendered.
Interest income
Interest income from a financial asset is recognised using effective
interest rate method. Interest income is included in other income in
the statement of profit and loss.
Rental Income
Rental income arising from operating lease on investment
properties is accounted for on a straight-line basis over lease terms
unless the receipts are structured to increase in line with expected
general inflation to compensate for the expected inflationary cost
increases and is included in the Statement of profit or loss due to
its operating nature.
b) Useful lives of Property, Plant and Equipment.
The Company reviews the useful life of the Property, plant &
equipment and Intangible asset as at the end of each reporting
period and these reassessments may result in change in
depreciation expenditure in future period. (Refer No.3a)
c) Current versus Non-Current classification
The Company presents assets and liabilities in the balance sheet
based on current/non-current classification. An asset is treated as
current when it is:
- Expected to be realised or intended to be sold or consumed
in normal operating cycle,
- Held primarily for the purpose of trading,
- Expected to be realised 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.
Trade receivables which are expected to be realised within 12
months from the reporting date shall be classified as current.
Outstanding more than 12 months shall be shown as noncurrent
only unless efforts for its recovery have been made and it is likely
that payment shall be received within 12 months from the reporting
date. A Judicious decision shall be taken by units in this regard.
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 payable shall be classified as Trade Payable if it is in
respect of the amount due on account of goods purchased or
services received in the normal course of business.
Trade payables which are expected to be settled within 12 months
from the reporting date shall be shown as current.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current
assets and liabilities.
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