2. SIGNIFICANT ACCOUNTING POLICIES
2.1) Basis of accounting and Preparation of financial statements
The standalone financial statements of the company have been prepared in accordance with Indian
Accounting Standard under historical cost convention on mercantile basis. The company has prepared
these financial statements to comply in all material respects with the accounting standards notified
under section 133 of the companies Act 2013 ('Act') read with rule 7 of the Companies (Accounts)
Rules, 2015. Accounting policies has been consistently applied.
2.2) Use of Estimates
The preparation of financial statements is in conformity with Indian Indian Accounting Standard
requires the management to make judgements, estimates and assumptions the reported amounts of
revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the
reporting period. Although these estimates are based on the management's best knowledge of
current events and actions, uncertainty about these assumptions and estimates could results in the
outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future
periods.
2.3) Valuation of Inventories
Raw materials and stores, work in progress, traded and finished goods
Raw materials and stores, work-in-progress, traded and finished goods are stated at the lower of
cost and net realizable value. Cost of raw materials and traded goods comprises cost of purchases.
Cost of work-in-progress and finished goods comprises direct materials, direct labour and an
appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on
the basis of stage of completion project. Cost of inventories also include all other costs incurred in
bringing the inventories to their present location and condition. Costs of purchased inventory are
determined after deducting rebates and discounts. Net realizable value is the estimated selling
price in the ordinary course of business less the estimated costs of completion and the estimated
costs necessary to make the sale.
The basis of determining cost for various categories of inventories is as follows:
work-in-process and Materials and appropriate share of Finished goods labour and overheads
2.4) Leases
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest
with the lessor are recognized as operating leases The total lease rentals in respect of an asset taken
on operating lease are charged to the Statement of Profit and Loss on the terms of the agreement and
the effect of lease equalization is not eiven considering the increment is on account of inflation factor.
2.5) Property, Plant and Equipment's
Tangible fixed assets
"Tangible fixed assets are carried at fair value less accumulated depreciation / amortization and
impairment losses, if any. The cost of fixed assets 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), any directly attributable expenditure on making the asset ready for its
intended use, Subsequent expenditure on fixed assets after its purchase / completion is capitalized
only if such expenditure results in an increase in the future benefits from such asset beyond its
previously assessed standard of performance."
Intangible assets
"Intangible assets include computer software and licenses acquired by the company. Intangible assets,
all of which have been acquired and are controlled through custody or legal rights are capitalized at
cost, where they can be reliably measured.
2.6) Depreciation on Property, Plant and equipment's
Depreciation on Tangible assets is provided on the straight-line method over useful lives of the assets
as per Schedule II of the companies Act 2013. Depreciation for assets purchased/sold during the
period is proportionately charged. Intangible assets are amortized over their respective individual
estimated useful lives on a straight-line basis, commencing from asset is available for use. " in order
to reflect the actual usage of assets.
Class of Asset Useful life
Freehold Buildings 5 - 30 Years
Furniture and Fittings 2 - 10 Years
Office Equipment's 3 - 6 Years
Plant and Machinery 2 - 40 Years
2.7) Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefit will flow to the
company and the revenue can be reliably measured. The assesses is maintaining accounts relating to
Income and Expenditure activities as well as major items of expenditure activities and other income
on accrual basis. Sales represent invoiced values of goods and services supplied net of discounts, sales
tax, GST and other government levies wherever applicable. Other income is accounted for on accrual
basis.
2.8) Other income recognition
a) Interest income is accounted on accrual basis.
b) Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and
to the extent that the amount recoverable can be measured reliably and it is reasonable to expect
ultimate collection.
2.9) Investments
Investment of the company comprises of long-term investment only. There is no decline other than
temporary decline in the value of investment; hence investment is carried at cost. There is no disposal
of long-term investment during the year.
2.10) Employee benefits
i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled
wholly within 12 months after the end of the period in which the employees render the related service
are recognized in respect of employee's services up to the end of the reporting period and are
measured at the amounts expected to be paid when the liabilities are settled. The liabilities are
presented as current employee benefit obligations under other financial liabilities in the balance
sheet. The Company does not carry any further obligations, apart from the contributions made on a
monthly basis.
ii) Other long-term employee benefit obligations
The liabilities for earned leave and sick leave which are not expected to be settled wholly within 12
months after the end of the period in which the employees render the related service. They are
therefore measured as the present value of expected future payments to be made in respect of
services provided by employees up to the end of the reporting period by actuaries using the projected
unit credit method. The benefits are discounted using the market yields at the end of the reporting
period that have terms approximating to the terms of the related obligation. Remeasurements as a
result of experience adjustments and changes in actuarial assumptions are recognized in profit or loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an
unconditional right to defer settlement for at least twelve months after the reporting period,
regardless of when the actual settlement is expected to occur.
iii) Bonus plans
The Company recognizes a liability and an expense for bonuses. The Company recognizes a provision
where contractually obliged or where there is a past practice that has created a constructive
obligation.
iv) Gratuity
The Company provides for gratuity, a defined benefit plan (the "Gratuity Plan") covering eligible
employees in accordance with the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump
sum payment to vested employees at retirement, death, incapacitation or termination of
employment, of an amount based on the respective employee's salary and the tenure of employment.
The liability or assets recognized in the balance sheet in respect of defined benefit provident fund
plans is the present value of the defined benefit obligation at the end of the reporting period less the
fair value of plan assets. The liability recognized in the balance sheet in respect of defined benefit
gratuity plan is the present value of the defined benefit obligation at the end of the reporting period.
The defined benefit obligations are calculated at the end of the reporting period by actuaries using
the projected unit credit method. The present value of the defined benefit obligations is determined
by discounting the estimated future cash outflows by reference to market yields at the end of the
reporting period on government bonds that have terms approximating to the terms of the related
obligation.
2.11) Foreign Currency Transactions
The transactions in foreign currencies are record at the exchange rate prevailing on the date of
transactions. The difference between the rate prevailing on the date of transaction and on the date
of settlement is recognized as income or expense, as the case may be, for the year.
2.12) Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term
balances (with an original maturity of three months or less from the date of acquisition), highly liquid
investments that are readily convertible into known amounts of cash and which are subject to
insignificant risk of changes in value
2.13) Cash flow statement
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items
and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from operating, investing and financing
activities of the Company are segregated based on the available information.
2.14) Borrowing costs
Borrowing costs include interest, amortization of ancillary costs incurred and exchange differences
arising from foreign currency borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the extent directly related to
completion of project costs are charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilized for working capital, pertaining to the period from
commencement of activities relating to project / development of the project cost are added to the
cost of the project cost.
The company has issued last year redeemable preference shares, its recognized under long term
borrowing cost to the company.
2.15) Trade receivables
Trade receivables are recognized initially at fair value and subsequently measured at amortized cost
using the effective interest method, less provision of bad debtors.
2.16) Other financial assets
a) Classification
The Company classifies its financial assets in the following measurement categories:
Those to be measured subsequently at fair value (either through other comprehensive income or
through profit or loss), and
Those measured at amortized cost.
The classification depends on the entity's business model for managing the financial assets and the
contractual terms of the cash flows.
b) Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a
financial assets not at fair value through profit or loss, transaction costs that are directly attributable
to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value
through profit or loss are expensed off in the statement of profit and loss.
2.17) Taxes on Income
a) Current Tax is determined as the amount of tax payable in respect of taxable income for the year
as per provision of the Income tax Act,1961.
b) Deferred tax is recognized, subject to consideration of prudence in respect of deferred tax assets,
on timing difference, being the difference between taxable income and accounting income that
originate in one period and are capable of reversal in one or more subsequent period and measured
using relevant enacted tax law rates and laws
c) Minimum Alternative Tax (MAT) paid in accordance with tax laws, which give rise to future
economic benefits in the form of adjustment of future tax liability, is recognized as an asset only when,
based on convincing evidence, it is probable that the future economic benefits associated with it will
flow to the group and the assets can be measured reliably.
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