C. Significant Accounting Policies
1.6. Presentation and disclosure of financial statement
All assets and liabilities have been classified as current and non-current as per
Company’s normal operating cycle and other criteria set out in Schedule III of the
Companies Act, 2013 for a company whose financial statements are made in
compliance with the Companies (India Accounting Standards) Rules, 2015.
Based on the nature of products / services and time between acquisition of assets for
processing / rendering of services and their realization in cash and cash equivalents,
operating cycle is less than 12 months, however for the purpose of current/ non¬
current classification of assets and liabilities, period of 12 months has been considered
as its normal operating cycle.
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 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 equivalents 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 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.
1.7. Property, Plant and Equipment and Depreciation
Recognition and measurement
Under the previous GAAP, property, plant and equipment were carried at historical
cost less depreciation and impairment losses, if any. On transition to Ind AS, the
Company has availed the optional exemption under Ind AS 101 and accordingly it has
used the carrying value as at the date of transition i.e. 1st April 2016 as the deemed
cost of the property, plant & equipment under Ind AS.
Properties plant and equipment are stated at their cost of acquisition. Cost of an item
of property, plant and equipment includes purchase price including non-refundable
taxes and duties, borrowing cost directly attributable to the qualifying asset, any costs
directly attributable to bringing the asset to the location and condition necessary for its
intended use and the present value of the expected cost for the
dismantling/decommissioning of the asset.
Subsequent costs are included in the asset’s carrying amount or recognized as a
separate asset, as appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Company. All other repair and maintenance
costs are recognized in statement of profit and loss as incurred.
Capital work-in-progress comprises of cost incurred on property, plant and equipment
under construction / acquisition that are not yet ready for their intended use at the
Balance Sheet Date.
Depreciation and useful lives
Depreciation on the property, plant and equipment (other than freehold land and capital
work in progress) is provided on a straight-line method (SLM) over their useful lives
which is in consonance of useful life mentioned in Schedule II to the Companies Act,
2013. Depreciation in respect of fixed assets put to use during the year is provided on
a pro-rata basis with reference to the date of installation of assets.
De-recognition
An item of property, plant and equipment and any significant part initially recognized is
de-recognized upon disposal or when no future economic benefits are expected from
its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated
as the difference between the net disposal proceeds and the carrying amount of the
asset) is included in the statement of profit and loss when the asset is de-recognized.
1.8. Inventories
Raw Material, packing material, stock in trade, work in progress and finished goods
are valued at lower of cost and net realizable value as per Ind AS - 2.
Costs of finished goods, and work in progress are determined by taking material cost
and relevant appropriate overheads, but excluding borrowing costs.
1.9. Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will
flow to the Company and the revenue can be reliably measured. 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 and discounts given to the customers. The Company has
applied the guidelines mentioned in Ind AS 18 for Revenue Recognition.
Interest income is recognized on a time proportionate basis taking into account the
amount outstanding and the rate as applicable.
Dividend is recognized on actual receipt basis.
1.10. Employee benefits
The Provisions of Provident Fund Act, 1952 and the payment of Gratuity Act, 1972 are
not applicable to the Company at present as the number of employees does not
exceed the permissible limit. The retirement benefits payable, if any, shall be
accounted on actual payment basis.
1.11. Taxes on income
Tax expense comprises current and deferred tax. Provision for current tax is made
after taking into consideration benefits admissible under the provisions of the Income
Tax Act, 1961.
The deferred tax resulting from timing difference between taxable and accounting
income is accounted using the tax rates and laws that are enacted or substantively
enacted as on the balance sheet date. Deferred Tax asset is recognized and carried
forward only to the extent that there is virtual certainty that the asset will be realized in
future.
1.12. Investments in equity instruments at FVTOCI
The quoted and unquoted Equity investments are initially measured at fair value plus
transaction costs. Subsequently, they are measured at fair value with gains and losses
arising from changes in fair value recognized in other comprehensive income and
accumulated in the ‘Reserve for equity instruments through other comprehensive
income’. The cumulative gain or loss is not reclassified to profit or loss on disposal of
the investments.
There are no equity investments which are held for trading.
1.13. Cash and cash equivalent
Cash and cash equivalents include cash in hand, bank balances, deposits with banks
(other than on lien) and all short term and highly liquid investments that are readily
convertible into known amounts of cash and are subject to an insignificant risk of
changes in value.
For the purpose of cash flow statement, cash and cash equivalent as calculated above
also includes outstanding bank overdrafts as they are considered an integral part of
the Company’s cash management.
1.14. Cash flow statement
Cash flows are reported using the indirect method, where by net profit before tax is
adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals
of past or future operating cash receipts or payments and item of income or expenses
associated with investing or financing cash flows. The cash flows from operating,
investing and financing activities are segregated.
|