Note 2 : Material accounting policies
The following are the significant accounting policies adopted in the preparation of these financial statements. These policies
have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of Preparation
The financial statements have been prepared in accordance with Indian Accounting Standards ( Ind AS ) as prescribed
under Section 133 of the Companies Act, 2013 ("the Act") read with Rule 3 of the Companies (Indian Accounting Standards)
Rules, 2015 as amended from time to time,
2.2 Basis of measurement
These financial statements have been prepared on the historical cost basis, except for certain financial instruments which
are measured at fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost
is generally based on the fair value of the consideration given in exchange for goods and services. 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.
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.
2.3 Functional and Presentation Currency
The financial statements are prepared in Indian Rupees ("INR") which is the Company's presentation currency and the
functional currency for its operations. All financial information presented in INR has been rounded to the nearest lakhs with
two decimal places unless stated otherwise.
1 Use of Estimates and judgments
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 year.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to the accounting estimates are
recognised in the period in which the estimate is revised and future periods affected.
Significant judgments and estimates relating to carrying value of assets and liabilities include useful lives of Property, plant
and equipment , impairment of Property, plant and equipment, investments , provision for employee benefits and other
provisions, recoverability of deferred tax assets, commitments and contingencies.
2-5 Classification of Assets & Liabilities as Current & Non-Current
All Assets and Liabilities have been classified as current or non-current as per the Company s normal operating cycle and
other criteria set out in the Schedule 111 to the Companies Act, 2013. Based on the nature of product & activities of the
Company and their realization in cash and cash equivalent, the Company has determined its operating cycle as 12 months
for the purpose of current and non-current classification of assets and liabilities.
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable
consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is net of
variable consideration on account of various discounts and schemes offered bv the Company as part of the contract. This
variable consideration is estimated based on the expected value of outflow. Revenue (net of variable consideration) is
recognized only to the extent that it is highly probable that the amount will not be subject to significant reversal when
uncertainty relating to its recognition is resolved.
2.6.1 Sale of Goods
Revenue from sale of products is recognized when the control on the goods have been transferred to the customer. The
performance obligation in case of sale of product is satisfied at a point in time i.e., when the material is delivered to the
customer.
2.6.2 Interest .
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the effective
interest rate method. Interest income is included under the head "Other Income" in statement of profit and loss.
2.6.3 Expenses
All expenses are charged in statement of profit and loss as and when they are incurred.
Property, Plant & Equipment
Property, plant and equipment are initially recognized at cost including the cost directly attributable for bringing the asset to the location and conditions necessary for it to be capable of operating in the manner intended by the management. After
the initial recognition the property, plant and equipment are carried at cost less accumulated depreciation and impairment!
losses, if any. Any gain or loss on disposal of an item of property, plant and equipment is recognized in the statement of
profit and loss. When significant parts of plant and equipment are required to be replaced at intervals, the company
depreciates them separately based on their specific useful lives. Subsequent expenditures relating to property, plant and
equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the
company and the costs to the item can be measured reliably. Repairs and maintenance costs are recognized in the
statement of profit and loss when incurred.
Capital work-in-progress includes cost of property, plant and equipment under installation / under development as at the
balance sheet date.
!.S Depreciation
Depreciation is calculated on a Straight Line Method basis over the estimated useful lives of all the assets as prescribed in
Schedule II of the Companies Act, 2013. The residual values, useful lives and methods of depreciation of property, plant and
equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
Depreciation is not recorded on capital work-in progress until construction and installation is completed and the asset is ton
intended use.
Intangible asset
Intangible assets purchased are measured at cost as of the date of acquisition, as applicable, less accumulated amortisation
and accumulated impairment, if any.
Intangible assets consist of trademark/patent which are amortised over license period which equates the useful life on a
straight line basis over the period of its economic useful life.
Investment Property
Property which is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the
Company, is classified as investment property. Investment property is measured initially at its cost, including related
transaction costs. Subsequent expenditure is capitalised to the asset's carrying amount only when it is probable that future I
economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured
reliably. Repairs and maintenance costs are expensed when incurred. Depreciation on investment property is provided on a I
pro rata basis on straight line method over the estimated useful lives. Useful life of assets, as assessed by the Management, 1
corresponds to those prescribed by Schedule,II-Part 'c' of the Companies Act, 2013
2.9 Inventory
Inventories consists of Raw Material, Work In Progress, Finished Goods , Scrap & Stores & Spares.
Inventories are valued at the lower of cost or net realisable value. Cost is determined on weighted average basis.
& Spares: Cost includes cost of purchase and other costs incurred in bringing the inventories to their
present location and condition on the weighted average basis.
Finished goods and work in progress: Cost includes cost of direct materials and labour and a proportion of manufacturing
2.10 Employee benefits
a) Short Term Employee Benefits
All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee
benefits. Benefits such as salaries, wages etc. and the expected cost of ex-gratia are recognised in the period in which the
employee renders the related service. A liability is recognised for the amount expected to be paid when there is a present
legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation
can be estimated reliably.
b) Defined Contribution Plan
The Company makes defined contribution to Provident Fund managed by Government Authorities, which are accounted on
accrual basis as expenses in the statement of Profit and Loss. The Company has no obligation other than the contribution
payable to the provident fund.
c) Defined Benefit Plan
The employees' gratuity scheme is a defined benefit plan. The present value of the obligation under such defined benefit
plans is determined based on an independent actuarial valuation using the projected unit credit method, carried out as at
balance sheet date. The obligation determined as aforesaid less the fair value of the Plan assets is reported as a liability or
assets as of the reporting date. Actuarial gain or losses are recognised immediately in the Other Comprehensive Income and
reflected in retained earnings and will not be reclassified to the statement of profit and loss. Past service cost, both vested
and unvested, is recognised as an expense at the earlier of (a) when the plan amendment or curtailment occurs, and (b)
when the entity recognises related restructuring costs or termination benefits.
d) Other Long-Term Benefits
Provision for other long term benefits in the form of long term compensated absences (leave encashment) are accounted for
on the basis as if it becomes due for payment on the last day of accounting year.
2.11 Income Tax
Tax expenses comprises current and deferred tax. It is recognised in Statement of profit and loss except to the extent it
relates to the items recognised directly in equity or in OCI
Current tax
Current tax comprises the expected tax payable on the taxable income or loss for the year and any adjustment to the tax
payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the
reporting date. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities. Current tax assets and liabilities are offset only if there is a legally enforceable
right to set it off the recognised amounts and it is intended to realise the asset and settle the liability on a net basis or
simultaneously
Deferred tax liabilities are generally recognized for all taxable temporary differences. However, in case of temporary
differences that arise from initial recognition of assets or liabilities in a transaction (other than business combination, that
affect neither the taxable profit nor the accounting profit, deferred tax liabilities are not recognized. Also, for temporary
differences if any that may arise from initial recognition of goodwill, deferred tax liabilities are not recognized.
Deferred tax assets are generally recognized for all deductible temporary differences to the extent it is probable that taxable
profits will be available against which those deductible temporary difference can be utilized. In case of temporary
differences that arise from initial recognition of assets or liabilities in a transaction (other than business combination) that
affect neither the taxable profit nor the accounting profit, deferred tax assets are not recognized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that It
is no longer probable that sufficient taxable profits will be available to allow the benefits of part or all of such deferred tax
assets to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted by the
balance sheet date and are expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled.
Presentation of current and deferred tax:
Current and deferred tax are recognized as income or an expense in the Statement of Profit and Loss, except when they
relate to items that are recognized in Other Comprehensive Income, in which case, the current and deferred tax
income/expense are recognized in Other Comprehensive Income.
The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the
recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability
simultaneously. In case of deferred tax assets and deferred tax liabilities, the same are offset if the Company has a legally
enforceable right to set off corresponding current tax assets against current tax liabilities and the deferred tax assets and
deferred tax liabilities relate to income taxes levied by the same tax authority on the Company.
2.12 Lease
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the
right to control the use of an identified asset for a period of time in exchange for consideration.
As a lessee
a) Right of use assets
The Company recognises right of use assets at the commencement date of the lease (i.e. the date the underlying asset is
available for use). Right of use assets are measured at cost, less any accumulated depreciation and impairment losses, and
adjusted for any remeasurement of lease liabilities. The cost of right of use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease
incentives received. Right of use assets are depreciated on a straight-line basis over the shorter of the lease term and the
estimated useful lives of the assets. If ownership of the leased asset transfers to the Company at the end of the lease term or
the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset,
b) Lease liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments primarily comprise of fixed payments. In calculating the
present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because
the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of for the lease payments made.
c) Short-term leases and leases of low value assets
The Company applies the short-term lease recognition exemption to its short-term leases of office spaces and certain
equipment (i.e. those leases that have a lease term of 12 months or less from the commencement date and do not contain a
purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment t a are
considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as exp
on a straight-line basis over the lease term.
As a lessor
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are
classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms. Initial
direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset
and recognised over the lease term on the same basis as rental income
Finance lease
Assets taken on lease by the Company in its capacity as lessee, where the Company has substantially all the risks and
rewards of ownership are classified as finance lease. Such leases are capitalised at the inception of the lease at lower of the
fair value or the present value of the minimum lease payments and a liability is recognised for an equivalent amount. Each
lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on
the outstanding liability for each year.
Operating lease
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor, are
recognised as operating lease. Operating lease payments are recognised on a straight line basis over the lease term in the
statement of profit and loss, unless the lease agreement explicitly states that increase is on account of inflation.
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