2. SUMMARY OF MATERIAL ACCOUNTING
POLICIES
2.1 Basis of Preparation of Financial
Statements:
These financial statements are prepared in
accordance with Indian Accounting Standard
(Ind AS), under the historical cost convention
on the accrual basis except for certain financial
instruments which are measured at fair values,
the provisions of the Companies Act, 2013 ('the
Act') and guidelines issued by the Securities
and Exchange Board of India (SEBI). The Ind
AS are prescribed under Section 133 of the
Act read with Rule 3 of the Companies (Indian
Accounting Standards) Rules, 2015 and relevant
amendments issued thereafter.
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.
These financial statements were approved and
authorised for issue with the resolution of the
Board of Directors on 27th May 2025.
2.2 Use of Estimates
The preparation of financial statements
in conformity with the recognition and
measurement principles of Ind AS which
requires the management to make estimates
and assumptions that affect the reported
amounts of assets, liabilities, revenue and
expenses and disclosure of contingent assets
and liabilities. The estimates and assumptions
used in the accompanying financial statements
are based upon management's evaluation of
the relevant facts and circumstances as of the
date of the financial statements. Actual results
may differ from the estimates and assumptions
used in preparing the accompanying financial
statements. Any revisions to accounting
estimates are recognized prospectively in future
periods. Key sources of estimation of uncertainty
at the date of the financial statements which
may cause a material adjustment to the
carrying amounts of assets and liabilities within
the next financial year, is in respect of useful lives
of property, plant and equipment, provisions
and contingent liabilities.
2.3 Property, plant and equipment and
depreciation:
(i) Since there is no change in the functional
currency, the company has elected to
continue with the carrying value for all
of its property, plant and equipment as
recognized in its Indian GAAP financial
statements as deemed cost at the transition
date viz. 1st April 2016. Property, plant and
equipment are stated at their cost of
acquisitions including incidental expenses
related to acquisition and installation of
the concerned assets and including cost
of specific borrowings. The Property, plant
and equipment manufactured internally by
the Company are stated at manufacturing
cost. Property, plant and equipment are
shown net of accumulated depreciation,
except free hold and, which is at cost.
(ii) Expenditure on New Projects and
Expenditure during the construction etc:
I n case of new projects and in case of
substantial modernization or expansion
at the existing units of the company,
expenditure incurred including interest on
borrowing and financing cost of specific as
well as general borrowing, till the time asset
becomes ready for intended use or sale is
being capitalised to the cost of asset. Trial
run expenditure is also capitalized.
(iii) I ntangible assets are measured on initial
recognition at cost. Expenditure incurred in
development phase, where it is reasonably
certain that outcome of development
will be commercially exploited to yield
future economic benefit to the company
is considered as an intangible asset. Such
developmental expenditure is capitalized at
cost including share of allocable expenses.
(iv) Depreciation / Amortization on Assets
(other than Freehold Land) :
Pursuant to enactment of the companies
act 2013 (the ‘Act'), the company has
revised useful life of its Property, plant and
equipment as per provision of schedule II
of the said act. Accordingly the company
provides depreciation on all its assets on
the "Straight Line Method" in accordance
with the said act.
Cost of Power line is being amortized over
a period of 7.5 years when put to use.
Intangible assets are amortized over their
respective individual estimated useful
lives on a straight line basis, commencing
from the date the asset is available to the
Company for its intended use.
2.4 Inventories:
(i) Stores and spares, raw materials and
components are valued at cost or net
realizable value whichever is lower, Cost of
Inventories has been computed to include
all cost of purchases, cost of conversion
and other costs incurred in bringing
the inventories to their present location
and condition.
(ii) Cost of Raw materials is ascertained on
weighted moving average basis.
(iii) Work-in-process, Dies under fabrication
and Finished Goods are valued at the lower
of cost or net realizable value.
(iv) Scrap and Non-moving semi-finished
goods, slow-moving and obsolete items,
are valued at the lower of cost or net
realizable value.
(v) Stock of Trial Product is valued at cost.
(vi) Dies, Die Block and Die Steel are valued at
material cost.
(vii) Goods in transit are stated at actual cost up
to the date of Balance Sheet.
2.5 Research & Development costs:
(i) Capital Expenditure is included in Fixed
Assets & Capital Work in Progress and
depreciation is provided at the respective
applicable rates.
(ii) Revenue expenditure incurred on R&D is
included in the respective account heads
in the financial statements.
2.6 Share Issue expenses
Share issue expenses are written off over a
period of ten years
2.7 Post employment and other employee
benefits:
(i) Short terms employee benefits
Short-term employee benefits such as
salaries, wages, performance incentives
etc. are recognised as expenses at the
undiscounted amounts in the Statement
of Profit and Loss of the period in which
the related service is rendered. Expenses
on non-accumulating compensated
absences is recognised in the period in
which the absences occur.
(ii) Provident Fund
Benefits in the form of Provident Fund and
Pension Scheme whether in pursuance
of law or otherwise which are defined
contributions and are accounted on
accrual basis and charged to statement
of profit and loss of the year.
(iii) Gratuity
The employees' gratuity fund scheme is
Company's defined benefit plan. Payment
for present liability of future payment of
gratuity is being made to the approved
gratuity fund under cash accumulation
policy of the Life Insurance Corporation of
India. The Employees' gratuity, a defined
benefit plan, is determined based on
valuations, as at the balance sheet date,
made by an independent actuary using
the Projected Unit Credit Method. Re¬
measurement, comprising of actuarial
gains and losses, in respect of gratuity are
recognised in the OCI, in the period in
which they occur and is not eligible to be
reclassified to the Statement of Profit and
Loss in subsequent periods. Past service
cost is recognised in the Statement of Profit
and Loss in the year of plan amendment
or curtailment. The classification of
the Company's obligation into current
and non-current is as per the actuarial
valuation report.
(iv) Privilege Leave Benefits
Accumulated leave which is expected to
be utilised within next twelve months, is
treated as short-term employee benefit.
Leave entitlement, other than short term
compensated absences, are provided
based on a actuarial valuation, similar to
that of gratuity benefit. Re-measurement,
comprising of actuarial gains and losses, in
respect of leave entitlement are recognised
in the Statement of Profit and Loss in the
period in which they occurred.
(v) Termination Benefits
Termination benefits such as compensation
under voluntary retirement scheme
is recognized as liability in the year
of termination.
2.8 Foreign Currency Transactions
(i) Initial recognition
The company's financial statements are
presented in INR, which is also its functional
currency. Foreign currency transactions
are recorded in the reporting currency, by
applying to the foreign currency amount,
the exchange rate between the reporting
currency and the foreign currency at the
date of transaction.
(ii) Conversion
Monetary Assets and Liabilities, designated
in foreign currencies are revalued at the rate
prevailing on the date of Balance Sheet or
forward contract rate or other appropriate
contracted rate. Non-monetary assets
and liabilities that are measured in terms
of historical cost in foreign currencies are
not revalued.
(iii) Exchange Differences
Exchange difference arising on the
settlement and conversion on foreign
currency transactions is recognized as
income or expenses in the year in which
it arises.
2.9 Investments and Other Financial Assets:
(i) Initial Recongnition
In the case of financial assets, not recorded
at fair value through profit or loss (FVPL),
financial assets are recognised initially at
fair value plus transaction costs that are
directly attributable to the acquisition of
the financial asset. Purchases or sales of
financial assets that require delivery of
assets within a time frame established by
regulation or convention in the market
place (regular way trades) are recognised
on the trade date, i.e., the date that the
Company commits to purchase or sell
the asset.
(ii) Subsequent Measurement
For purposes of subsequent measurement,
financial assets are classified in
following categories:
a. Financial Assets at Amortised Cost
Financial assets are subsequently
measured at amortised cost if these
financial assets are held within a
business model with an objective to
hold these assets in order to collect
contractual cash flows and the
contractual terms of the financial
asset give rise on specified dates to
cash flows that are solely payments
of principal and interest on the
principal amount outstanding. Interest
income from these financial assets is
included in finance income using the
effective interest rate ("EIR") method.
Impairment gains or losses arising on
these assets are recognised in the
Statement of Profit and Loss.
b. Financial Assets Measured at Fair
Value
Financial aseets are measured at fair
value through other comprehensive
income (‘OCI') if these financial
assets are held with a business model
with an objective to achieve both
by collecting contractual cash flow
and selling financial asset and the
contractual terms of the financial
asset give rise on specified dates to
cash flows that are solely payments of
principal and interest on the principal
amount outstanding. Movements in
the carrying amount are taken through
OCI, except for the recognition of
impairment gains or losses, interest
revenue and foreign exchange gains
and losses which are recognised in the
Statement of Profit and Loss.
In respect of equity investments (other
than for investment in subsidiaries
and associates) which are not held
for trading, the Company has made
an irrevocable election to present
subsequent changes in the fair value
of such instruments in OCI. Such an
election is made by the Company on
an instrument by instrument basis at
the time of transition for existing equity
instruments/ initial recognition for new
equity instruments.
2.10Revenue Recognition:
Revenue from contracts with customers is
recognised when control of the goods or services
are transferred to the customer at an amount
that reflects the consideration to which the
Company expects to be entitled in exchange
for those goods or services. The Company has
concluded that it is principal in its revenue
arrangements, because it typically controls
the goods or services before transferring them
to the customer. The policy of recognizing the
revenue is determined by the five stage model
proposed by Ind AS 115 "Revenue from contract
with customers.
(i) Revenue from the domestic sales is
recognised when the significant risks and
rewards of ownership of the goods have
been passed to the buyer, usually on
delivery of the goods. Revenue from the
sale of goods is measured at the transaction
price of the consideration received or
receivable, net of returns and allowances,
trade discounts and volume rebates.
(ii) Revenue from export sales are recognized
when all the significant risks and rewards
of ownership of the goods have been
passed to the buyer, usually on the basis
of date of Bill of Lading. Export incentives
are accounted for on Export of goods if
the entitlements can be estimated with
reasonable accuracy and conditions
precedent to claim are fulfilled.
(iii) Dividend is recorded in the year in which
right to receive payment is established.
(iv) Interest income is recognized using the
effective interest method.
2.11 Cash Flow Statement:
Cash flows are reported using the indirect
method, whereby net profit before tax is
adjusted for the effects of transactions of a non
cash nature and any deferral or accruals of past
or future cash receipts or payments. The cash
flows from operating, investing and financing
activities of the Company are segregated.
2.12 Cash and cash equivalents:
Cash comprises cash on hand and demand
deposits with bank. Cash equivalents are short
term, highly liquid investments that are readily
convertible into known amounts of cash which
are subject to an insignificant risk of changes
in value.
2.13 Borrowing Costs:
Borrowing Costs directly attributable to the
acquisition, construction or production of
qualifying assets are capitalized till the month
in which the asset is ready to be put to use, as
part of the cost of that asset. Other borrowing
costs are recognized as expenses in the period
in which these are incurred.
2.14 Earnings per share:-
The basic & diluted earning per share is
computed by dividing the net profit or loss
attributable to equity shareholder for the period
by the weighted average number of equity
shares outstanding during the period.
2.15 Impairment of Assets:
The Management assesses for any impairment
of assets or cash generating units, if indicators,
external or internal, suggest possibilities of
reduction in net realisable value of assets or
value in use of cash generating units below their
carrying costs. Impairments, if any, is recognised
in the Profit and Loss Account.
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