I. SIGNIFICANT ACCOUNTING POLICIES
1.1. Basis of Preparation
The financial statements are prepared and presented under the historical cost convention, on the accrual basis of accounting in accordance with the accounting principles generally accepted in India (‘Indian GAAP') and comply with the Accounting Standards issued by the Institute of Chartered Accountants of India ('ICAI') specified in Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rule 2014 and relevant provisions of Companies Act, 2013 ("the Act") to the extent applicable.
1.2. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.
1.3. Fixed assets and depreciation
The company has adopted Cost Model as prescribed in Accounting standard -10 (Revised) “Property Plant & Equipment”.
Recognition
The Cost of an item of property, Plant& equipment is recognized as an asset if, and only if:
(a) it is probable that future economic benefits associated with the item will flow to the enterprises; and
(b) the cost of the item can be measured reliably.
Fixed assets are stated at cost, less accumulated depreciation and impairment losses if any. Pre-operative expenses including trial run expenses (net of revenue) are capitalised. The cost of fixed assets comprises the purchase price and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to the working condition for its intended use. Financing costs relating to acquisition of fixed assets are also included to the extent they relate to the period till such assets are ready to put to use.
Capital Work-in-progress includes the cost of fixed assets that are not ready to use at the balance sheet date.
Depreciation on fixed assets is provided on Written down Method at the manners provided in Schedule II of the Companies Act, 2013. Depreciation is charged on fixed assets from last day of the month in which such assets were put to use. Further, Govt. Grant received if any related to depreciable assets are reduced from depreciation over the period of useful life of qualifying assets on systematic and rational basis. Leasehold land is amortized over the period of lease.
1.4. Impairment of Assets
The Company assesses at each balance sheet date whether there is any indication that an asset or a group of assets (cash generating unit) may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset or a group of assets. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the profit & loss account. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exits, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost.
1.5. Inventories
(a) Inventories are valued at cost or net realizable value whichever is lower.
(b) The cost of finished goods and stock in process includes estimated cost of conversion and other costs included in bringing the inventories to their present location and condition. Cost of raw materials, packaging material and oils and fuels on First Come First Out basis.
(c) Cost of Store and Spares is determined at Estimated Cost.
(d) By-product and scrap are valued at net realisable value.
1.6. Revenue recognition
(a) Revenue from sale is recognized on transfer of all significant risk and rewards of ownership of products to the customers, which is generally on dispatch of goods. Sales are stated exclusive of GST.
(b) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.
1.7. Employee Benefits
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, and short term compensated absences, etc. are recognized in the period in which the employee render the related services.
Post- Employment Benefits
(i) . Defined Contribution Plans: The Employee State Insurance
Scheme and Contributory Provident Fund administered by Provident Fund Commissioner are defined contribution plans. The Company's contribution paid/payable under the schemes is recognized as expense in the profit and loss account during the period in which the employee renders the related service. No provision has been made towards leave encashment payable to employes on their retirement or termination of service.
(ii) . Defined Benefit Plans: The Company has taken Group
Gratuity and Cash Accumulation Policy issued by the Kotak Life Insurance. The present value of the obligation under such defined benefit plans is determined based on actuarial valuation as advised by Kotak Life Insurance, using the Projected Unit Credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans, are as advised by Kotak Life Insurance.
The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans, are as advised by Kotak Life Insurance.
1.8. Foreign Currency Transactions
Transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date of transactions. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the statement of profit and loss of the year.
Monetary assets and liabilities in foreign currency, which are outstanding as at the year-end, are translated at the closing exchange rate and the resultant exchange differences are recognized in the statement of profit and loss.
Borrowing costs are capitalized as a part of the cost of qualifying assets when it is probable that they will result in future economic benefits to the enterprise and the cost can be measured reliably. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Other borrowing cost is recognized as an expense in the period in which they are incurred. Interest on term loan taken for acquisition of fixed assets till the date of commencement of commercial production unit is capitalized and determined in accordance with Accounting Standard (AS) 16- Borrowing Costs issued by the Institute of Chartered Accountants of India (ICAI) and notified under the Companies (Accounts) Rules 2014.
1.10. Taxation
Tax expenses for the current year comprises of current tax and deferred tax. Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of Income T ax Act 1961. Deferred tax is recognized, on timing difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.
1.11. Earning Per Share
Basic and diluted earnings per share is computed by dividing the net profit attributable to equity shareholders for the year, by the weighted average number of equity shares outstanding during the year. There are no diluted potential equity share.
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