Significant Accounting Policies
1. Basis of preparation of standalone financial statements
(a) Basis of Accounting:
The standalone financial statements have been 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 prescribed in the
Companies (Accounting Standards) Rules, 2006 which continue to apply under Section 133 of the
Companies Act, 2013 ('the Act') read with Rule 7 of the Companies (Accounts) Rules, 2014.
(b) Use of Estimates:
The preparation of standalone financial statements in conformity with Indian GAAP requires
management to make judgments, estimates and assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities and the disclosures of contingent liabilities at the end of
reporting period.
(c) Current/Non-Current Classification:
Any asset or liability is classified as current if it satisfies any of the following conditions:
1. It is expected to be realized or settled or is intended for sale or consumption in the company's
normal operating cycle;
ii. It is expected to be realized or settled within twelve months from the reporting date;
iii. In the case of an asset, it is held primarily for the purpose of being traded; or it is cash or cash
equivalent unless it is restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting date;
iv. In the case of a liability, the company does not have an unconditional right to defer settlement of
the liability for at least twelve months from the reporting date all other assets and liabilities are
classified as non-current. For the purpose of current / non-current classification of assets and
liabilities, the Company has ascertained its normal operating cycle as twelve months. This is based
on the nature of services and the time between the acquisition of assets or inventories for
processing and their realization in cash and cash equivalents.
2. Tangible and Intangible Assets
(a) Tangible Fixed Assets
Tangible fixed assets are carried at the cost of acquisition or construction, less accumulated
depreciation/accumulated impairment. The cost of fixed assets comprises of its purchase price,
including import duties and other non-refundable taxes or levies and any directly attributable cost
of bringing the asset to its working condition for its intended use. Expenses directly attributable to
new manufacturing facility during its construction period are capitalized. Know-how related to plans,
designs and drawings of buildings or plant and machinery is capitalized under relevant tangible asset
heads. Pursuant to the requirements under Schedule II of the Companies Act, 2013, the Company has
identified and determined the cost of each component of an asset separately when the component
has a cost which is significant to the total cost of the asset and has useful life that is materially
different from that of the remaining asset. Profit or loss on disposal of tangible assets is recognized
in the Statement of Profit and Loss. Tangible Fixed assets retired from active use and held for disposal
are stated at the lower of their net book value and net realizable value and are disclosed separately
under 'Other Current Assets'. Any expected loss is recognized immediately in the standalone
Statement of Profit and Loss.
(b) Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. Intangible assets
arising on acquisition of business are measured at fair value as at date of acquisition. Following initial
recognition, intangible assets are carried at cost less accumulated amortization and accumulated
impairment loss, if any. Profit or Loss on disposal of intangible assets is recognized in the standalone
Statement of Profit and Loss.
(c) Capital Work in Progress & Capital Advances
Cost of Assets not ready for intended use, as on the balance sheet date, is shown as capital work in
progress. Advances given towards acquisition of fixed assets outstanding at each balance sheet date
are disclosed as Short-Term Loans & Advances.
(d) Depreciation and Amortization:
Depreciation on tangible fixed assets is provided using the Written Down Value Method based on the
useful lives of the assets as estimated by the management and is charged to the standalone Statement
of Profit and Loss as per the requirement of Schedule II of the Companies Act, 2013. The estimate of
the useful life of the assets has been assessed based on technical advice which considered the nature
of the asset, the usage of the asset, expected physical wear and tear, the operating conditions of the
asset, anticipated technological changes, manufacturers warranties and maintenance support, etc.
Significant components of assets identified separately pursuant to the requirements under Schedule
II of the Companies Act, 2013 are depreciated separately over their useful life. The residual value,
useful life and method of depreciation of an asset is reviewed at each financial year end and adjusted
prospectively
(e) Impairment
At Balance Sheet date, an assessment is done to determine whether there is any indication of
impairment in the carrying amount of the Company's assets. If any such indication exists, the asset's
recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount
of an asset exceeds its recoverable amount. An assessment is also done at each Balance Sheet date
whether there is any indication that an impairment loss recognized for an asset in prior accounting
periods may no longer exist or may have decreased. If any such indication exists the asset's
recoverable amount is estimated. The carrying amount of the fixed asset is increased to the revised
estimate of its recoverable amount but so that the increased carrying amount does not exceed the
carrying amount that would have been determined had no impairment loss been recognized for the
asset in prior years. A reversal of impairment loss is recognized in the standalone Statement of Profit
and Loss for the year. After recognition of impairment loss or reversal of impairment loss as
applicable, the depreciation charge for the fixed asset is adjusted in future periods to allocate the
asset's revised carrying amount, less its residual value (if any), on straight line basis over its
remaining useful life.
3. Revenue Recognition
Revenue from sale of goods is recognized on transfer of all significant risks and rewards of ownership
to the buyer. The amount recognized as sale is exclusive of sales tax/VAT/GST and is net of returns
& discounts. Sales are stated gross of excise duty as well as net of excise duty (on goods manufactured
and outsourced), excise duty being the amount included in the amount of gross turnover. The excise
duty related to the difference between the closing stock and opening stock is recognized separately
as part of changes in inventories of finished goods, work in progress and stock in trade. Revenue from
service is recognized as per the completed service contract method. Processing income is recognized
on accrual basis as per the contractual arrangements. Dividend income is recognized when the right
to receive payment is established. Interest income is recognized on the time proportion basis.
4. Lease Accounting
Assets taken on operating lease:
Lease rentals on assets taken on operating lease are recognized as expense in the standalone
Statement of Profit and Loss on straight line basis.
5. Inventory
(a) Raw materials, work in progress, finished goods, packing materials, stores, spares, components,
consumables and stock-in-trade are carried at the lower of cost and net realizable value.
However, materials and other items held for use in production of inventories are not written
down below cost if the finished goods in which they will be incorporated are expected to be sold
at or above cost. The comparison of cost and net realizable value is made on an item-by item basis.
Damaged, unserviceable and inert stocks are valued at net realizable value.
(b) In determining cost of raw materials, packing materials, stock-in-trade, stores, spares,
components and consumables, weighted average cost methods used. Cost of inventory comprises
all costs of purchase, duties, taxes (other than those subsequently recoverable from tax
authorities) and all other costs incurred in bringing the inventory to their present location and
condition.
(c) Cost of finished goods and work-in-progress includes the cost of raw materials, packing
materials, inappropriate share of fixed and variable production overheads, excise duty as
applicable and other costs incurred in bringing the inventories to their present location and
condition. Fixed production overheads are allocated on the basis of normal capacity of production
facilities.
6. Investments
Investments are classified into current and long-term investments. Investments that are readily
realizable and intended to be held for not more than a year from the date of acquisition are classified
as current investments. All other investments are classified as long-term investments. Current
investments are stated at the lower of cost and fair value. The comparison of cost and fair value is
done separately in respect of each category of investments. Long-term investments are stated at cost.
A provision for diminution in the value of long-term investments is made only if such a decline is
other than temporary in the opinion of the management. Reversal of such provision for diminution
is made when there is a rise in the value of long-term investment, or if the reasons for the decline no
longer exist. On disposal of an investment, the difference between it carrying amount and net disposal
proceeds is recognized in the standalone Statement of Profit and Loss.
7. Transactions in Foreign Currency
(a) Initial recognition:
T ransactions in foreign currencies entered into by the Company are accounted at the exchange rates
prevailing on the date of the transaction. Exchange differences arising on foreign exchange
transactions settled during the year are recognized in the standalone Statement of Profit and Loss.
(b) Measurement of foreign currency items at the Balance Sheet date:
Foreign currency monetary items of the Company are restated at the closing exchange rates. Non¬
monetary items are recorded at the exchange rate prevailing on the date of the transaction. Exchange
differences arising out of these translations are recognized in the standalone Statement of Profit and
Loss.
(c) Forward exchange contracts:
The Company had not entered into any forward exchange contracts to hedge against its foreign
currency exposures relating to the underlying transactions and firm commitments. The Company had
not entered into any derivative instruments for trading or speculative purposes.
8. Trade receivables
T rade receivables are stated after writing off debts considered as bad.
9. 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 and they are recognized in the period in which the employee renders
the related service. The Company recognizes the undiscounted amount of short term employee
benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after
deducting any amount already paid.
B. Post-employment benefits:
(a) Defined contribution plans: Defined contribution plans are employee state insurance scheme and
Government administered pension fund scheme for all applicable employees and superannuation
scheme for eligible employees. The Company's contribution to defined contribution plans are
recognized in the standalone Statement of Profit and Loss in the financial year to which they
relate.
(b) Defined Benefit Plans:
(i) Provident fund scheme : The Company makes specified monthly contributions towards
Employee Provident Fund scheme, for the eligible employees.
(ii)Gratuity scheme : Gratuity is payable to all eligible employees of the company on retirement,
death, permanent disablement and resignation in terms of the provisions of the Payment of
Gratuity Act 1972, or company's scheme whichever is more beneficial.
10. Research and Development
Research and Development expenditure of a revenue nature is expensed out under the respective
heads of account in the year in which it is incurred. Fixed assets utilized for research and
development are capitalized and depreciated in accordance with the policies stated for Tangible
Fixed Assets and Intangible Assets.
11. Provision for Taxation
Tax expense comprises of current tax (i.e. amount of tax for the period determined in accordance
with the Income Tax Act, 1961) and deferred tax charge or credit (reflecting the tax effects of timing
differences between accounting income and taxable income for the period). The deferred tax charge
or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates
that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are
recognized only to the extent there is reasonable certainty that the assets can be realized in future;
however, where there is unabsorbed depreciation or carry forward loss under taxation laws,
deferred tax assets are recognized only if there is a virtual certainty of realization of such assets.
Deferred tax assets are reviewed as at each Balance Sheet date to reassess realization.
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