2 SIGNIFICANT 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
These financial statements have been prepared in
accordance with Indian Accounting Standards (referred
to as "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.
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 and land has been carried
at revalued amount, 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.
2.2 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.
2.3 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.
2.4 Classification of Assets and Liabilities as
Current and 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 III 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.
Deferred tax assets and liabilities are classified as non¬
current assets and liabilities.
2.5 Recognition of Revenue and Expenditure
Revenue from contracts with customers is recognized
on transfer of control of promised goods or services to
a customer at an amount that reflects the consideration
to which the Company is expected to be entitled to in
exchange for those goods or services.
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 by
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.
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 shipped to the customer or on delivery to the
customer, as may be specified in the contract.
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.
Export Incentive
Duty drawback is recognized on the acrrual basis
whereas MEIS/Rodtep credit income is recognized on
receipt basis.
Expenses
All expenses are charged in statement of profit and loss
as and when they are incurred.
2.6 Property, Plant & Equipment
Property, plant and equipment (except land) are stated
at cost comprising of purchase price and any initial
directly attributable cost of bringing the asset to its
working condition for its intended use , less accumulated
depreciation (other than land) and impairment loss, if
any. The Land has been carried at revalued amount and
revaluation is carried out at reasonable period.
"Depreciation is provided for property, plant and
equipment on a straight line method so as to expenses
the cost less residual value over their useful lives assets
as prescribed in Schedule II of the Companies Act, 2013
except Dies & Moulds. The useful life of Dies & Moulds
has been assessed as per the technical assessment of
the management. The estimated useful lives and residual
value are reviewed at the end of each reporting period,
with the effect of any change in estimate accounted for
on a prospective basis."
Depreciation is not recorded on capital work-in progress
until construction and installation is completed and the
asset is for intended use.
2.7 Intangible assets
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 software licenses which
are amortised over license period which equates the
useful life on a straight line basis over the period of its
economic useful life.
2.8 Inventory
Inventories consists of Raw Material, Work In Progress,
Finished Goods, Stores & Spares and Packing Materials.
Inventories are valued at the lower of cost or net
realisable value. Cost is determined on weighted
average basis.
Raw materials, Stores & Spares & Packing material: 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 overheads based on the normal
operating capacity on a weighted average basis. Cost of
finished goods includes other costs incurred in bringing
the inventories to their present location and condition.
Net realisable value is the estimated selling price in the
ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make
the sale.
2.9 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. 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
Contributions to defined contribution plans are
recognised as expense when employees have
rendered services entitling them to such benefits.
c) Defined Benefit Plan
For defined benefit plans, the cost of providing
benefits is determined using the Projected
Unit Credit method, with actuarial valuations
being carried out at each balance sheet date.
Remeasurement, comprising actuarial gains and
losses, the effect of the changes to the asset
ceiling and the return on plan assets (excluding
interest), is reflected immediately in the balance
sheet with a charge or credit recognised in other
comprehensive income in the period in which they
occur. 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.
The retirement benefit obligations recognised in
the balance sheet represents the present value
of the defined benefit obligations reduced by the
fair value of scheme assets. Any asset resulting
from this calculation is limited to the present
value of available refunds and reductions in future
contributions to the scheme.
2.10 Income Tax
Tax expense is the aggregate amount included in the
determination of profit or loss for the period in respect
of current tax and deferred tax.
Current tax
Current tax is the amount of income taxes payable in
respect of taxable profit for a period. Taxable profit
differs from 'profit before tax' as reported in the
Statement of Profit and Loss because of items of income
or expense that are taxable or deductible in other years
and items that are never taxable or deductible under
the Income Tax Act, 1961.
Current tax is measured using tax rates that have been
enacted by the end of reporting period for the amounts
expected to be recovered from or paid to the taxation
authorities.
Deferred Tax
Deferred tax is recognized on temporary differences
between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax
bases used in the computation of taxable profit under
Income tax Act, 1961.
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.
2.11 Lease
Assets taken on lease are accounted as right-of-use
assets and the corresponding lease liability is recognised
at the lease commencement date.
Initially the right-of-use asset is measured at cost
which comprises the initial amount of the lease liability
adjusted for any lease payments made at or before
the commencement date, plus any initial direct costs
incurred and an estimate of costs to dismantle and
remove the underlying asset or to restore the underlying
asset or the site on which it is located, as reduced by
any lease incentives received.
The lease liability is initially measured at the present
value of the lease payments, discounted using the
Company's incremental borrowing rate. It is remeasured
when there is a change in future lease payments arising
from a change in an index or a rate, or a change in the
estimate of the guaranteed residual value, or a change
in the assessment of purchase, extension or termination
option. When the lease liability is remeasured in this
way, a corresponding adjustment is made to the carrying
amount of the right-of-use asset or is recorded in profit
or loss if the carrying amount of the right-of-use asset
has been reduced to zero.
The right-of-use asset is measured by applying cost
model i.e. right-of-use asset at cost less accumulated
depreciation and cumulative impairment, if any. The
right-of-use asset is depreciated using the straight-line
method from the commencement date to the end of
the lease term or useful life of the underlying asset
whichever is earlier. Carrying amount of lease liability is
increased by interest on lease liability and reduced by
lease payments made.
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