1. MATERIAL ACCOUNTING POLICIES:
Basis of Preparation:
The financial statements of the company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015.
The financial statements have been prepared on the historical cost basis, except for certain financial Instruments (refer accounting policy regarding 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 as at the date of respective transactions
Use of Estimates and Judgments
The preparation of financial statements in conformity with Indian Accounting Standards requires the management of the company to make judgements, estimates and assumptions that affect the reported amounts of income and expenses, balances of assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period.
The said estimates are based on the facts and events, that existed at the reporting date, or that occurred after that date but provide additional evidence about condition exisiting at the reporting date.
The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could defer from these estimates.
Summary of material accounting policies information Current versus Non-Current Classification
The Company presents assets and liabilities in balance sheet based on current/ non-current classification. An asset is current when it is:
• Expected to be realised or intended to be sold or consumed in normal operating cycle
• Held primarily for the purpose of trading
• Expected to be realised within twelve months after the reporting period, or
• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
• All other assets are classified as noncurrent.
A liability is current when:
• It is expected to be settled in normal operating cycle.
• It is held primarily for the purpose of trading
• It is due to be settled within twelve months after the reporting period, or
• There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
• The Company classifies all other liabilities as non-current.
Deferred Tax Assets and Liabilities are classified as non-current Assets and Liabilities.
Advance tax paid is classified as Current Assets.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
Non-Financial Assets
Property, Plant and Equipment are stated at cost of acquisition less accumulated depreciation. The cost comprises purchase price including financing cost and directly attributable cost of bringing the asset to its working condition for the intended use. Amount of capital Subsidy received from the Government under TUF scheme against machineries has been reduced from the cost of the assets.
Intangible fixed assets acquired separately are measured on initial recognition at cost. They are stated at cost of acquisition less amortisation depreciation.
Gains or Losses arising from derecognition of a Tangible or intangible assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognized.
Depreciation and Amortisation Property, Plant and Equipment:
Property, Plant and Equipment are stated at cost, net of recoverable taxes, trade discount and rebates less accumulated depreciation and impairment losses, if any. Such cost includes purchase price, borrowing cost and any cost directly attributable to bringing the assets to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the assets. In case of land the Company has availed fair value as deemed cost on the date of transition to Ind AS.
Property, Plant and Equipment which are significant to the total cost of that item of Property, Plant and Equipment and having different useful life are accounted separately.
Depreciation on Property, Plant and Equipment is provided using Straight Line value method Depreciation is provided based on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013 except in respect of the following assets, where useful life is different than those prescribed in Schedule II;
Intangible Assets
Intangible Assets are stated at cost of acquisition net of recoverable taxes, trade discount and rebates less accumulated amortisation/depletion and impairment losses, if any. Such cost includes purchase price, borrowing costs, and any cost directly attributable to bringing the asset to its working condition for the intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the Intangible Assets.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.
Gains or losses arising from derecognition of an Intangible Asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset
is derecognised. The Company's intangible assets comprises assets with finite useful life which are amortised on a straight-line basis over the period of their expected useful life. A summary of amortisation/depletion policies applied to the Company's Intangible Assets to the extent of depreciable amount is as follows:
Amortisation of Intangible Fixed Assets is provided on the Straight Line Method
Any expenditure not meeting the recognition criteria of Intangible Asset is charged to Statement of Profit and Loss in entirety.
Finance Costs
Finance cost includes interest expenses on working capital, security deposits received from vendors, Bank Charges and interest on lease.
Employee Benefit expenses Short Term Employee Benefits:
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised as an expense during the period when the employees render the services.
Expected credit losses on trade receivables
The expected credit loss provision on trade receivables are based on assumptions about risk of default andexpected timing of collection. The Company uses judgment in making these assumptions and selecting theinputs to the expected credit loss calculation based on the Company's history of collections, customer'screditworthiness and market conditions at the end of each reporting period.
Impairment of Assets
At each Reporting date the Company assesses whether there is any indication that the Fixed Assets or cash generating units have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment, if any. Where it is not possible to estimate the recoverable amount of individual asset, the company estimate the recoverable amount of the cash generating unit to which the asset belong.
As per the assessment conducted by the company as at March 31st 2024 there were no indications that the fixed assets have suffered an impairment loss.
Financial Assets:
Financial Assets at fair value through Other Comprehensive Income:
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows and selling financial assets
Financial Assets at fair value through Profit and Loss:
Financial assets are measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of financial assets at fair value through profit or loss are immediately recognised in statement of profit and loss.
Cash and Cash Equivalents:
Cash and cash equivalents comprise of cash on hand, cash at banks, short-term deposits and short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Financial Liabilities:
Financial liabilities are subsequently carried at amortized cost using the effective interest method.
De-recognition of Financial Instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized when the obligation specified in the contract is discharged or cancelled or expires.
Fair value of financial instruments
In determining the fair value of its financial instruments, the Company uses Quoted (unadjusted) market prices in active markets for identical assets and liabilities.
Valuation of Inventories
Raw materials, stores & spares and packaging materials:
Lower of cost and net realisable value. However, materials and other items held for use in the production of finished goods are not written down below cost if the products in which they will be used are expected to be sold at or above their cost.
Finished Goods:
Lower of cost and net realisable value. Cost includes direct materials, labour and a proportion of manufacturing overheads based on the normal operating capacity.
Work-in-progress:
Lower of cost and net realisable value.
Cost is estimated at cost price of the finished product less estimated costs of completion.
Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Revenue from sale of goods is measured net of discount, returns &taxes and duties collected on behalf of the government. The following specific recognitions criteria must also be met before revenue is recognized:
Sale of Goods
Revenue from Sale of Goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of Goods. The company collects Goods & Services Tax (GST) on behalf of the Government and, therefore, these are not economic benefits flowing to the company. Hence they are excluded from the revenue.
Income from Services
Income from services is recognized as they are rendered, based on agreement / arrangement with the concerned parties.
Interest Income
Interest income is recognized on accrual basis.
Dividend
Dividend income is recognized when the company's right to receive Dividend is established.
Design & development Cost
Expenditure incurred on Design and development is charged to profit and loss account in the year it is incurred.
Foreign Currency Transactions
Foreign currency transactions are recorded in reporting currency by applying the rate prevailing on the date of transaction.
Monetary assets and liabilities denominated in foreign currency at the reporting date are translated at the year-end rates.
Non monetary items are reported at the exchange rate on the date of transaction. Realized gains/(losses) on foreign
currency transactions are recognized in the Profit & Loss Account.
Retirement and other Employee Benefits
i) Short-term employee benefits are recognised as expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.
ii) Gratuity, which is a defined benefit plan, is accrued based on an independent actuarial valuation, which is done based on project unit credit method as at the balance sheet date. The Company recognizes the net obligation of a defined benefit plan in its balance sheet as an asset or liability. Gains and losses through re-measurements of the net defined benefit liability/(asset) are recognized in other comprehensive income. In accordance with Ind AS, remeasurement gains and losses on defined benefit plans recognized in OCI are not to be subsequently reclassified to Statement of profit and loss. As required under Ind AS compliant Schedule III, the Company transfers it immediately to retained earnings.
iii) The company's liability towards leave entitlement benefits is accounted for on the basis of earned leave and provisions for the same is made at the end of the year.
iv) Contributions payable to recognized provident funds, which are defined contribution schemes, are charged to the statement of profit and loss.
v) Company's contribution during the year towards Government administration, PF, ESIC and MLWF are charged to Profit & Loss as incurred
vi) Provision for other retirement/postretirement benefit and leave encashment is made on the basis of actuarial valuation.
Income Taxes
Income tax expenses comprise current tax and deferred tax charged or credit.
Current tax is measured on the basis of estimated taxable income for the current accounting period in accordance with
the provisions of the Income Tax Act, 1961.
Deferred Tax is recognized, on timing differences, being the difference between taxable incomes and accounting income
that originate in one period and are capable of reversal in one or more subsequent periods.
Deferred tax assets and liabilities are measured based on the tax rates that are expected to apply in the period when assets is realized or liability is settled, based on taxed rates and tax laws that have been enacted or substantially enacted at the Reporting date.
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