1. Significant Accounting Policies:-
Basis of Preparation of Financial Statements:-
The Financial Statements are prepared in accordance
with Indian Accounting Standards (Ind AS) notified under
Section 133 of the Companies Act, 2013 ("Act") read with
Companies (Indian Accounting Standards) Rules, 2015;
and the other relevant provisions of the Act and Rules
thereunder.
The Financial Statements have been prepared under
historical cost convention basis, except for certain assets
and liabilities measured at fair value.
The Company's presentation and functional currency is
Indian Rupees (Rs.). All figures appearing the financial
statements are rounded off to the Rupee, except where
otherwise indicated.
1.1 Authorization of Financial Statements:-
The preparation of Company's financial statements
requires management to make judgments, estimates and
assumptions that affect the reported amounts of revenue,
expenses, assets, liabilities and the accompanying
disclosures along with contingent liabilities. Uncertainty
about these assumptions and estimates could result
in outcomes that require material adjustments to the
carrying amounts of the assets or liabilities affected in
future periods. The Company continually evaluates these
estimates and assumptions based on the most recently
available information.
^ Assessment of functional currency;
^ Financial instruments;
^ Estimates of useful lives and residual value of Property,
Plant and Equipment and Intangible assets;
^ Valuation of Inventories
^ Measurement of Defined Benefit Obligations and
actuarial assumptions;
^ Provisions;
^ Evaluation of recoverability deferred tax assets; and
^ Contingencies.
Revisions to accounting estimates are recognised
prospectively in the Statement of Profit and Loss in the
period in which the estimates are revised and in any future
periods affected.
1.2 Property, Plant and Equipment
1.2.1 Property, Plant and Equipment are stated at cost net of
accumulated depreciation and accumulated impairment
losses, if any.
1.2.2 The initial costs of an asset comprises its purchase price
or construction costs (including import duties and non¬
refundable taxes), any costs directly attributable to bringing
the asset into the location and condition necessary for
it to be capable of operating in the manner intended by
management, the initial estimate of any decommissioning
obligation, if any, and borrowing cost for qualifying assets
(i.e. assets that necessarily take a substantial period of
time to get ready for their intended use).
1.2.3 Subsequent expenditure is capitalized only if it is probable
that the future economic benefits associated with the
expenditure will flow to the Company.
1.2.4 Spare parts which meet the definition of Property, Plant
and Equipment are capitalized as Property, Plant and
Equipment in case the unit value of the spare part is
above the threshold limit. In other cases, the spare part is
inventorised on procurement and charged to Statement of
Profit and Loss on consumption.
1.2.5 An item of Property, Plant and Equipment and any
significant part initially recognized separately as part of
Property, Plant and Equipment is de-recognized upon
disposal; or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising
on de-recognition of the asset is included in the Statement
of Profit and Loss when the asset is de-recognized.
1.2.6 The residual values and useful lives of Property, Plant and
Equipment are reviewed at each financial year end and
changes, if any are accounted in line with revisions to
accounting estimates.
1.2.7 Cost of assets not ready for use at the balance sheet date
is disclosed under Capital Work-in-Progress. Expenditure
during Construction period is included under Capital
Work-in-Progress & the same is allocated to the respective
Property, Plant and equipment on the completion of its
Construction.
1.3. Depreciation
Depreciation on Property, Plant and Equipment are
provided on straight line basis, over the estimated useful
lives of assets (after retaining the estimated residual value
of 5%). These useful lives determined are in line with the
useful lives as prescribed in the Schedule II of the Act.
1.3.1 Components of the main asset that are significant in value
and have different useful lives as compared to the main
asset are depreciated over their estimated useful life.
Useful life of such components has been assessed based
on historical experience and internal technical assessment.
1.3.2 Depreciation on spare parts specific to an item of Property,
Plant and Equipment is based on life of the related
Property, Plant and Equipment. In other cases, the spare
parts are depreciated over their estimated useful life based
on the technical assessment.
1.3.3 Depreciation is charged on additions/deletions on pro-rata
daily basis of addition/deletion.
1.4 Intangible Assets
1.4.1 Intangible assets are carried at cost net of accumulated
amortization and accumulated impairment losses, if any.
1.5 Investment Property
1.5.1 Investment property is property (land or a building - or
part of building - or both) held either to earn rental income
or a capital appreciation or for both, but not for sale in the
ordinary course of business, use in production or supply of
goods or services or for administrative purposes.
1.5.2 Any gain or loss on disposal of investment property
calculated as the difference between the net proceeds
and the carrying amount of the Investment Property is
recognised in Statement of Profit and Loss.
1.6 Borrowing Costs
1.6.1 Borrowing costs consist of interest and other costs incurred
in connection with the borrowing of funds. Borrowing costs
also include exchange differences to the extent regarded
as an adjustment to the borrowing costs.
1.6.2 Borrowing costs that are attributable to the acquisition
or construction of qualifying assets (i.e. an asset that
necessarily takes a substantial period of time to get ready
for its intended use) are capitalized as a part of the cost of
such assets. All other borrowing costs are charged to the
Statement of Profit and Loss.
1.7 Impairment of Non-financial Assets
1.7.1 Non-financial assets other than inventories, deferred tax
assets and non-current assets classified as held for sale
are reviewed at each Balance Sheet date to determine
whether there is any indication of impairment. If any such
indication exists, or when annual impairment testing for
an asset is required, the Company estimates the asset's
recoverable amount. The recoverable amount is higher of
the assets or Cash-Generating Units (CGU's) fair value less
costs of disposal and its value in use. Recoverable amount
is determined for an individual asset, unless the asset does
not generate cash inflows that are largely independent of
those from other assets or group of assets.
1.7.2 When the carrying amount of an asset or CGU exceeds its
recoverable amount, the asset is considered impaired and
is written down to its recoverable amount.
1.8 Inventories
1.8.1 The cost for the purpose of valuation of goods is arrived at
on FIFO basis and includes estimated Cost of conversion
and other cost incurred in bringing the inventories to their
present location and condition. Due allowance is estimated
and made for defective and obsolete items, wherever
necessary, based on the past experience of the Company.
The mode of valuing closing stock is as under:
^ Raw Materials, Packing goods and General
Stores are valued at cost or net realizable value,
whichever is less, excluding CENVAT, and VAT/GST
credit, by FIFO method.
^ Work-in-Process is valued at raw material cost
plus estimated overheads or net realizable value;
whichever is less but excluding CENVAT, VAT/GST
credit.
^ Finished Goods valued at cost including estimated
overheads or net realizable value whichever is less.
1.8.2 Obsolete, slow moving, surplus and defective stocks are
identified at the time of physical verification of stocks and
where necessary, provision is made for such stocks.
1.9 Revenue Recognition
1.9.1 Sale of Goods
Revenue from the sale of goods is recognized when the
significant risks and rewards of the ownership of the goods
have passed to the buyer, the Company retains neither
continuing managerial involvement to the degree usually
associated with ownership nor effective control over
the goods sold, revenue and the associated costs can be
estimated reliably and it is probable that economic benefits
associated with the transaction will flow to the Company.
Revenue from sale of goods excludes GST and is measured
at the fair value of the consideration received or receivable,
after the deduction of any trade discounts, volume rebates,
net of returns, taxes or duties collected on behalf of the
government.
Export Sales are accounted for on the basis of the date of
Bill of Lading.
1.9.2 Interest income is recognized using Effective Interest Rate
(EIR) method.
1.10 Classification of Income/ Expenses
1.10.1 Incomes and expenditures are recognized on accrual basis
except in case of significant uncertainty like claims payable
& receivable, which have been accounted on acceptance
basis. Purchases are reported of net of trade discounts,
returns and GST (to the extent refundable/ adjustable)
1.11 Employee benefits
1.11.1 Short term employment benefits
Short term employee benefits such as salaries, wages,
short-term compensated absences, performance
incentives etc., and the expected cost of bonus, ex-gratia
are recognized as an expense at an undiscounted amount
in the Statement of Profit and Loss of the year in which the
related services are rendered.
1.11.2 Defined Contribution Plans
^ Employee's Family Pension:
The Company has Defined Contribution Plan
for Post-employment benefits in the form of
family pension for all eligible employees, which
is administered by the Regional Provident Fund
Commissioner and is charged to revenue every
year. Company has no further obligation beyond
its monthly contributions.
^ Provident Fund:
The Company has Defined Contribution Plan
for Post-employment benefits in the form of
Provident Fund for all eligible employees; which
is administered by the Regional Provident Fund
Commissioner and is charged to revenue every
year. Company has no further obligations beyond
its monthly contributions.
1.11.3 Defined Benefit Plans
^ Gratuity:
The Company has defined benefit plan for Post¬
employment benefit in the form of Gratuity for
all employees. Liability for above defined benefit
plan is provided on the basis of actuarial valuation
as at the Balance Sheet date, carried out by an
independent actuary. The actuarial method used
for measuring the liability is the Projected Unit
Credit method.
^ Compensated Absences :
Liability for Compensated Absences is provided
on the basis of valuation, as at the Balance Sheet
date, carried out by an independent actuary. The
Actuarial valuation method used for measuring
the liability is the Projected Unit Credit method.
Under this method, the Defined Benefit Obligation
is calculated taking into account pattern of
availment of leave whilst in service and qualifying
salary on the date of availment of leave. In respect
of encashment of leave, the Defined Benefit
obligation is calculated taking into account all types
of the increment, salary growth, attrition rate and
qualifying salary projected up to the assumed date
of encashment.
1.11.4 Termination Benefits:
^ Termination benefits are recognised as an expense
as and when incurred.
1.11.5 The present value of the defined benefit obligation is
determined by discounting the estimated future cash
outflows by reference to market yields at the end of the
reporting period on Government bonds that have terms
approximating to the terms of the related obligation.
1.11.6 The net interest cost is calculated by applying the discount
rate to the net balance of the defined benefit obligation.
This cost is included in employee benefit expense in the
Statement of Profit and Loss.
1.11.7 Remeasurement gains and losses arising from experience
adjustments and changes in actuarial assumptions are
recognised in the period in which they occur directly
in Other Comprehensive Income. They are included in
retained earnings in the Statement of changes in equity
and in the Balance Sheet.
1.11.8 Changes in the present value of the defined benefit
obligation resulting from plan amendments or curtailments
are recognised immediately in profit or loss as past service
cost.
1.12 Foreign Currency Transactions
1.12.1 Monetary Items
Transactions in foreign currencies are initially recorded at
their respective exchange rates at the date the transaction
first qualifies for recognition.
Monetary assets and liabilities denominated in foreign
currencies are translated at exchange rates prevailing on
the reporting date.
Exchange differences arising on settlement or translation
of monetary items are recognised in Statement of Profit
and Loss either as profit or loss on foreign currency
transaction and translation or as borrowing costs to the
extent regarded as an adjustment to borrowing costs.
1.12.2 Non - Monetary items:
Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated using the
exchange rates at the dates of the initial transactions.
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