1.2 SIGNIFICANT ACCOUNTING POLICIES
2.1 STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION
a. Compliance with Indian Accounting Standards (Ind - AS) :
The financial statements have been prepared in accordance with the Indian Accounting
Standards ('Ind AS') notified under Companies (India Accounting Standards) Rules,
2015. For all the periods upto and including year ended March 31, 2022, the Company
prepared, its financial statements in accordance with the Accounting Standards notified
under section 133 of the Companies Act 2013, read together with paragraph 7 of the
Companies (Accounts) Rules, 2014 ('Previous Indian GAAP').
The financial statements have been prepared on accrual and going concern basis. The
accounting policies are applied consistently to all the periods presented in the financial
statements, All the assets and liabilities have been classified as current and non¬
current as per the Company's normal operating cycle and other criteria as set out in
Division II of Schedule III to the Companies Act, 2013.
b. Historical Cost Convention
The financial statements have been prepared on a historical cost basis, except for the
followings:
- Certain financial assets and liabilities that are measured at fair value.
c. Functional and presentation currency
The financial statements are prepared in Indian Rupees ('Rs.'), which is the
Company's functional and presentation currency.
d. Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current /
non-current classification.
An asset is classified as current when it is: -
- expected to be realized, or intended to be sold or consumed in normal operating
cycle;
- held primarily for the purpose of trading;
- expected to be realized within 12 months after the reporting period; or
- cash or cash equivalent unless restricted from being exchanged or used to settle a
liability for at least 12 months after the reporting date.
All other assets are classified as non-current.
A liability is classified as current when it is:
- expected to be settled in the normal operating cycle;
- held primarily for the purpose of trading;
- due to be settled within 12 months after the reporting date; or
- there is no unconditional right to defer the settlement of the liability for at least 12
months after the reporting date.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities:
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Operating Cycle:
The operating cycle is the time between acquisition of assets for processing and their
realization in cash and cash equivalent. The Company has identified twelve months
as its operating cycle.
e. Use of estimates and judgments
The preparation of the financial statements requires management to make
judgements, estimates and assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities, and the accompanying disclosure and the
disclosure of contingent liabilities. Uncertainty about these estimates and
assumptions could result in outcomes that requires material adjustments to the
carrying amount of the assets and liabilities in future period/s.
These estimates and assumptions are based on the facts and events, that existed as
at the date of Balance Sheet, or that occurred after that date but provide additional
evidence about conditions existing as at the Balance Sheet date.
The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying values of assets and liabilities within the next financial
year are discussed below.
i. Useful lives of Property Plant and Equipment
The Property, Plant and Equipment are depreciated on a written down value
basis over their respective useful lives. Management estimates the useful lives
of these assets as detailed in Note- 3.1 below. Changes in the expected level
of usage, technological developments, level of wear and tear could impact the
economic useful lives and the residual values of these assets, therefore, future
depreciation charges could be revised and could have an impact on the profit
in future years.
ii. Taxes
Uncertainties exist with respect to the interpretation of complex tax
regulations, changes in tax laws, and the amount and timing of future
taxable income. Given the wide range of business relationships and the long
term nature and complexity of existing contractual agreements, differences
arising between the actual results and the assumptions made, or future
changes to such assumptions, could necessitate future adjustments to tax
income and expense already recorded. The Company establishes provisions,
based on reasonable estimates. The amount of such provisions is based on
various factors, such as experience of previous tax audits and differing
interpretations of tax regulations by the taxable entity and the responsible
tax authority. Such differences of interpretation may arise on a wide variety
of issues depending on the conditions prevailing in the respective domicile of
the companies.
iii. Impairment of Financial assets
The impairment provisions of financial assets are based on assumptions about
risk of default and expected loss rates. The Company uses judgement in
making these assumptions and selecting the inputs to the impairment
calculation, based on Company's past history, existing market conditions as
well as forward looking estimates at the end of each reporting period.
iv. Impairment of non-Financial assets
The Company assesses at each reporting date whether there is an indication
that an asset may be impaired. If any indication exists, or when annual
impairment testing for an asset is required, the Company estimates the
asset's recoverable amount. An assets recoverable amount is the higher of an
assets's fair value less cost of disposal and its value in use. It is determined
for an individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or Company's of assets.
Where the carrying amount of an asset exceeds its recoverable amount, the
asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. In
determining fair value less costs of disposal, recent market transactions are
taken into account. If no such transactions can be identified, an appropriate
valuation model is used. These calculations are corroborated by valuation
multiples, or other fair value indicators.
2.2 Property, Plant & Equipment
Property, Plant & Equipment are accounted for on historical cost basis (inclusive of the
cost of installation and other incidental costs till commencement of commercial
production) net of recoverable taxes, less accumulated depreciation and impairment loss,
if any. It also includes the initial estimate of the costs of dismantling and removing the
item and restoring the site on which it is located.
Subsequent costs are added to the existing asset's carrying amount or recognized as a
separate asset, as appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Company and the cost of the item can be
measured reliably. All other repairs and maintenance are charged to the Statement of
Profit and Loss during the period in which they are incurred.
Cost of leasehold land is amortized over the period of lease.
Depreciation on property, plant & equipment is provided on a pro-rate basis on written
down value basis, over the useful life of the assets estimated by the management, in the
manner prescribed in Schedule II of the Companies Act, 2013. The property, plant and
equipment costing upto Rs. 5,000/- are fully depreciated during the year of addition. The
asset's residual values, useful lives and method of depreciation are reviewed at the end
of each reporting period and necessary adjustments are made accordingly, wherever
required. In line with that the useful lives in the following cases which were different
from those prescribed in Schedule II of the Companies Act, 2013 till 31.03.2023 have in
the current financial year been adopted according to Schedule II of the Companies Act,
2013.
Based on usage pattern, internal assessment and technical evaluation carried out by the
technicians, the management now believes that the useful lives as as prescribed in
Schedule II of the Companies Act, 2013 best represent the period over which the
management expects to use these assets. Hence the management has revised its
estimate of the useful life of depreciable asset in line with Schedule II of the Companies
Act, 2013.
Gains or losses arising on retirement or disposal of property, plant and equipment are
recognized in the Statement of Profit and Loss.
Property, plant and equipment which are not ready for intended use as on the date of
Balance Sheet are disclosed as "Capital work-in-progress".
2.3 Investment Property
Property that is held for long- term rental yields or for capital appreciation or both, and
that is not occupied by the Company, is classified as investment property. Investment
properties are measured initially at cost, including transaction costs. Subsequent to
initial recognition, investment property is measured at cost less accumulated
depreciation and accumulated impairment losses, if any. Subsequent costs are added to
the carrying amount only when it is probable that it will increase its useful life. All other
repairs and maintenance are charged to the Statement of Profit and Loss during the
period in which they are incurred.
Investment property is derecognized when either it has been disposed off or when the
investment property is permanently withdrawn from use and no future economic benefit
is expected from its disposal. Any gain or loss arising on de-recognition of the
investment property is included in the Statement of Profit and Loss.
Transfers are made to / from investment property only when there is a change in its use.
Transfers between investment property is made at the carrying amount of the property
transferred.
2.4 Financial Instruments
A financial instrument is a contract that gives rise to a financial asset of one entity and a
financial liability or equity instrument of another entity.
2.5 Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and demand deposits with banks
which are short-term (three months or less from the date of acquisition), highly liquid
investments that are readily convertible into cash and which are subject to an
insignificant risk of changes in value.
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