3.1 Presentation and disclosure of financial statements
All assets and liabilities have been classified as current and non-current as per Company's normal operating cycle and
other criteria set out in the division II of Schedule III of the Companies Act, 2013, for a Company whose financial
statements are made in compliance with the Companies (India Accounting Standards) Rules, 2015. Deferred tax
liabilities are classified as non-current liabilities. Based on the nature of business and their realization in cash and cash
equivalents, 12 months has been considered by the Company for the purpose of current / non-current classification of
assets and liabilities.
3.2 Property, plant and equipment
The cost of an item of property, plant and equipment shall be recognised as an asset if, and only if it is probable that
future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. Items of property, plant and equipment (including capital-work-in progress) are measured at cost, which
includes capitalised borrowing costs, less accumulated depreciation and any accumulated impairment losses. Freehold
land is carried at historical cost less any accumulated impairment losses.
Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non¬
refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the
item to its working condition for its intended use and estimated costs of dismantling and removing the item and
restoring the site on which it is located. Any gain or loss on disposal of an item of property, plant and equipment is
recognised in profit or loss.
3.3 Depreciation on property, plant and equipment
a) Depreciation on property, plant and equipment (other than freehold land and capital work in progress) is provided
on SLM over the useful life of the relevant assets net of residual value whose life is in consonance with the life
mentioned in Schedule II of the Companies Act, 2013.
b) In the case of assets purchased, sold or discarded during the year, depreciation on such assets is calculated on pro¬
rata basis from the date of such addition or as the case may be, upto the date on which such asset has been sold or
discarded.
c) Depreciation on addition has been provided from the date of putting the assets into use.
3.4 Investment properties
Investment property is property held either to earn rental income or for capital appreciation or for both, but not for
sale in the ordinary course of business, use in the production or supply of goods or service or for administrative
purposes. Upon initial recognition, an investment property is measured at cost, including related transaction costs.
Subsequent to initial recognition, investment property is measured at cost less accumulated depreciation and
accumulated impairment losses, if any.
3.5 Intangible assets
i) Under the previous GAAP, intangible Assets acquired separately are measured on initial recognition at cost.
Following initial recognition intangible assets are carried at cost less any accumulated amortization. On transition to
Ind AS, the Company has availed the optional exemption under Ind AS 101 and accordingly it has used carrying value
as at the date of transition i.e. 1st April 2016 as the deemed cost of intangible assets under Ind AS.
ii) Subsequent to transition date, Intangible Assets acquired separately are measured on initial recognition at cost.
Following initial recognition intangible assets are carried at cost less any accumulated amortization. Intangible assets
are recognised only if it is probable that the future economic benefits attributable to the asset will flow to the
enterprise and the cost of asset can be measured reliably.
3.6 Inventories
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to it's present location and condition are accounted for as follows:
i) Raw Materials, Packing Materials & Stores & Spares: Costs include cost of purchase and other costs incurred in
bringing the inventories to their present location and condition. Costs is determined based on weighted average basis.
ii) Finished Goods and Work in Progress: Costs include cost of purchase and other costs incurred in bringing the
inventories to their present location and condition. Costs is determined based on weighted average basis.
3.7 Financial instruments
Initial Recognition
All financial instruments are recognized initially at fair value. Transaction costs that are attributable to the acquisition
of the financial asset (other than financial assets recorded at fair value through OCI) are included in the fair value of the
financial assets. Purchase or sales of financial assets that require delivery of assets within a time frame established by
regulation or convention in the market place (regular way trade) are recognised on trade date. While, loans and
borrowings and payables are recognised net of directly attributable transaction costs.
Subsequent Measurement
The classification of financial instruments depends on the objective of the business model for which it is held.
Management determines the classification of its financial instruments at initial recognition.
a) Non-derivative financial assets
(i) Financial assets at amortised cost
A financial asset shall be measured at amortised cost if both of the following conditions are met:
(a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect
contractual cash flows and
(b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest (SPPI) on the principal amount outstanding.
They are presented as current assets, except for those maturing later than 12 months after the reporting date which
are presented as non-current assets. Financial assets are measured initially at fair value plus transaction costs and
subsequently carried at amortized cost using the effective interest method, less any impairment loss. Trade
receivables, security deposits, cash and cash equivalents, employee and other advances and eligible current and non¬
current assets are measured at Amortized Cost.
(ii) Debt instruments at FVTOCI
A debt instrument shall be measured at fair value through other comprehensive income if both of the following
conditions are met:
(a) the objective of the business model is achieved by both collecting contractual cash flows and selling financial assets
and
(b) the asset's contractual cash flow represent SPPI Debt instruments included within FVTOCI category are
measured initially as well as at each reporting period at fair value plus transaction costs. Fair value movements are
recognised in other comprehensive income (OCI). However, the Company recognises interest income, impairment
losses & reversals and foreign exchange gain loss in statement of profit and loss. On derecognition of the asset,
cumulative gain or loss previously recognised in OCI is reclassified from equity to profit and loss. Interest earned is
recognised under the effective interest rate (EIR) model.
(iii) Equity instruments at FVTOCI
All equity instruments are measured at fair value. Equity instruments held for trading is classified as FVTPL. For all
other equity instruments, the Company may make an irrevocable election to present subsequent changes in the fair
value in OCI. The Company makes such election on an instrument-by-instrument basis. If the Company decides to
classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividend are
recognised in OCI which is not subsequently recycled to statement of profit and loss.
(iv) Financial assets at FVTPL
FVTPL is a residual category for financial assets. Any financial asset which does not meet the criteria for categorization
as at amortised cost or as FVTOCI, is classified as FVTPL.
In addition, the Company may elect to designate the financial asset, which otherwise meets amortised cost or FVOCI
criteria, as FVTPL if doing so eliminates or significantly reduces a measurement or recognition inconsistency. The
Company has not designated any financial asset as FVTPL. Financial assets included within the FVTPL category are
measured at fair values with all changes in the statement of profit and loss.
b) Non-derivative financial liabilities
(i) Financial liabilities at amortised cost
Financial liabilities at amortised cost represented by borrowings, trade and other payables are initially recognized at
fair value, and subsequently carried at amortized cost using the effective interest rate method.
.8 Revenue recognition
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue
can be reliably measured.
A. Sale of goods is recognized when the significant risks and rewards of ownership of the goods have passed to the
buyer and are recorded at the fair value of the consideration received or receivable, net of returns and allowances,
trade and volume discounts.
B. Interest income in respect to all the Debt Instruments and deposits which are measured at cost or at fair value
through other comprehensive income, is recorded using effective interest rate (EIR). EIR is the rate that exactly
discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter
period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial
liability. Interest Income is included in Other Income in the statement of profit and loss.
C. Export Benefits are recognized in the year of export
D. Revenue from rendering of services is recognised when the performance of agreed contractual task has been
completed.
E. Revenue from Operations is measured at the fair value of consideration received / receivable, taking into account
contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
3.9 Foreign currency transactions
Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the
transaction. As at the Balance Sheet date, foreign currency monetary assets and liabilities are translated at closing
exchange rate. The gains or losses resulting from such translations are included in net profit in the Statement of Profit
and Loss.
Non-monetary assets and non-monetary liabilities denominated in a foreign currency and measured at fair value are
translated at the exchange rate prevalent at the date when the fair value was determined.
Non-monetary assets and non-monetary liabilities denominated in a foreign currency and measured at historical cost
are translated at the exchange rate prevalent at the date of the transaction.
Transaction gains or losses realized upon settlement of foreign currency transactions are included in determining net
profit for the period in which the transaction is settled. Revenue, expense and cash flow items denominated in foreign
currencies are translated into the relevant functional currencies using the exchange rate in effect on the date of the
transaction.
3.10 Employee Benefits
(a) All the Short-Term Employee Benefits are accounted for on the basis of services rendered by the employees of the
company.
(b) Company contributes towards Provident Fund which is Defined Contribution schemes. Liability in in respect
thereof is determined on basis of contribution required to be made as per statutes/ rules.
(c) No provision has been made for Long Term Employee Benefits such as Gratuity and Leave Encashment as the same
are recognized as and when they become due for payment.
3.11 Borrowing Cost
Borrowing Costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized
as part of Cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready
for its intended use. All other borrowing costs are charged the Statement of Profit & Loss.
3.12 Taxes on income
Tax expenses for the year comprises of current tax, deferred tax charge or credit and adjustments of taxes for earlier
years. In respect of amounts adjusted outside profit or loss (i.e. in other comprehensive income or equity), the
corresponding tax effect, if any, is also adjusted outside profit or loss.
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are
recognised for all taxable temporary differences, and deferred tax assets are recognised for all deductible temporary
differences, carry forward tax losses and allowances to the extent that it is probable that future taxable profits will be
available against which those deductible temporary differences, carry forward tax losses and allowances can be
utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the
asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted at the reporting date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right
exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxation
authority.
3.13 Goods & Services tax (GST)
GST credit received on purchases is reduced from respective item of purchases. GST on Sales is credited to Payable
account and differential amount, if any, is paid. Thus, the company has followed exclusive method of accounting
whereby purchases, sales and stock is shown exclusive of GST and accounted for in separate account.
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