II SIGNIFICANT ACCOUNTING POLICIES
a. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements of the company have been prepared in accordance with the Indian Accounting Standards (Ind AS)
notified under the Companies (Indian Accounting Standards) Rules 2015 as amended from time to time by the Ministry of
Corporate Affairs (MCA), the provisions of Companies Act, 2013, and guidelines issued by the Securities and Exchange Board of
India (SEBI). 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.
Financial statements of the company are prepared under the historical cost convention except for the certain financial assets
and liabilities measured at fair value as mentioned in applicable accounting policies.
b. USE OF ESTIMATES AND JUDGEMENTS
The preparation of the financial statements is 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 period. Accounting estimates could change from period to period.
Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware
of changes in circumstances surrounding the estimates.
The estimates and underlying assumptions are reviewed on going concern basis.
Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that
period, in the period of the revision and future periods if the revision affects both current and future
c. CLASSIFICATION OF EXPENDITURE/INCOME
Except Otherwise Indicated:-
(i) All expenditure and income are accounted for under the natural heads of account.
(ii) All expenditure and income are accounted for on accrual basis except when ultimate realisation of income is uncertain.
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 treated as 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 non-current.
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.
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.
e. REVENUES
(i) Revenues from sales of goods are recognized when the significant risk and rewards of the ownership of the goods have
been transferred to the buyer, recovery of the consideration is probable, the associated costs and involvement with,
the goods and the amount of revenue can be measured reliably. The timing of transfers of risks and rewards normally
happen upon shipment.
(ii) Sales returns / rate differences are adjusted from the sales of the year in which the returns take place / rate differences
accepted.
(iii) Further, revenues are recognized at gross value of consideration received excluding the amount of Goods & Service
Tax(GST).
f. PROPERTY, PLANT AND EQUIPMENT (PPE)
Recognition and measurement:
Property, plant and equipment are initially recognized at cost of acquisition or construction after deducting refundable
purchase taxes and including the cost directly attributable for bringing the asset to the location and conditions necessary for it
to be capable of operating in the manner intended by the management, borrowing cost in accordance with the established
accounting policy, cost of restoring and dismantling, if any, initially estimated by the management. After the initial recognition
the property, plant and equipment are carried at cost less accumulated depreciation and impairment losses.
Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.
The estimated useful lives, residual values and depreciation method are reviewed at each financial year end and the effect of
any change is accounted for on prospective basis. Depreciation on plant & equipment's are provided as per below schedule:-
The carrying amount of the all property, Plant and equipment are derecognized on its disposal or when no future economic
benefits are expected from its use or disposal and the gain or loss on de-recognition is recognized in the statement of profit &
loss.
Advances paid towards the acquisition of property, plant and equipment outstanding at each Balance Sheet date is classified as
capital advances and cost of assets not put to use before such date are disclosed under 'capital work-in-progress'.
g. INVENTORIES
Raw materials, stock-in-trade, work-in-progress, finished goods and packing materials are valued at the lower of weighted
average cost and net realizable value. Cost of finished goods and work-in-progress includes cost of materials, direct labour and
an appropriate portion of overheads to bring the inventory to the present location and condition. Stores and maintenance
spares are valued at average cost.
The net realizable value of work-in-progress is determined with reference to the selling price of related finished goods. Raw
materials and other supplies held for use in production of inventories are not written down below cost except in cases where
material prices have declined and it is estimated that the cost of the finished products will exceed their net realizable value.
Obsolete stocks are identified every year on the basis of technical evaluation and are charged off to revenue.
Finished goods expiring within 60 days(near expiry inventory) as at the balance sheet date have been fully provided for.
h. CASH AND CASH EQUIVALENTS
For the purpose of presentation in the cash flow statement, cash and cash equivalents includes cash on hand, deposits held at
call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that
are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value
i. TRADE RECEIVABLES
T rade receivables represents amount billed to customers as credit sales and are net off;
a. any amount billed but for which revenues are reversed under the different accounting standard and
b. Impairment for trade receivables, which is estimated for amounts not expected to be collected in full."
j. FINANCIAL INSTRUMENTS
Initial recognition
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the
instrument. All financial assets and liabilities are recognized at fair value on initial recognition, except for trade
receivables/payables and where cost of generation of fair value exceeds benefits, which are initially measured at transaction
price. Transaction costs directly related to the acquisition or issue of the financial assets and financial liabilities (other than
financial assets and financial liabilities through profit & loss account) are added to or deducted from the cost of financial assets
or financial liabilities. Transaction cost directly attributed to the acquisition of financial assets or financial liabilities at fair value
through profit & loss account are recognized immediately in the statement of profit & loss.
Subsequent measurement
(i) Financial assets carried at amortized cost: A financial asset is subsequently measured at amortized cost if it is held within
a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms
of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
(ii) Financial assets at fair value through other comprehensive income: A financial asset is subsequently measured at fair
value through other comprehensive income if it is held within a business model whose objective is achieved by both
collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Company has made an irrevocable election for its investments which are classified as equity instruments (all being not held
for trading), to present the subsequent changes in fair value in other comprehensive income based on its business model.
Fair value of the listed equity instruments are measured using the rate quoted in the stock exchange wherein the securities are
actively traded as on the last working day of the period of reporting. In respect of unlisted equity instruments, fair value is
determined based on the latest audited financial statements and considering the open market information available, failing
which it shall be measured at cost..
(c) Financial liabilities
(i) Financial liabilities are initially recognized at the fair value of the consideration received less directly attributable
transaction cost.
(ii) Subsequent to initial measurement, financial liabilities are measured at amortised cost. The difference in the initial
carrying amount of the financial liabilities and their redemption value is recognized in the statement of profit & loss over
the contractual term using the effective interest rate method. This category includes the following class of liabilities;
trade and other payables, borrowing; and other financial liabilities.
(iii) Financial liabilities are further classified as current and non-current depending whether they are payable within 12
months after the balance sheet date or beyond.
(iv) Financial liabilities are derecognized when the company is discharge from its obligation; they expire, are cancelled or
replaced by a new liability with substantial modified terms
k. IMPAIRMENT
Financial assets
The company recognizes loss allowances using the expected credit loss model for the financial assets which are not fair valued
through statement of profit and loss. Loss allowance on trade receivables, with no significant financing component is measured
at an amount equal to lifetime expected credit loss. For all financial assets expected credit losses are measured at an amount
equal to 12-month ECL unless there has been significant increase in credit risk from initial recognition in which case these are
measured at lifetime expected credit loss. The amount of expected credit losses or reversal that is required to adjust the loss
allowance at the reporting date to the amount that is required to be recognized is recognized as an impairment gain or loss in
the profit or loss for the period.
Intangible assets, property, plant and equipment
Intangible assets, property plant & equipment are evaluated for recoverability wherever events or changes in circumstances
indicate that their carrying amount may not be recoverable.
For impairment testing, assets that do not generate independent cash flows are grouped together into cash generating units
(CGUs).
For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value in
use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of
those from other assets. In such cases, the recoverable amount is determined for the CGU to which the asset belongs.
If such asset is considered to be impaired, the impairment to be recognized in the statement of profit and loss is measured by
the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment
loss is reversed in the statement of profit & losses if there have been changes in the estimates used to determine the
recoverable amount. The carrying amount is increased to its revised recoverable amount, provided that this amount does not
exceeds the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no
impairment loss has been recognized for the asset in prior years.
l. EARNING PER SHARE
Basic Earnings Per Share is computed by dividing the net profit attributable to the equity shareholders of the company to the
weighted average number of Shares outstanding during the period & Diluted earnings per share is computed by dividing the
net profit attributable to the equity shareholders of the company after adjusting the effect of all dilutive potential equity shares
that were outstanding during the period, the weighted average number of shares outstanding during the period including the
weighted average number of equity shares that could have issued upon conversion of all dilutive potential.
m. INCOME TAXES
Income tax expense or credit represents the sum of the current tax and deferred tax.
Current and deferred tax is recognised in the Statement of Profit and Loss except to the extent it relates to items recognised in
'Other comprehensive income' or directly in equity, in which case it is recognised in 'Other comprehensive income' or directly
in equity, respectively.
Current income tax
Current tax payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the Statement of
profit and loss because some items of income or expense are taxable or deductible in different years or may never be taxable
or deductible. The Company's current tax is calculated using tax rates that have been enacted or substantively enacted by the
end of the reporting period.
Current tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current
tax liabilities and when they relate to income taxes levied by the same taxation authority. The Company periodically evaluates
positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and
establishes provisions where appropriate. It establishes provisions where appropriate on the basis of amounts expected to be
paid to the tax authorities.
MAT credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay
normal income tax during the specified period. In the year in which the Minimum Alternative tax (MAT) credit becomes eligible
to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of
Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as
MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of
MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal
Income Tax during the specified period.
Deferred Tax
Deferred tax is provided using the balance sheet approach on temporary differences at the reporting date between the tax
bases of assets and liabilities and their carrying amounts for financial reporting purpose at reporting date.
Deferred income tax assets and liabilities are measured using tax rates and tax laws 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. The effect of changes in tax rates on deferred income tax assets and
liabilities is recognized as income or expense in the period that includes the enactment or the substantive enactment date. A
deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available against
which the deductible temporary differences and tax losses can be utilized.
The carrying amount of deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred tax assets to be utilised. Unrecognized
deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that
future taxable profits will allow deferred tax assets to be recovered.
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.
n. EMPLOYEE BENEFITS EXPENSES AND LIABILITIES IN RESPECT OF EMPLOYEE BENEFITS ARE RECORDED IN ACCORDANCE WITH
INDIAN ACCOUNTING STANDARD 19 - EMPLOYEE BENEFITS.
(i) Provident Fund
The Company pays contributions toward provident fund to the regulatory authorities as per local regulations where the
Company has no further payment obligations. The contributions are recognised as employee benefit expense when they
are due.
The Company makes contribution Employee State Insurance in accordance with Employee State Insurance Act, 1948.
The Company has no obligation, other than the contribution payable to the provident fund.
(ii) Gratuity and other post-employment benefits
Gratuity is a post-employment benefit and is in the nature of a defined benefit plan. The liability recognised in the balance
sheet in respect of gratuity is the present value of the defined benefit/obligation at the balance sheet date less the fair
value of plan assets, together with adjustment for unrecognized actuarial gains or losses and past service costs. The defined
benefit/obligation is calculated at or near the balance sheet date by an independent actuary using the projected unit credit
method.
Gains and losses through re-measurements of the net defined benefit liability/(asset) are recognized in other
comprehensive income. The actual return of the portfolio of plan assets, in excess of the yields computed by applying the
discount rate used to measure the defined benefit obligations recognized in Other Comprehensive Income. The effect of
any plan amendments are recognized in net profits in the Statement of Profit and Loss.
(iii) Other Short Term Benefits
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12months
after the end of the period in which the employees render the related service are recognised in respect of employees'
services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities
are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
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