Note 1 : Significant Accounting Policies And Practices
A. Statement of Compliance
The financial statements of the Company have been prepared in accordance with accounting principles generally
accepted in India (Indian GAAP). These financial statements have been prepared to comply in all material respects
specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and Companies
(Accounting Standards) Rules, 2021 as amended from time to time.
B. Basis of Preparation
The financial statements have been prepared on an accrual basis and under the historical cost convention. The
accounting policies adopted in the preparation of financial statements are consistent with those of previous year.
Items included in the financial statements of the Company are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency') The Indian Rupee (INR) is the functional and
presentation currency of the company.
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs (‘00000) as per
the requirement of Schedule III (except per share data), unless otherwise stated.
C. Operating Cycle
All the assets and liabilities have been classified as current as per the Company's normal operating cycle and other
criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between
the acquisition of assets for processing and their realization in cash and equivalent, the Company has ascertained its
operating cycle to be 12 months for the purpose of current-non-current classification of assets and liabilities.
D. Use of Estimates
The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates
and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the
reported income and expenses during the year. The Management believes that the estimates used in preparation
of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the
differences between the actual results and the estimates are recognised in the periods in which the results are known
/ materialise.
While preparing standalone financial statements in conformity with AS, the management has made certain estimates
and assumptions that require subjective and complex judgments. These judgments affect the application of accounting
policies and the reported amount of assets, liabilities, income and expenses, disclosure of contingent liabilities at the
statement of financial position date and the reported amount of income and expenses for the reporting period. Future
events rarely develop exactly as forecasted and the best estimates require adjustments, as actual results may differ
from these estimates under different assumptions or conditions
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized prospectively.
E. Cash Flow Statement (AS : 3)
Cash Flow statement has been prepared under the “Indirect Method” as set out in Accounting standard - 3 ‘Cash Flow
statements'.
F. Current and 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 :
i) Expected to be realised or intended to be sold or consumed in normal operating cycle.
ii) Held primarily for the purpose of trading
iii) Expected to be realised within twelve months after the reporting period, or
iv) 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:
i) It is expected to be settled in normal operating cycle
ii) It is held primarily for the purpose of trading
iii) It is due to be settled within twelve months after the reporting period, or
iv) 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 respectively.
G. Inventories (AS : 2)
a. Raw Materials - These inventories are valued at lower of cost or realizable value.
b. Work in Process - These inventories are valued at estimated completion of the Job which would include the
material cost and proportionate conversion/processing cost.
c. Manufactured Finished Goods - These inventories are valued at lower of cost or net realizable value. The cost
of finished goods comprises of materials, direct labour, other direct costs and related production overheads and
excluding GST.
H. Cash and Cash Equivalents
Cash and cash equivalents comprises Cash-in-hand, Current Accounts, Fixed Deposits with banks. Cash equivalents
are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid
investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of
changes in value. Other Bank Balances comprises of cash and bank balances other than cash and cash equivalents
which has original maturity of more than three months and restricted balances.
I. Revenue Recognition (AS : 9)
i) Sale of goods
Revenue from the sale of goods is recognized when control of the goods has transferred to our customer and
when there are no longer any unfulfilled obligations to the customer. This is generally when the goods are
delivered to the customer, depending on individual customer terms, which can be at the time of dispatch or
delivery. This is considered the appropriate point where the performance obligations in our contracts are satisfied
as the Company no longer have control over the inventory.
ii) Sale of Services
Revenue from services rendered is recognised in Statement of Profit and Loss as the underlying services are
performed and recognised net of GST.
iii) Interest Income
Interest Income is recognized on a time proportion basis taking into account the amount outstanding and the
rate applicable.
iv) Dividend
Dividend income is recognized when right to receive dividend is established.
v) GST
GST on purchase of material has been deducted in the value of finished goods or services. Input credit in respect
of raw materials, packing materials, Stores and Spares, and capital expenditure has been accounted for on accrual
basis. Input Credit on capital goods has been deducted from the cost of such capital goods/GST where input tax
credit is allowed.
J. Property, Plant and Equipment & Intangible Assets (AS : 10)
i. Recognition and measurement
Property, Plant and Equipment (PPE) are capitalised at acquisition cost, including directly attributable costs such
as freight, insurance and specific installation charges for bringing the assets to working condition for use.
ii. Subsequent costs
Expenditure relating to existing PPE is added to the cost of the assets, where it increases the performance / life
of the asset as assessed earlier.
Capital work in progress if any, consists cost of fixed assets that are not ready for their intended use at the
reporting date.
iii. Derecognition
The carrying amount of an item of PPE is derecognized on disposal or when no future economic benefits are
expected from its use or disposal. The gain or loss arising from the derecognition of an item of PPE is measured
as the difference between the net disposal proceeds and the carrying amount of the item and is recognized in
the Standalone Statement of Profit and Loss when the item is derecognized.
iv. Depreciation
The Depreciation has been calculated in accordance with the Schedule II prescribed under Companies Act, 2013.
The Company depreciates its fixed assets over the useful life in the manner prescribed in Schedule II of the Act as
per WDV Method. Depreciation for assets purchased / sold during a period is proportionately charged. Individual
low cost assets (acquired for less than Rs.5,000/-) are depreciated in the year of acquisition. Depreciation on
additions to assets or on sale/discardment of assets is calculated on pro rata basis from the date of such addition
or up to the date of such sale/discardment as the case may be.
K. Transactions in Foreign Exchange (AS : 11)
Foreign currency transactions are translated into the respective functional currency using the exchange rates at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates
are recognised in profit or loss.
L. Investments (AS : 13)
Investments are classified into current and non-current investments. Investments which are readily realizable and
intended to be held for not more than one year from the date on which such investments are made, are classified as
current investments. All other investments are classified as non-current.
Non-current investments are carried individually at cost less provision for diminution, other than temporary, in the
value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of
investments include acquisition charges such as brokerage, fees and duties.
Gross income and Expenses from Investments have been stated separately in the statement of Profit and Loss as
specified in the statute governing the enterprise.
M. Employee Benefits (AS 15)
Short term benefits:
Short-term employee benefits are recognized as an expense at the undiscounted amount in the Statement of profit
and loss of the year in which the related service is rendered.
Long term benefits:
a) Defined Contribution Plan
The Company contributes to a recognised provident fund for all its employees. Contributions are recognised as
an expense when employees have rendered services entitling them to such benefits. The expense is recognized
at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and
losses in respect of post-employment and other long term benefits are charged to the Statement of profit and
loss.
b) Gratuity
The Company provides for its gratuity liability based on actuarial valuation as at the balance sheet date which is
carried out by an independent actuary using the Projected Unit Credit Method. Actuarial gains or losses arising
from experience adjustments and changes in actuarial assumptions are credited or charged to Statement of
Profit and Loss in the period in which such gains or losses arise.
c) Leave encashment
Leave encashment is accounted based on actuarial valuation. (The estimated losses/ gains are recognized in the
Statement of Profit and Loss in the year in which they arise.)
N. Borrowing Costs (AS : 16)
Borrowing costs that are attributable to the acquisition or construction of a qualifying assets are capitalised as part of
the cost of assets. A qualifying asset is one that necessary takes substantial period of time to get ready for its intended
use.
Basis of Capitalisation is the weighted average of the period's general purpose outstanding borrowing costs. All other
borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs
that the Company incurs in connection with the borrowing of funds.
O. Related Party Transaction (AS : 18)
Disclosure of transactions with related parties, as required by Accounting Standard 18 “Related Party Disclosure”
has been set out in a Notes to the Financial Statement. Related parties as defined under clause 3 of the Accounting
Standard have been identified based on representations made by key managerial personnel and information available
with the Company.
P. Leases (AS : 19)
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at
the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the
use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not
explicitly specified in an arrangement.
A lease is classified at the inception date as a finance lease or an operating lease.
Lease arrangements where the Company has substantially all the risks and rewards of ownership associated with
the leased assets are classified as finance leases. Assets taken on finance lease are recognised as fixed assets. An
equivalent liability is created at the inception of the lease. Rentals paid are apportioned between finance charge and
principal based on the implicit rate of return in the contract. The finance charge is shown as interest expense and the
principal amount is reduced from the liability. The assets acquired under the lease are depreciated over the lease term,
which is reflective of the useful life of the leased asset.
Operating lease payments are recognised as an expense in the Statement of Profit and Loss on a straight-line basis
over the lease term unless other systematic basis is more representative of the time pattern of the benefit.
Q. Earnings per share (AS : 20)
Basic earnings per share are calculated by dividing the net profit or loss for the year (after deducting preference
dividends and attributable taxes) attributable to equity share holders by the weighted average number of equity shares
outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for
events of fresh issue of equity shares.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year (after deducting preference
dividends and attributable taxes) attributable equity share holders and the weighted average number of equity shares
outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
R. Tax Expense (AS : 22)
Tax expense comprises both current and deferred taxes. The current charge for income taxes is calculated in accordance
with the relevant tax regulations. Deferred income taxes reflect the impact of current year timing differences between
taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is
measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date.
Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable
income will be available against which such deferred tax assets can be realized. Deferred tax assets are recognized on
carry forward of unabsorbed depreciation and tax losses only if there is virtual certainty that such deferred tax assets
can be realized against future taxable profits.
Unrecognized deferred tax assets of earlier years are re-assessed and recognized to the extent that it has become
reasonably certain that future taxable income will be available against which such deferred tax assets can be realized.
Deferred tax asset in respect of carry forward of unused tax credits and unused tax losses are recognized to the extent
that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry
forward of unused tax credits and unused tax losses can be utilized.
S. Impairment of Assets (AS : 28)
Assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying
amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher
of value in use and fair value less costs to sell), the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out
on the smallest Component of assets to which it belongs for which there are separately identifiable cash flows; its cash
generating units (‘CGUs').
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