2. Significant Accounting Policies
2.1 Property, Plant and Equipment
(a)Tangible Assets
(i) Recognition
Property Plant and Equipment are recorded at cost of acquisition with Construction Cost if any.
They are stated at historical cost less accumulated depreciation, amortization and impairment loss,
if any. Cost includes expenditure that is directly attributable to the acquisition of the items. The
fixed assets of the company are carried at cost of acquisition which includes the actual cost of the
assets, expenditure towards erection and commissioning and allocation of pre-operative expenses
during installation period.
(ii) Subsequent Expenditure
Subsequent expenditure is capitalized only if it is probable that the future economic benefits
associated with the expenditure will flow to the Company.
(iii) De-recognition
An item of property, plant and equipment is derecognized upon disposal or when no future
economic benefits are expected to arise from the continued use of assets.
(iv) Depreciation
Depreciation is calculated on cost of items of property, plant and equipment (other than freehold
land and properties under construction) less their estimated residual values over their estimated
useful lives using the straight line method basis in respect of buildings, plant and equipment,
furniture and fixtures, office equipment’s, Vehicle and other assets as per Schedule II of the
Companies Act,2013. Depreciation is generally recognized in the Statement of Profit and Loss.
Depreciation method, useful lives and residual values are reviewed at each financial year end and
adjusted, if appropriate. Based on technical evaluation and consequent advice, the management
believes that its estimates of useful lives best represent the period over which management
expects to use these assets. The useful lives of the Company’s Plant and Equipment are
considered on the basis of continuous process plant.
(b) Capital work-in-progress
Project under construction wherein assets are not ready for use in the manner as identified asset
for a period of time in exchange for consideration.
(c] Intangible Assets
(i) Initial Recognition and Classification
Intangible assets acquired separately are measured on initial recognition at cost. Intangible assets
are stated at cost less accumulated amount of amortization and accumulated impairment losses, if
any. Intangible assets are amortized on a straight line basis over the estimated useful economic of
such assets. An asset’s useful life is estimated based on an evaluation of the future economic
benefits expected of such assets.
Expenditure incurred on acquisition or development of software and such other Intangible Assets
are recognized as Intangible Assets, if it is expected that such assets will generate sufficient future
economic benefits.
(ii) Subsequent Expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits
embodied in the specific asset to which it relates. All other expenditures are recognized in profit
or loss as incurred.
(iii) Amortization
Amortization is calculated to write off the cost of intangible assets less their estimated residual
values over the estimated useful lives using the straight line method and is included in
depreciation and amortization in Statement of Profit and Loss. The estimated useful lives of
computer software are considered 3 to 5 Years. Amortization method, useful lives and residual
values are reviewed at the end of each financial year and adjusted, if appropriate.
(iv) De-recognition
An item of intangible asset is derecognized upon disposal or when no future economic benefits
are expected to arise from the continued use of asset.
(d) Impairment of Non-Financial Assets.
The Company’s non-financial assets are reviewed at each reporting date to determine whether
there is any indication of impairment, if any such indication exists, then the asset recoverable
amount is estimated.
An impairment loss is recognized if the carrying amount of an asset exceeds its estimated
recoverable amount. Impairment losses are recognized in the Statement of Profit and Loss.
In respect of assets for which impairment loss has been recognized in prior periods, the Company
reviews at each reporting date whether there is any indication that the loss has decreased or no
longer exists. An impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount. Such a reversal is made only to the extent that the asset’s
carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortization, if no impairment loss had been recognized.
2.2 Borrowing cost:
Borrowing costs are interest and other costs incurred in connection with the borrowing of funds.
Borrowing costs directly attributable to the acquisition or construction of qualifying asset that
necessarily takes a substantial period of time to get ready for its intended use are capitalized as
part of the cost of the respective asset until such time the assets are substantially ready for their
intended use. All other borrowing costs are recognized as an expense in the period in which they
are incurred and reported in finance costs.
2.3 Operating Cycle
Based on the nature of products/activities of the Company and the normal time between purchase
of raw materials and their realization in cash or cash equivalents, the Company has determined its
operation cycle within 12 months for the purpose of classification of its assets and liabilities as
current and non-current.
2.4 Current versus Non- Current Classification
The Company presents assets and liabilities in the Balance Sheet based on current / non-current
classification.
An asset/ liability is treated as current when it is: -
- Expected to be realized or intended to be sold or consumed or settled in normal operating
cycle
- Held primarily for the purpose of trading
- Expected to be realized/ settled 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.
- There is no unconditional right to defer the settlement of the liability for at least twelve
months after the reporting period.
All other assets and liabilities are classified as non-current. Deferred tax assets and liabilities are
classified as non-current assets and liabilities respectively.
2.5 Inventories:
Items of inventories are measured at lower of cost and net realizable value after providing for
obsolescence, wherever considered necessary. The Cost of Inventories comprises of all cost of
purchases, cost of conversion and other costs including manufacturing overheads incurred in
bringing the inventories to their present location and condition. Raw Materials & Stores & Spares
have been valued at cost on FIFO basis.
Finished Goods are valued at Retail price Method.
Net realizable value is the estimated selling price in the ordinary course of business, less
estimated costs of completion and estimated costs necessary to make the sale. Excess / shortages,
if any, arising on physical verification are absorbed in the respective consumption accounts.
2.6 Cash and cash equivalents:
Cash comprises Cash on hand and demand 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.
2.7 Cash Flow Statement
Cash flows are reported using the indirect method whereby the profit before tax is adjusted for the
effect of the transactions of a non cash nature, any deferrals or accruals of past and future
operating cash receipts or payments and items of income or expenses associated with investing or
financing cash flows. The cash flows from operating, investing and financing activities of the
Company are segregated.
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