3. Summary of Significant Accounting Policies
This note provides a list of the significant accounting policies adopted in the preparation of these
financial statements. These policies have been consistently applied to all the years presented,
unless otherwise stated.
i. Income
(i) Revenue from Sate of Goods and Services
Revenue from contracts with customers for sale of goods or services is recognised when the
Company satisfies performance obligation by transferring promised goods or services to the
customer at an amount that reflects the consideration which the Company is expected to be entitled
to in exchange for those goods or services.
Revenue is measured based on the transaction price, which is the consideration, adjusted for trade
discounts, incentives and returns, if any, as specified in the contract with the customer. Revenue
also excludes taxes collected from customers. The trade discounts incentives and right of return are
estimated and provided for, based on historical, current and forecast information available. A refund
liability is recognised for expected returns in relation to sales made, corresponding assets are
recognised for the products expected to be returned.
The Company does not expect to have any contract where the period between the transfer of the
promised goods or services to the customer and payment by the customer exceed one year. As a
consequence, the Company does not adjust any of the transaction prices for the time value of
money.
(ii) Dividend Income
Dividend income on equity shares is recognised when the Company's right to receive the payment
is established, which is generally when shareholders approve the dividend. During the year the
Company has not received any income from dividend.
ii. Expenditures
(i) Finance costs
Borrowing costs on financial liabilities are recognised using the Effective Interest Rate (EIR).
iii. Cash and cash equivalents
Cash and cash equivalents include cash on hand, 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.
Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit for the period is adjusted for the
effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating
cash receipts or payments and item 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.
iv. Financial Assets
Financial assets include cash, or an equity instrument of another entity, or a contractual right to
receive cash or another financial asset from another entity. Few examples of financial assets are
loan receivables, investment in equity and debt instruments, trade receivables, cash and cash
equivalents
All Financial assets are recognized initially at fair value plus, in the case of financial assets not
recognized at fair value through profit and loss, transaction costs that are attributable to the
acquisition of the financial asset. Financial assets are subsequently measured at amortized cost
using effective interest rate method (EIR)
v. Financial Liabilities
Financial liabilities include liabilities that represent a contractual obligation to deliver cash or another
financial assets to another entity, or a contract that may or will be settled in the entities own equity
instruments. Few examples of financial liabilities are trade payables, debt securities and other
borrowings and subordinated debts.
vi. Taxes
(i) Current Tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid
to the taxation authorities, in accordance with the Income Tax Act, 1961 and the Income
Computation and Disclosure Standards (ICDS) prescribed therein. The tax rates and tax laws used
to compute the amount are those that are enacted or substantively enacted, at the reporting date.
(ii) Deferred Tax
Deferred tax is provided using the Balance Sheet approach 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 recognized for deductible temporary differences to the extent that it is probable that taxable
profits will be available against which the deductible temporary differences can be utilised.
The carrying amount of deferred tax assets is 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 asset to be utilised. Unrecognised deferred tax assets, if any, are reassessed at
each reporting date and are recognised to the extent that it has become probable that future taxable
profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the
year when the asset is realised 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 taxable
entity and the same taxation authority.
vii. Property, Plant and Equipment
Property, plant and equipment are carried at historical cost of acquisition less accumulated
depreciation and impairment losses, consistent with the criteria specified in Ind AS 16 ‘Property,
Plant and Equipment’.
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