(B) Significant Accounting Policies
1) Basis of Preparation of Financial Statement
These financial statements are prepared
in accordance with the Indian Accounting
Standards prescribed under section 133 of the
Act read with the Companies (Indian Accounting
Standards) Rules, 2015 as amended ("Ind AS")
and other accounting principles generally
accepted in India under the historical cost
convention on the accrual basis except for certain
financial instruments which are measured at fair
values. GAAP comprises mandatory accounting
standards as prescribed under Section 133 of
the Companies Act, 2013 ('Act') read with Rule
7 of the Companies (Accounts) Rules, 2014.
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.
2) Use of Estimates:
The preparation of the financial statements in
conformity with GAAP requires management to
make estimates and assumptions that affect the
reported balances of assets and liabilities and
disclosures relating to contingent liabilities as at
the date of the financial statements and reported
amounts of income and expenses during the
period. Examples of such estimates include
computation of percentage of completion which
requires the Company to estimate the efforts or
costs expended to date as a proportion of the
total efforts or costs to be expended, provisions
for doubtful debts, future obligations under
employee retirement benefit plans, income
taxes, post-sales customer support and the use-
full lives of fixed tangible assets and intangible
assets. Accounting estimates could change
from period to period. Actual results could differ
from those estimates. Appropriate changes
in estimates are made as the Management
becomes aware of changes in circumstances
surrounding the estimates. Changes in estimates
are reflected in the financial statements in
the period in which changes are made and, if
material, their effects are disclosed in the notes
to the financial statements.
3) Property, Plant and Equipment and Intangible
assets & Depreciation:
Tangible Assets:
All items of fixed assets are stated at historical
cost less accumulated depreciation. Historical
cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset's
carrying amount or recognized as a separate
asset, as appropriate, only when it is probable
that future economic benefits associated with
the item will flow to the Company and the cost of
the item can be measured reliably. The carrying
amount of any component accounted for as a
separate asset is derecognized when replaced.
All other repairs and maintenance expenses are
charged to profit or loss during the reporting
period in which they are incurred
Depreciation on fixed assets is provided on
pro rata basis as per WDV method based on
the estimated useful life of various assets, as
specified in Schedule II of the Companies Act,
2013.
Intangible Assets:
An intangible asset is recognized when it is
probable that the future economic benefits
attributable to the asset will flow to the
enterprise and where its cost can be reliably
measured. Intangible assets are stated at cost
of acquisition less accumulated amortization
and impairment losses, if any. Cost comprises
the purchase price and any cost attributable
to bringing the assets to its working condition
for its intended use which includes taxes
and allocated incidental expenditure during
development / acquisition and exclusive of Input
tax credit (IGST/CGST and SGST) or other tax
credit available to the Company.
Subsequent expenditure relating to intangible
assets is capitalized only if such expenditure
results in an increase in the future benefits
from such asset beyond its previously assessed
standard of performance.
Assets Acquired as Lease:
Leases under which the Entity assumes
substantially all the risks and rewards of
ownership are classified as finance leases. Such
assets are capitalized at fair value of the asset
or present value of the minimum lease payments
at the inception of the lease, whichever is lower.
Lease payments under operating leases are
recognized as an expense in the Proft and Loss
Account on a straight-line basis over the lease
term.
The cost of leasehold land is amortized over the
period of the lease. Leasehold improvements and
assets acquired on finance lease are amortized
over the lease term or useful life, whichever is
lower.
Advances paid towards the acquisition of
Property, Plant and Equipment
Advances paid towards the acquisition of
Property, Plant and Equipment, outstanding
at each balance sheet date are shown under
capital advances. The cost of the Property, Plant
and Equipment not ready for its intended use on
such date, is disclosed under capital work-in¬
progress.
4) Impairment of Assets:
An asset is treated as impaired when the
carrying cost of assets exceeds its recoverable
value. Impairment loss is charged to the
Statement of Profit and Loss in the year in
which an asset is identified as impaired. The
impairment loss recognized in prior accounting
period is reversed if there has been a change in
the estimate of recoverable amount.
5) Investments:
Investments are classified and measured
in accordance with Ind AS 109 - Financial
Instruments.
• Equity investments are measured at fair
value through profit or loss (FVTPL) unless
irrevocably designated at fair value through
other comprehensive income (FVOCI) at
initial recognition.
• Debt instruments are classified based
on the Company's business model and
contractual cash flow characteristics and
are measured at amortised cost, FVOCI, or
FVTPL accordingly.
• All investments are initially recognized at
fair value.
• Changes in fair value of investments
measured at FVTPL are recognized in the
Statement of Profit and Loss.
• Investments classified at FVOCI are
measured at fair value, and changes therein
are recognized in Other Comprehensive
Income (OCI).
• The Company assesses expected credit
losses (ECL) for debt investments where
applicable.
6) Inventories : The inventories are valued on the
following basis :
a) Raw Materials : Valued at Cost Price.
b) Finished goods : Valued at lower of Cost or
Net Realizable Value.
c) Stock in Process : Valued at Cost Price.
7) Employee Benefits:
All short term employee benefits are accounted
on undiscounted basis during the accounting
period based on services rendered by
employees.
The Company's contribution to Provident Fund
and Employees State Insurance Scheme is
determined based on a fixed percentage of the
eligible employees' salary and charged to the
Statement of Profit and Loss on accrual basis.
The Company's liability towards gratuity and
compensated absences, being defined benefit
plans are accounted for on the basis of an
independent actuarial valuation and actuarial
gains/losses are charged to the Statement of
Profit and Loss.
8) Revenue Recognition:
(A) Revenue/income and Cost / Expenditure
are generally accounted on accrual basis as
they are earned or incurred, except those
with significant uncertainties.
(B) Sales are recognized at the point of dispatch
of goods to the customers. Sales are net of
discounts, GST and returns.
(C) Interest income is recognized on time
proportion basis.
(D) Dividend on Investments is accounted when
approved by the shareholders' in the annual
general meeting.
(E) Insurance claim receivable is recognized
in the year of the loss to the extent
ascertainable.
(F) The CENVAT / GST Credit available on
purchase of raw materials / capital items and
other eligible inputs are adjusted against
GST payable on clearance of finished goods.
9) Foreign Currency Transaction:
Monetary assets and liabilities related to foreign
currency transactions remaining unsettled at
the end of the year are translated at year end
rates.
The difference in translation of monetary assets
and liabilities and realized gains and losses
on foreign transactions are recognized in the
Statement of Profit and Loss.
The premium or discount on forward exchange
contracts is recognized in the statement of
profit and loss over the period of the contract.
10) Accounting for Government Grants/Refunds:
Government grants/subsidies and refunds due
from Government Authorities are accounted
when there is reasonable certainty of their
realization.
11) Taxation
Tax expenses comprise current tax (amount of
tax for the period determined in accordance
with the Income Tax Regulations in India) and
deferred tax charge or credit (reflecting the
tax effects of timing differences between
accounting income and taxable income for the
period).
The deferred tax charge or credit and the
corresponding deferred tax liabilities or assets
are recognised using the tax rates that have been
enacted or substantively enacted by the Balance
Sheet date, Deferred tax assets are recognised
only to the extent there is reasonable certainty
that the assets can be realized in future; however,
when there is unabsorbed depreciation or carry
forward losses under taxation laws, deferred tax
assets are recognised only if there is a virtual
certainty of realization of such assets. Deferred
tax assets are reviewed at each Balance Sheet
date and written down or written up to reflect
the amount that is reasonably / virtually certain,
as the case may be, to be realized
Tax credit is recognised in respect of Minimum
Alternate Tax (MAT) as per the provisions of
Section 115JAA of the Income Tax Act, 1961
based on convincing evidence that the Company
will pay normal income tax within the statutory
time frame and is reviewed at each Balance
Sheet date.
Company has policy of not considering MAT tax
credit available to them under the Income Tax
Act.
12) Borrowing Cost:
Borrowing Costs relating to the acquisition/
construction of qualifying assets are capitalized
until the time all substantial activities necessary
to prepare the qualifying assets for their
intended use are complete. A qualifying asset is
one that necessarily takes substantial period of
time to get ready for its intended use. All other
borrowing costs are charge to revenue.
13) Earning Per Share:
Basic earning per share is calculated by
dividing the net profit or loss after tax for the
year attributable to Equity Shareholders of the
Company by the weighted average number of
Equity Shares outstanding during the year.
Diluted earning per Share is calculated by
dividing net profit or loss attributable to equity
Shareholders by the weighted average number
of equity shares outstanding during the year
with adjustment of all dilutive potential equity
shares.
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