Significant accounting policies

Basis of Preparation of Financial Statements

The financial statements of the company are prepared on going concern basis under historical cost convention on accrual basis in accordance with Generally Accepted Accounting Principles in India (Indian GAAP) to comply with accounting standards prescribed under section 133 of Companies Act, 2013, read with the Rule 7 of the Companies (Accounts) Rules, 2014 as amended and Companies(Accounting Standard) Rules, 2021. Further the guidance notes/ announcements issued by the institute of Chartered Accountants of India (“ICAI”) are also considered, wherever applicable except to the extent where compliance with other statutory promulgations overrides the same requiring a different treatment

The accounting policies adopted in the preparation of the financial statement are consistent with those followed in previous year. Presentation of Financial Statements:

The Balance Sheet and Statement of Profit and Loss are prepared and presented in the format prescribed in the Schedule IH (Division-1) to the Companies Act, 2013. The Cash Flow Statements has been prepared and presented as per the requirements of Accounting Standard (AS) 3 “Cash Flow Statements”. The disclosure requirements with respect to items in the Balance Sheet and Statement of Profit Loss, as prescribed in the Schedule HI ( Division-1) to the Act, are presented by way of notes forming part of accounts along with the other notes required to be disclosed under the applicable Accounting Standards.

Amounts in the financial statements are presented in INR and all values are rounded off to the nearest lakhs with the two decimal places, except when otherwise stated.

Use of Estimates:

The preparation of financial statements, in conformity with the Indian generally accepted accounting principles, requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. 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 difference between the actual results and estimates are recognized in the period in which the results are known /materialize.

Revenue Recognition:

i) Sales:

The revenue from sales of goods is recognized when;

- all significant risks and rewards of ownership are transferred to the buyer and the company retains no effective control of the goods transferred to a degree usually associated with ownership; and the same is measurable at the time of sale and

- no significant uncertainty exists regarding the amount of consideration that will be derived from the sale of goods.

- The revenue in respect of export benefits is recognized on post export basis at the time which the same is received.

ii) Insurance and Other Claims

Insurance and other claims are recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

iii) Interest

Income from interest is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

iv) Dividend

Dividend income from investment in shares is recognized when the right to receive payment is established.

Employee Benefits:

The Company has various schemes of employee benefit such as provident fund, employee state insurance corporation (ESIC), gratuity and compensated absences which are dealt as under

a) Short Term Employee Benefits:

Short term employee benefits are recognized as an expense on an undiscounted basis in the statement of profit and loss of the year in which the related service is rendered.These benefits also include leave encashment and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related services.

b) Post-Employment Benefits:

i) Defined Contribution Plans:

Provident Fund, Employee State Insurance Contribution (ESIC) and Employee Pension Scheme (EPS) are the defined contribution plans:

The contribution to these scheme are made in accordance with the provisions of Employee’s Provident Fund Act and Miscellaneous Provision Act, 1952 read with the Employee's Pension Scheme , 1995 and Employee State Insurance Corporation Act,1948 are charged to statement of profit and loss of the year in which contribution to such schemes become due and when services are rendered by the employees.

ii) Defined Benefit Plans:

Gratuity:

The liability for gratuity is provided on the basis of actuarial valuation carried out by an independent actuary at the balance sheet date using projected unit credit method. The present value of the company’s obligation is determined on the basis of actuarial valuation at the year end and the fair value of plan assets is reduced from the gross obligations under the gratuity scheme to recognize the obligation on a net basis.

iii) Other Employee Benefits Leave Encashment:

Compensated absences include earned leaves. Company has the policy of adjusting earned leaves with holidays taken by employees. If earned leaves remains after adjusting holidays then the same is paid to employees at year end itself.

c) Actuarial gain or loss

The actuarial gain/loss is recognized immediately in statement of profit and loss in the period in which they occur.

Property,plant and equipment:

Tangible Assets:

i) The property, plant and equipment are stated at historical cost less accumulated amount of depreciation and impairment losses, if any except Land at cost

ii) The cost of property, plant and equipment comprises of its purchase price (net of recoverable taxes) and any attributable expenditure (either direct or indirect) for bringing an asset to its working condition for its intended use and interest on loan taken for the acquisition of qualifying asset upto the date of asset is ready for its intended use; any trade discounts and rebates are deducted in arriving at the purchase price.

iii) Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably.

iv) Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under Long term loan and advances and the cost of assets not put to use before such date are disclosed under ‘Capital work-in-progress’.

Intangible Assets:

Intangible assets are stated at historical cost less accumulated amount of amortization and impairment losses, if any.

Depreciation

Depreciation on tangible assets is provided on the Written Down Value method based on useful life of the assets in the manner prescribed by Schedule II to the Companies Act, 2013. Depreciation method,useful lives and residual values are reviewed periodically at each financial year end. Depreciation on additions to / deletions from fixed assets made during the period is provided on pro-rata basis from / up to the date of such addition / deletion as the case maybe.

Operating Cycles:

Based on the nature of products/ activities of the company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and noncurrent.

Material Events:

Material events occurring after the balance sheet date are taken in to cognizance in accordance with the principles laid down in AS-4 " Contingencies and events occurring after the balance date".

Inventories:

Inventories are valued at cost or net realizable value whichever is lower. The cost of inventories is measured by using the following cost formula:

- Raw Material Cost or Net Realizable Value, whichever is lower.

- Store and Spares Cost plus direct expenses

- Work in Process Raw material cost plus conversion cost depending upon the stage of completion.

- Manufactured Finished Goods Raw material cost plus conversion cost and other overheads incurred to bring goods to their

present location and condition.

- Traded Finished Goods Cost plus direct expenses.

Borrowing Costs:

Borrowing Cost - Includes interest in relation to borrowing that are directly attributable to the acquisition or construction of qualifying assets are capitalized as part of cost of the assets. Qualifying asset is one that takes substantial period of time to get ready for its intended use. Other borrowing costs are recognized as expenses in the period in which these are incurred.

Leases

i) Company as a lessee

Assets acquired on leases where in a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals paid for such leases are recognized as an expense on systematic basis over the term of lease.

ii) Company as a lessor

Leases in which the company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Lease income from operating lease is recognized on a systematic basis over the term of the relevant lease. Assets subject to operating lease are included in Property, Plant & Equipment. Depreciation on these assets are recognized in the statement of Profit and Loss .

Foreign currency transactions conversion/translation:

i) Foreign currency transactions are recorded on initial recognition in the reporting currency, by applying to the foreign currency amount, the exchange rate between the reporting currency and the foreign currency at the date of transaction.

i) Foreign currency monetary items are reported using the closing rate as at the date of balance sheet. The exchange difference arising on the settlement of monetary items or on reporting these items at rate different from those at which they are initially recorded during the period or reported in the previous financial statements are recognized as income or expenses in the period in which they arise.

i) The premium or discount arising at the inception of a forward exchange contract is amortized as expense or income over the life of the contract. Exchange differences on such a contract are recognized in the statement of profit and loss in the reporting period in which the exchange rates change. Profit or Loss arising on cancellation or renewal of such a forward exchange contract is recognized as income or as expense in the period in which such profit or loss arises.

Earning per Share:

Basic earning per share are computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

Diluted earning per share is computed by taking into account the aggregate of the weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all the potential equity shares into equity shares.

Accounting for Taxes on Income:

The accounting treatment followed for taxes on income is to provide for Current Tax and Deferred Tax. Current Tax is the aggregate amount of income tax determined to be payable in respect of taxable income for period in accordance with the provisions of the Income Tax Act, 1961. Deferred tax is the tax effect of timing differences between taxable income and accounting income for the period that originate in one period and are capable of reversal in one or more subsequent periods.

Where there are unabsorbed depreciation or carry forward losses, deferred tax assets are recognized only if there is virtual certainty of realization of such assets supported by convincing evidence. In other circumstances, deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future. Such assets are reviewed as at each Balance Sheet date.

Deferred tax is measured using the tax rates and tax law enacted or substantively enacted as at the reporting date.

Deferred tax assets and deferred tax liabilities have been set off as it relates to income taxes levied by the same taxation authority. Impairment of Assets:

The carrying value of assets/ cash generating units at each balance sheet date are reviewed for impairment, if any indication for impairment exists, recoverable amount of such assets is estimated and impairment is recognized, if the carrying amount of these assets exceeds their recoverable amount.The recoverable amount is the greater of the net selling price and their value in use . Value in use is arrived at by discounting the fiiture cash flows to their present value based on appropriate discount factor. When there is any indication that impairment loss recognized for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognized in the statement of profit and loss

Segment Information:

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/(loss) amounts are evaluated regularly by the executive management in deciding how to allocate resources and in assessing performance. Company has no seperate reportable segment on the basis of said criteria.

Cash flow statement:

The cash flow statement has been prepared using indirect method in accordance with the Accounting Standard (AS) - 3 on "Cash flow statements" specified under Section 133 of Company Act, 2013.

Cash and cash equivalent:

Cash and cash equivalent in the balance sheet comprise cash at banks, cash on hand and short term deposits with a maturity period of three months or less, which are subject to insignificant risk of changes in value.

Government Grants:

Government grants available to the company are recognized when there is a reasonable assurance of compliance with the conditions attached to such grants and where benefits in respect thereof have been earned and it is reasonably certain that the ultimate collection will be made.

Government grants of the nature of promoter's contribution is credited to capital reserve and treated as a part of shareholders's funds.Govemment grants related to depreciable assets is accounted for by reducing the gross value of concerned assets.

A government grant that becomes recievable as compensation for expense or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs shall be recognised in statement of profit or loss of the period in which it become receivable.

Government Grants are not recognised untill there is reasonable assurance that the company will comply with the conditions attaching to them and that the grants will be received.