2 SIGNIFICANT ACCOUNTING POLICIES,
ASSUMPTIONS AND NOTES
2.1 BASIS OF PREPARATION
2.1.1 Ministry of corporate affairs has notified roadmap to
implement IND AS notified under Companies (Indian
Accounting Standard) Rules 2015 as amended by
the Companies (Indian Accounting Standard) Rules
2016. And according to the said roadmap the
company is required to apply IND AS in preparation
of financial statements from the financial year
beginning from 1st April 2017.
2.1.2 The Company has prepared its financial statements
as per the IND AS as applicable to the company from
the financial year beginning on April 1,2016 .
2.1.3 The significant accounting policies used in preparing
the financial statements are set out in Notes to the
Standalone Financial Statements.
2.1.4 The preparation of the financial statements requires
management to make estimates, judgements and
assumptions. Actual results could vary from these
estimates. The estimates, judgements and underlying
assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision
effects only that period or in the period of the revision
and future periods if the revision affects both current
and future years . The management believes that the
estimates used in preparation of the financial
statements are prudent and reasonable.
2.1.5 Amounts in these financial statements have, unless
otherwise indicated, have been rounded off to ‘rupees
in lakhs 'upto two decimal points.
2.2 Statement of Compliance
The financial statements comprising of the Balance
Sheet, Statement of Profit and Loss, Statement of
changes in equity, Statement of Cash Flow together
with notes comprising of a summary of Significant
Accounting Policies and Other Explanatory Information
for the year ended 31st March 2024 and comparative
information in respect of the preceding period have
been prepared in accordance with IND AS as notified
and duly approved by the Board of Directors, along
with proper explanation for material departures.
2.3 ACCOUNTING POLICIES
2.3.1 Basis of Measurement
The standalone financial statements have been
prepared on accrual basis and under the historical
cost convention except following which have been
measured at fair value:
a. Financial assets and liabilities except those carried at
amortised cost
b. Defined benefit plans - Plan assets measured at fair
value
The standalone financial statements are presented in
Indian Rupees, which is the Company's functional and
presentation currency.
2.3.2 Current versus non-current classification
The Company presents assets and liabilities in
statement of financial position based on current/non-
current classification.
The Company has presented non-current assets and
current assets before equity, non-current liabilities and
current liabilities in accordance with Schedule III,
Division II of Companies Act, 2013 notified by MCA.
An asset is classified as current when it is:
(a) Expected to be realised or intended to be sold or
consumed in normal operating cycle,
(b) Held primarily for the purpose of trading,
(c) Expected to be realised within twelve months after the
reporting period, or
(d) 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 classified as current when it is:
(a) Expected to be settled in normal operating cycle,
(b) Due to be settled within twelve months after the
reporting period, or
(c) There is no unconditional right to defer the settlement
of the liability for at least twelve months after the
reporting period. All other liabilities are classified as
non-current.
The operating cycle is the time between the acquisition
of assets for processing and their realisation in cash
or cash equivalents. Deferred tax assets and liabilities
are classified as non-current assets and liabilities.
2.3.3 Inventories
Inventories are valued at the lower of cost and net
realisable value.
Costs incurred in bringing each product to its present
location and condition are accounted for as follows :
Raw Materials: Cost includes cost of purchase and
other costs incurred in bringing the inventories to their
present location and condition. Cost is determined on
first in first out basis.
Finished Goods and Work in Progress: Cost includes
cost of direct materials and labour and a proportion of
fixed manufacturing overheads based on the normal
operating capacity. Cost is determined on first in first
out basis.
Traded Goods: Cost includes cost of purchase and
other costs incurred in bringing the inventories to their
present location and condition. Cost is determined on
first in first out basis.
Net realisable 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.
2.3.4 Statement of cash flows
Cash flows are reported using the Indirect method
as prescribed in IND AS 7 ‘Statement of Cash flows',
where by net profit before tax 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 expense
associated with investing or financial cash flows.
The cash flows from operating, investing and
financing activities of the Company are segregated.
2.3.5 Revenue recognition and other income
• Effective April 1,2018, the Company has applied Ind
AS 115 which establishes a comprehensive
framework for determining whether, how much and
when revenue is to be recognised. Ind AS 115 replaces
Ind AS 18 Revenue and Ind AS 11 Construction
Contracts. The Company has adopted Ind AS 115
using the cumulative effect method. The effect of
initially applying this standard is recognised at the
date of initial application (i.e. April 1,2018).The impact
of the adoption of the standard on the financial
statements of the Company is insignificant.Revenue
is recognised upon transfer of control of promised
products or services to customers in an amount that
reflects the consideration which the Company
expects to receive in exchange for those products
or services.
Revenue is measured based on the transaction price,
which is the consideration, adjusted for volume
discounts, service level credits, performance
bonuses, price concessions and incentives, if any,
as specified in the contract with the customer.
Revenue also excludes taxes collected from
customers
Other income
a Interest
• Interest income is accrued on a time basis, by
reference to the principal outstanding and at the
effective interest rate applicable, which is the rate
that exactly discounts estimated future cash receipts
through the expected life of the financial asset to that
asset's net carrying amount on initial recognition.
2.3.6 Property, Plant and Equipment
Property, plant and equipment are tangible items
that:(a) are held for use in the production or supply
of goods or services, for rental to others, or for
administrative purposes; and(b) are expected to be
used during more than one period.
Items such as spare parts, stand-by equipment and
servicing equipment are classified as inventory since
they do not meet the definition of PPE.
Initial recognition: The initial cost of property, plant
and equipment comprises its purchase price, including
non-refundable purchase taxes, and any directly
attributable costs of bringing an asset to working
condition and location for its intended use. It also
includes the initial estimate of the costs of dismantling
and removing the item and restoring the site on which
it is located.
Subsequent expenses and recognition:
Expenditure incurred after the property, plant and
equipment have been put into operation, such as
repairs and maintenance, are normally charged to the
Statement of Profit and Loss in the period in which the
costs are incurred. Major inspection and overhaul
expenditure is capitalized. Subsequently Property,
Plant and Equipment are carried at cost less
accumulated depreciation and accumulated impairment
losses, if any.
The gain or loss arising on the disposal or retirement
of an item of property, plant and equipment is
determined as the difference between the sales
proceeds and the carrying amount of the asset and is
recognized in the Statement of Profit and Loss on the
date of disposal or retirement.
Depreciation: Property, Plant and Equipments except
lease hold land are depreciated on Written Down
Method & SLM Method in the manner prescribed in
Schedule II to the Companies Act, 2013.
Financial Land Lease: Company has taken certain
lands on financial lease. The amount of lease has
been amortised over the period of lease.
Component accounting: When parts of an item of
property, plant and equipment have different useful
life, they are accounted for as separate items (Major
components) and are depreciated over the useful life
respectively.
Projects under which assets are not ready for
their intended use are disclosed under Capital
Work-in-progress.
2.3.7 Leases
Lease arrangements where the risks and rewards
incidental to ownership of an asset substantially vest
with the lessor are recognised as operating leases.
Lease hold land have been recognized as finance
lease as per IND -As 17 (Leases) and therefore
have been classified under the head of property
,plant and equipment and have been ammortised on
the basis of remaining life of the land on straight-line
basis.
Rental expense from operating leases is generally
recognised on a straight-line basis over the relevant
lease term other than where the rentals are
structured solely to increase in line with expected
general inflation to compensate for the increase in
lessor's expected inflationary cost, such increase is
recognised in the year in which such benefits accrue.
In the event that lease premiums are paid to enter
into operating leases, such premiums are recognised
as a prepaid expenditure and amortised over the
period of lease.
2.3.8 Employee benefit expenses
a. Short - term Employee Benefits:-
All employee benefits payable wholly within twelve
months of rendering the service are classified as
short-term employee benefits and they are recognised
in the period in which the employee renders the related
services.
The Company recognises the undiscounted amount
of short term employee benefits expected to be paid
in exchange for services rendered as a liability after
deducting any amount already paid.
Bonus and Leave encashment expenses are paid in
the year in which they are incurred. Hence, they are
classified as short term benefits.
b. Post-employment Benefits:-
(a) Defined Contribution Plan: Contribution to PF
and ESI is recognised as an expense in the Statement
of Profit & Loss as it is incurred. There are no other
obligations other than the contribution payable to the
respective trust. Eligible employees receive benefits
from a provident fund which is a defined contribution
plan. Both the eligible employee and the Company make
monthly contributions to the provident fund plan equal
to a specified percentage of the covered employee's
salary.
(b) Defined Benefit Plans : Retirement benefits in the
form of gratuity is determined on the basis of an
actuarial valuation using the projected unit credit
method as at Balance Sheet date.
2.3.9 Borrowing Cost
Borrowing cost that are attributable to the acquisition
or construction of qualifying assets are capitalized as
part of the cost of such assets. A qualifying assets is
one that takes necessarily substantial period of time
to get ready for its intended use. All other borrowing
cost are charged to revenue.
2.3.10 Earnings per share
• Basic earnings per share is computed using the net
profit for the year attributable to the shareholders'
and weighted average number of shares outstanding
during the year.
• Diluted earnings per share is computed using the net
profit for the year attributable to the shareholder' and
weighted average number of equity and potential
equity shares outstanding during the year, except
where the result would be anti-dilutive.
2.3.11 Impairment of assets
An asset is considered as impaired when at the date
of Balance Sheet there are indications of impairment
and the carrying amount of the asset exceeds its
recoverable amount (i.e. the higher of the fair value
less cost to sell and value in use). The carrying
amount is reduced to the recoverable amount and
the reduction is recognized as an impairment loss in
the Statement of Profit and Loss. Any impairment gain
loss is transfarred to profit and loss.
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