NOTE 2 : Summary of material Accounting Policies
1. Basis of preparation of Financial Statements and statement of Compliance.
a) These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS), notified under
section 133 of the Companies Act, 2013 read with Rule 3 of the Companies ( Indian Accounting Standards) Rules,
2015, under the historical cost convention on accrual basis, except for certain financial instruments (including derivatives
instruments) and defined benefit plans - Plan assets, which are measured at fair values, as specified at places of respective
categories.
b) All the assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle
and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and the time
between the acquisition of assets for processing and their realization in cash and cash equivalent, the Company has
ascertained its operating cycle to be twelve months for the purpose of current - non-current classification of assets and
liabilities.
c) Accounting policies not specifically referred to otherwise are consistent with the generally accepted accounting principles
followed by the Company.
d) The financial statements of the company for the year ended 31st March 2025 were approved for issue in accordance with
the resolution of the Board of Directors on 15th May 2025.
2. Property, Plant and Equipment (PPE) and Depreciation
A) Property Plant and Equipment: Recognition and measurement
a) Freehold land is carried at historical cost. All other Tangible assets are stated at cost of acquisition or construction,
less accumulated depreciation and any accumulated impairment loss if any. All costs, including borrowing cost till
respective assets is put to use, are capitalized. Purchase price includes import duties.
The cost of an item of PPE comprises:
- Its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts
and rebates
- Any cost directly attributable to bringing the asset to the location and condition necessary for it to be capable of
operating in the manner intended by management
Where cost of a part of an asset (asset component) is significant to total cost of the asset and useful life of that part
is different from the useful life of the remaining asset, useful life of that significant part is determined separately, and
such asset component is depreciated over its separate useful life.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is
classified as capital advances under other non-current assets and the cost of assets not put to use before such date
are disclosed under ‘Capital work-in-progress’.
b) Intangible assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses,
if any.
c) Fosses arising from the retirement of and gains & losses arising from disposal of fixed assets, which are carried at
cost, are recognized in the statement of profit & loss.
B) Subsequent expenditure
Subsequent costs are included in the carrying amount of asset 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 are charged to Statement of Profit and Loss during the year in which
they are incurred.
(iv) Leasehold Improvements are written off over the period of lease or lease term whichever is shorter.
(v) Intangible assets comprising of software capitalized is amortized over a period of 3 years. Intangible assets comprising
of cost incurred, Patent capitalized is amortized over a period of 5 years.
(vi) Depreciation on assets added/ disposed off during the year has been provided on pro-rata basis with reference to the
days of addition/ disposal.
(vii) Depreciation methods, estimated useful lives and residual values are reviewed at each reporting date and the effect
of any change in the estimates of useful life/ residual value is adjusted prospectively.
(viii) The residual values are not more than 5% of the original cost of the asset.
D. Capital Work in Progress (CWIP)
PPE which are not ready for intended use as on the date of Balance sheet are disclosed as Capital Work-in-progress.
CWIP includes actual cost of asset under capitalization and directly attributable costs comprises of cost of employee
benefits arising from the acquisition of PPE, trial run costs (net of sales), interest costs, power expenses and other
manufacturing expenses.
3. Foreign Exchange Transaction
(i) Functional currency and presentation currency :
The functional currency of the Company is the Indian rupee. These financial statements are presented in Indian rupees,
which is the Company’s functional and presentation currency.
(ii) Transactions and balances :
Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing
at the time of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and
from Monetary assets and liabilities in foreign currency, outstanding at the end of the year are converted into Indian
currency at the rate prevailing on the Balance Sheet date. Resulting gain or loss is recognized in statement of profit or loss.
At the reporting date, non-monetary items which are carried in terms of historical cost denominated in foreign currency are
reported using the exchange rate at the date of transaction.
Forward Exchange Contracts:-
The premium or discount arising at the inception of the forward exchange contracts entered into to hedge an existing
assets/ liability, is amortized as expense or income over the life of the contract. Exchange differences on such contracts
are recognized in the statement of profit & loss in the reporting period in which the exchange rate changes.
Forward exchange contracts outstanding as at the year end on account of firm commitment/ highly probable forecast
transaction are marked to market and the gains or the losses, if any , is recognized as Other Comprehensive Income
(OCI).
4. Investments
a) I nvestments that are readily realizable and are intended to be held for not more than one year from the date, on which
such investments are made, are classified as current investments. All the other investments are classified as non-current
investments.
b) Provision for diminution is made to recognize a decline, other than temporary, in the value of investments, such reduction
being determined and made for each investment individually.
c) Equity instruments : The Company measures its equity investment other than in subsidiaries, joint ventures and associates
at fair value through profit and loss. However where the Company’s management makes an irrevocable choice on initial
recognition to present fair value gains and losses on specific equity investments in other comprehensive income (Currently
no such choice made), there is no subsequent reclassification, on sale or otherwise, of fair value gains and losses to the
Statement of Profit and Loss.
d) Debt instruments: The Company classifies its debt instruments into following categories:
1) Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest are measured at amortised cost. Interest income from these financial assets is
included in other income using the effective interest rate method.
2) Fair value through profit and loss: Assets that do not meet the criteria for amortised cost are measured at fair value
through statement of Profit and Loss. Income from these financial assets being difference of cost & maturity proceeds
are included in other income.
5. Inventories
Inventories are stated at lower of cost and net realizable value.
Raw materials, packaging materials and stores and spare parts:
Valued at lower of cost and net realizable value. Cost includes purchase price, (excluding those subsequently recoverable
by the enterprise from the concerned revenue authorities), freight inwards and other expenditure incurred in bringing such
inventories to their present location and condition. In determining the cost, FIFO cost method is used.
However, these items are considered to be realizable at cost if the finished products, in which they will be used, are expected
to be sold at or above cost.
Work in progress, manufactured finished goods and traded goods:
Valued at the lower of cost and net realisable value. Cost of work in progress and manufactured finished goods is determined on
the FIFO method basis and comprises direct material, cost of conversion and other costs incurred in bringing these inventories
to their present location and condition. Cost of traded goods is determined on a FIFO cost method basis.
Waste material are valued at Net Realizable value.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and
the estimated costs necessary to make the sale.
Provision for obsolescence on inventories is considered on the basis of management’s estimate based on its usability and
durability.
License stock are stated at the Duty credit entitlement value.
6. Revenue Recognition
(i) Revenue from contract with customers is recognized when the Company satisfies performance obligation by transferring
promised goods and services to the customer, Performance obligations are satisfied at the point of time when the customer
obtains control of the asset. Revenue is based on the transaction price, which is the fair value of the consideration received
or receivable, stated net of discounts, returns and goods & service tax. Transaction price is recognized based on the price
specified in the contract, net of estimated sales incentives / discounts if any.
(ii) Export incentives under the “Duty Drawback Scheme” etc. is accounted as income in the year of export.
(iii) Interest Income/ expenditure is recognized on the time proportion basis taking into account of the amount outstanding and
the rate applicable.
(iv) Dividend income is recognized when the right to received dividend is established.
(v) Government Grants in the form of Market Linked Focus Product License (MLFPL Scheme)/M.E.I.S/RODTEP Scheme etc.
are recognized based on export on an accrual basis.
7. Government Grants & Subsidies
Government Grants are recognized when there is a reasonable assurance that the same will be received and all attaching
conditions will be complied with. Revenue grants are recognized in the Statement of Profit and Loss. Capital grants relating to
specific tangible / Intangible Assets are shown separately as Current/Non Current Liability and has not been reduced from the
gross value of the respective Tangible / Intangible Assets.
8. Customs Duty
Custom Duty is accounted for as and when paid on the clearance of the goods for home Consumption.
9. Employees Retirement and other benefits
a) Provident fund:-
The contribution of the Company on a monthly basis towards Provident Fund and Employee State Insurance, which
are, defined contributions plans are charged to revenue. The company has paid to regulatory authority & has no further
obligations other than these contributions.
b) Leave Encashment:-
Leave Encashment towards accumulated Compensated Absences are the company’s defined benefit plan payable upon
Retirement, resignation, termination of employment. The present value of the obligation under such defined benefit plan is
determined based on actuarial Valuation using the Projected Unit Credit Method.
Remeasurement gains and losses arising from change in present value of defined benefit obligation, experience adjustments
and changes in actuarial assumptions are recognized in the period in which they occur are recognized immediately in the
statement of profit and loss as past service cost.
c) Gratuity:-
The company provides for gratuity, a defined benefit plan (the Gratuity plan) covering eligible employees in accordance
with the Payment of Gratuity Act, 1972. The Gratuity plan provides a lump sum payment to vested employees at retirement,
death, incapacitation or termination of employment, of an amount based on the respective employee’s salary and the
tenure of employment. The company’s liability is actually determined under (using the Projected Unit Credit method) at the
end of each year. Actuarial losses/ gains are recognized in the statement of profit & loss in the year in which they arise.
The company has subscribed to a gratuity plan which is administrated through HDFC Standard life and a trust which is
administrated through trustees.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are
recognized in the period in which they occur, directly in other comprehensive income, which are included in retained
earnings in the statement of changes in equity and in the balance sheet. Changes in the present value of the defined
benefit obligation resulting from plan amendments or curtailments are recognized immediately in the statement of profit
and loss as past service cost.
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