1 Material Accounting Policies
a) Basis of Preparation of Financial Statements
The Financial Statements are prepared and presented in accordance with Indian Generally Accepted
Accounting Principles (GAAP) under the historical cost convention on the accrual basis of accounting. GAAP comprises
mandatory accounting standards as specified in the Company (Accounting Standards) Rules 2014, the provisions of
the Companies Act, 2013. Accounting policies have been consistently applied in preparation and presentation of
>inancial statements.
b) Use of Estimates
The preparation of Financial Statements in conformity with the generally accepted accounting principles
requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of
the financial statements and the reported amount of revenues and expenses during the reporting period. Management
believes that the estimates and assumptions used in the preparation of >inancial statements are prudent and
reasonable. Actual results could differ from those estimates. Any difference between the actual results and estimates
are recognized in the period in which the results are known / materialize. Any revision to accounting estimates is
recognized prospectively in the current and future periods.
c) Going Concern Assumption
The Management believes that the Company would be in a position to continue as a going concern for the
foreseeable future and may meet its financial obligations as they fall due. Accordingly, these financial statements have
been prepared under the going concern assumption.
c) Presentation & Disclosure of Financial Statements
All assets and liabilities have been classified as current & non-current as per company's normal operating
cycle and other criteria set out in the Schedule III of the Companies Act, 2013. Based on the nature of services and
time between acquisition of assets for rendering of services and their realization in cash and cash equivalents,
operating cycle is less than 12 months. However, for the purpose of current / non- current classification of assets and
liabilities, period of 12 months have been considered as normal operating cycle.
d) Property, Plant and Equipment and Depreciation
"i. Property, plant and equipment are stated at cost of acquisition / construction less accumulated
depreciation and accumulated impairment losses, if any. Gross carrying amount of all property, plant and equipment
are measured using cost model.
ii. Cost of an item of property, plant and equipment includes purchase price including non - refundable taxes and
duties, borrowing cost directly attributable to the qualifying asset, any costs directly attributable to bringing the asset
to the location and condition necessary for its intended use and the present value of the expected cost for the
dismantling/decommissioning of the asset.
iii. Parts (major components) of an item of property, plant and equipments having different useful lives are accounted
as separate items of property, plant and equipments
iv. Subsequent expenditure related to an item of property, plant and equipment are added to its book value only if they
increase the future benefits from the existing asset beyond its previously assessed standard of performance. All other
expenses on existing PPE, including day-to-day repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which such expenses are incurred.
v. Property, plant & equipment are eliminated from financial statements either on disposal or when retired from active
use. Assets held for disposal are stated at net realizable value. Losses arising in the case of retirement of property,
plant and equipment and gains or losses arising from disposal of property, plant & equipment are recognized in the
statement of profit and loss in the year of occurrence.
vi. Depreciation
• Depreciation on property, plant and equipment is provided on a Written down value (WDV) over their useful lives
which is in consonance of useful life mentioned in Schedule II to the Companies Act, 2013
• Depreciation methods, useful lives and residual values are reviewed periodically, including at the end of each
financial year and adjusted prospectively.
• In case of assets purchased, sold or discarded during the year, depreciation on such assets is calculated on pro-rata
basis from the date of such addition or as the case may be, upto the date on which such asset has been sold or
discarded.
Gains or losses arising from derecognition of property, plant and equipment are measured as the difference between
the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss
when the asset is derecognized."
e) Impairment
The carrying amounts of assets are reviewed at each balance sheet date for any indication of impairment
based on internal / external factors. An impairment loss is recognized wherever the carrying amount of an asset
exceeds its recoverable amount. The recoverable amount is the greater of the asset's net selling price and value in use.
Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset
and from its disposal at the end of its useful life. Based on the assessment done at each balance sheet date, recognized
impairment loss is further provided or reversed depending on changes in circumstances. After recognition of
impairment loss or reversal of impairment loss as applicable, the depreciation charge for the property, plant and
equipment is adjusted in future periods to allocate the asset's revised carrying amount, less its residual value (if any),
on a systematic basis over its remaining useful life. If the conditions leading to recognition of impairment losses no
longer exist or have decreased, impairment losses recognized are reversed to the extent it does not exceed the carrying
amount that would have been determined after considering depreciation / amortization had no impairment loss been
recognized in earlier years.
f) Investments:
"Investments that are readily realizable and intended to be held for not more than a year from the date on
which such investments are made are classified as current investments. All other investments are classified as long¬
term investments. On initial recognition, all investments are measured at cost. The cost comprises purchase price and
directly attributable acquisition charges such as brokerage, fees and duties. If an investment is acquired, or partly
acquired, by the issue of shares or other securities, the acquisition cost is the fair value of the securities issued. If an
investment is acquired in exchange for another asset, the acquisition is determined by reference to the fair value of
the asset given up or by reference to the fair value of the investment acquired, whichever is more clearly evident.
Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long
term investments are carried at cost. However, provision for diminution in value of long term investments is made to
recognize a decline, other than temporary, on an individual investment basis.
Investment transactions are accounted for on a trade date basis. In determining the holding cost of investments and
the gain or loss on sale of investments, the 'weighted average cost' method is followed."
g) Inventories
"i. Raw materials and components, packing materials, consumables, stores and spares are valued at lower of
cost and net realizable value. However, materials and other items held for use in the production of inventories are not
written down below cost if the finished products in which they will be incorporated are expected to be sold at or above
cost.
The Cost comprises of costs of purchase, duties and taxes (other than those subsequently recoverable) and other costs
incurred in bringing them to their present location and condition. Cost is determined on First In First Out.
ii. Work-in-progress / Finished goods are valued at lower of cost and net realizable value. Cost includes direct
materials valued on First In First Out basis, conversion costs (i.e. costs directly related to the units of production),
appropriate proportion of manufacturing overheads based on normal operating capacity and other costs incurred in
bringing them to their present location and condition. Net realizable 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.
iii. Stocks in trade (Traded goods) are valued at lower of cost and net realizable value. Cost includes direct materials
valued on First In First Out basis, and other costs incurred in bringing them to their present location and condition.
iv. Scraps are valued at estimated net realizable value.
v. Cost of inventories is arrived at after providing for cost of obsolescence wherever considered necessary."
h) Cash and Cash Equivalents
Cash and cash equivalents include cash in hand, cheque on hand, bank balances and deposits with banks
with maturity period less than 12 months (other than on lien)
i) Cash Flow Statement
Cash Flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects
of transactions of 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.
j) Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company
and the revenue can be reliably measured. Revenue is recognized net of Goods and Services Tax wherever applicable
Sales of Goods: Sales of goods are recognized when significant risks and rewards of ownership of the goods
have been transferred to the buyer which generally coincides with delivery and are recorded net of rebates, trade
discounts and sales returns.
Unbilled Revenue: In cases where the performance obligation from the Company's end has been satisfied —
i.e., control or custody of goods or services has been transferred — but invoicing is pending, revenue is recognized as
sales. The corresponding amount is classified under Trade Receivables as 'Unbilled Receivable' and is disclosed
separately in the ageing schedule.
k) Other Income
"Interest income: Interest income is recognized on time proportion basis taking into account the amount
outstanding and rate applicable.
Other Income - It is recognized when It is accrued"
l) Retirement and other Employee Benefit
"(i) Short term employee benefit
All employee benefits falling due wholly within twelve months of rendering the service are classified as short term
employee benefits and they are recognised as an expense at the undiscounted amount in the Statement of Profit and
Loss in the period in which the employee renders the related service. These benefits include short term compensated
absences such as paid annual leave. The undiscounted amount of short-term employee
benefits expected to be paid in exchange for the services rendered by employees is recognized as an expense during
the period. Benefits such as salaries and wages, etc. and the expected cost of the bonus / ex-gratia are recognised in
the period in which the employee renders the related service.
(ii) Post employment
Defined Contribution Plan :
The defined contribution plan is post-employment benefit plan under which Company contributes fixed contribution
to a government administered fund and will have no obligation to pay further contribution. The Company's defined
contribution plan comprises of Provident Fund and Employee State Insurance Scheme. The Company's contribution
to defined contribution plans are recognized in the Statement of Profit and Loss in the period in which the employee
renders the related service.
m) Taxes
"(i) Current Tax : Tax expenses comprises of current tax, deferred tax charge or credit, minimum alternative
tax and adjustments of taxes for earlier years. Provision for current tax is made as per the provisions of Income Tax
Act, 1961.
(ii) Deferred Tax : Deferred tax charge or credit reflects the impact of current year timing differences between taxable
income and accounting income for the year and reversal of timing differences of earlier years and are measured based
on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date.
Deferred tax assets are recognized only to the extent there is reasonable certainty that sufficient future taxable income
will be available against which such deferred tax assets can be realized. In situations where the Company has
unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual
certainty supported by convincing evidence that they can be realized against future taxable profits. Deferred tax assets
are reviewed for the appropriateness of their respective carrying amounts at each balance sheet date. At each balance
sheet date the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets
to the extent that it has become reasonably/virtually certain as the case may be that sufficient future taxable income
will be available against which such deferred tax assets can be realized."
n) Borrowing Cost
Borrowing costs that are directly attributable to the acquisition, construction or development of a qualifying
asset are capitalized as part of the cost of the respective asset till such time the asset is ready for its intended use. A
qualifying asset is an asset which necessarily takes a substantial period of time to get ready for its intended use. All
other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest, exchange
difference arising from foreign currency borrowings to the extent they are treated as an adjustment to the borrowing
cost and other costs that an entity incurs in connection with the borrowing of funds.
o) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss (after tax) for the year attributable
to equity shareholders by the weighted average number of equity shares outstanding during the year The weighted
average number of equity shares outstanding during the period and all periods presented is adjusted for events of
bonus issue and share split. For the purpose of calculating diluted earnings per share, the net profit or loss (after tax)
for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during
the year are adjusted for the effects of all dilutive potential equity shares. Diluted earnings per share are calculated
after adjusting effects of potential equity shares (PES).PES are those shares which will convert into equity shares at a
later stage. Profit / loss is adjusted by the expenses incurred on such PES. Adjusted profit/loss is divided by the
weighted average number of ordinary plus potential equity share
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