NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO STANDALONE
FINANCIALSTATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
1.1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The Financial Statements are prepared in accordance with Indian Generally accepted
Accounting Principles (GAAP) under the historical cost convention on accrual basis. 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, the provisions
of the Act (to the extend notified). Accounting polices has been consistently applied except
where newly issued accounting standard requires a change in the accounting policy hitherto in
use.
1.2. USE OF ESTIMATE
The preparation of Financial Statements requires estimates and assumptions to be made that
affect the reported amount of assets and liabilities as at the date of the Financial Statements
and the reported amount of revenues and expenses during the reporting period/year. The
differences between the actual results and estimates are recognised in the year in which the
results are known/materialize. All 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 realisation in cash and cash equivalents, the
Company has ascertained its operating cycle as 12 months for the purpose of current/non-
current classification of assets and liabilities.
1.3. FIXED ASSETS
i) Fixed Assets are stated at their original cost including freight, duties, taxes and other
incidental expenses related to acquisition and installation.
ii) Expenditure during construction period including interest on specific borrowing for new
major projects are capitalised till the stabilisation of commercial production
iii) The Company capitalises its assets (including construction and installation in progress) at
a value net of GST received/receivable in respect of capital goods.
1.4. DEPRECIATION
Company provide depreciation as per SLM basis. The management believes that the life
ascertained by it best represents the period over which management expects to use these
assets. Hence the useful lives for these assets is different from the useful lives as prescribed
under Part C of Schedule II of Companies Act 2013. Depreciation and amortization methods,
useful lives and residual values are reviewed periodically, at each financial year end.
In respect of additions/extensions forming integral part of existing assets and adjustments to
fixed assets on account of exchange difference if any, depreciation has been provided over
residual life of the respective fixed asset.
1.5. INVENTORY VALUATION
Raw materials, packing material, fuel and consumable, stores, spare parts, equipment and
loose tools, finished products and stock-in-process are valued at lower of cost or net realizable
value. Cost for the same is determined on FIFO basis. Provision is made in respect of non¬
standard and absolute items.
1.6. INVESTMENTS
Investments are stated at cost. The cost comprises of purchase price and directly
attributable acquisition charges such as brokerage, fees and duties.
1.7. TAXES ON INCOME - CURRENT AND DEFERRED
Provision for Current Tax / MAT is made on the basis of estimated taxable income for the
current accounting year in accordance with the Income Tax Act, 1961.
Deferred tax assets, other than unabsorbed depreciation or carried forward losses, are
recognized only if there is reasonable certainty that they will be realized in the future and are
reviewed for the appropriateness of their respective carrying values at each Balance Sheet
date.
1.8. FOREIGN CURRENCY FLUCTUATION:
i. Initial Recognition
Foreign currency transaction are recorded in Indian rupees being the reporting currency,
by applying to the foreign currency amount, the exchange rate between the reporting
currency and the foreign currency at the respective dates of the transactions.
ii. Conversion
Foreign currency monetary items are reported using the closing rate as at the year end.
Non-monetary items which are carried in terms of historical cost denominated in a
foreign currency are reported using the exchange rate at the date of the transaction.
iii. Exchange Differences
Exchange Differences arising on the settlement of monetary items or on reporting the
company's monetary items at rates different from those at which they were initially
recorded during the financial year are recognised as income or as expenses in the
financial year in which they arise except for adjustment of exchange difference arising on
reporting of long term foreign currency monetary items in so far they related to the
acquisition of a depreciable capital asset which are adjusted to the cost of the assets.
1.9. REVENUE RECOGNITION
Sales are recognised when the substantial risks and rewards of ownership in the goods are
transferred to the buyer as per the terms of the contract and are recognised net of trade
discounts, rebates, sales taxes and excise duties.
Interest: Interest income is recognised on time proportion basis taking into account the
amount outstanding and the rate.
1.10. GOVERNMENT GRANT
The Company recognises government grants in the statement of profit and loss only when
there is reasonable assurance that the conditions attached to them will be complied with, and
the grants will be received.
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