Note 2 - SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of preparation of financial statement :
The Financial Statements have been prepared and presented under the historical cost convention, on an accrual basis of accounting and in
accordance with the provisions of the Companies Act, 2013(the Act) and the accounting principles generally accepted in India (Indian GAAP)
and comply with the Accounting Standards ('AS') prescribed in the Companies (Accounting Standards) Rules, 2006. The accounting policies
adopted in the preparation of the financial statements are consistent with those followed in the previous year except as specifically stated
otherwise.
2.2 Current and Non-current classification
The company presents assets and liabilities in the balance sheet based on current and Non-current classification. An asset is classified as
current when it is-
• Expected to be realised or intended to be sold or consumed in normal operating cycle;
• Held primarily for the purpose of trading;
• Expected to be realised within twelve months after the reporting period, or
• 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 current when-
• It is expected to be settled in normal operating cycle:
• It is held primarily for the purpose of trading;
• It is due to be settled within twelve months after the reporting period, or
There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. The company
classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
2.3 Use of estimates
The preparation of the financial statements in conformity with generally accepted accounting principles, requires management to make
estimates and assumptions that affect the reported amount of assets and liabilities as of the balance sheet date, reported amounts of
revenues and expenses for the year then ended and disclosure of contingent liabilities as of the balance sheet date. The estimates and
assumptions used in these financial statements are based upon management’s evaluation of the relevant facts and circumstances as on the
date of the financial statements. Actual results may differ from those estimates. Any revision to accounting estimates is recognised
prospectively.
2.4 Revenue Recognition
Revenue is recognised to the extent it is probable and the economic benefits will flow to the company and the revenue can be reliably
measured. Sales are recognised, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer,
which generally coincides with the delivery of goods to customers.
Sales include excise duty but exclude sales tax, value added tax and GST. The company follows the mercantile system of accounting and
recognizes the income and expenditures on accrual basis except in case of significant uncertainties. Certain items of income such as
insurance claim, market fees refund ,overdue interest from customers etc have been considered to the extent the amount is accepted by the
parties.
Domestic sales are recognized at the point of dispatches to customers. Export Sales at the time of issue of Bill of Lading.
Unbilled revenue pertains to amounts recognized as revenue based on services performed which will be billed subsequently. Deferred
revenue/income received in advance pertains to amounts billed to customers for services to be rendered in future periods.
2.5 Property, Plant and Equipment
Property, plant and equipment are stated at cost (net of Goods and Services Tax (GST) wherever applicable) less accumulated depreciation
and allowance for impairment, if any. Cost includes the purchase price and any cost directly attributable to bringing the asset to its working
condition for its intended use. . Capital work in progress is stated at cost. Capital work in progress includes the cost of fixed assets that are
not yet ready for their intended use, as on the balance sheet date.
Intangible Assets
(i) Cost of development of internally developed or purchased software, used for the purpose of operations, is capitalised.
(ii) Any expense on software for support, maintenance, upgrades etc., payable periodically is charged to the Statement of Profit and Loss.
Advance given towards acquisition of fixed assets and the cost of assets not ready for use as at the balance sheet date are disclosed under
long term loans and advances and capital work in progress respectively.
2.6 Depreciation & Amortisation
Tangible Assets
Depreciation on Property, Plant and Equipment has been provided on Written Down Value (WDV) Method as per the
useful life prescribed in Schedule II of the Companies Act 2013. Depreciation shall be charged on a pro-rata basis on assets purchased/sold
during the year. Individual low cost assets (acquired for less than INR 5,000) shall be depreciated in full in the year of acquisition
Intangible Assets
Amortization is calculated to write off the cost of intangible assets less their estimated residual values over their estimated useful lives using
the written down value method and is included in depreciaton and amortization expenses in the statement of profit and loss.
2.7 Impairment of assets
The Company assesses at each Balance Sheet date whether there is any indication that any asset may be impaired. If any such indication
exists, the carrying value of such assets is reduced to its recoverable amount and the impairment loss is recognised in the statement of profit
and loss. If at the Balance Sheet date there is any indication that a previously assessed impairment loss no longer exists, then such loss is
reversed and the asset is restated to that extent.
2.8 Leases
a. Finance lease
i. Assets taken on finance lease are capitalised at fair value or net present value of the minimum lease payments, whichever is less.
ii. Lease payments are apportioned between the finance charges and outstanding liability in respect of assets taken on lease.
b. Operating lease
i. Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term are classified as operating
lease. Lease rent are recognized as an expense in the Statement of Profit and Loss on a straight line basis over the lease term.
2.9 Taxation
Current Tax
Provision for current tax is made on the basis of estimated taxable income for the current accounting year in accordance with the Income-tax
Act, 1961 and tax laws prevailing in the respective tax jurisdictions where the Branch operates.
Minimum Alternate Tax (MAT)
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.
Deferred tax is recognised on timing differences, being the differences between the taxable income and
the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured
using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognised for all
timing differences.
Deferred Tax
Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting
income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is
measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax assets are recognised and carried forward only to the
extent that there is reasonable certainty, except for carry forward of losses and unabsorbed depreciation which are
recognised based on virtual certainty that the difference will reverse in future
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