2. SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Preparation
The Standalone Financial Statements are prepared and presented in accordance with Generally
Accepted Accounting Principles (GAAP) under historical cost convention on accrual basis and
are in accordance with Accounting Standards and Provisions of Companies Act, 2013 to the
extent applicable.
The Company has prepared Standalone Financials as per revised Schedule III to the Companies
Act, 2013 issued by Ministry of Corporate Affairs.
All the assets and liabilities have been classified as current and non-current as per guidance
note issued by the Institute of Chartered Accountants of India.
The policies and procedures adopted by Management in preparation and presentation of
Financial Statement are in conformity with accounting standards issued by the Institute of
Chartered Accountants of India.
b. Use of estimates
The Standalone Financial Statements have been prepared under the historical cost convention,
on accrual basis of accounting to comply in a material respects, with the mandatory accounting
standards as specified under section 133 of the Companies Act 2013 ("the Act") read with rule 7
of Companies (Accounts) Rules 2014 and the relevant provisions of the Act. The preparation of
Standalone Financial Statements in conformity with Indian GAAP requires the management to
make Judgments, estimates and assumptions that affect the reported amounts of assets and
liabilities, revenue and expenses and the disclosures of contingent liabilities, at the end of the
reporting period. Although these estimates are based upon management's best knowledge of
current events and actions, actual results could differ from these estimates.
c. Tangible Fixed Assets
Tangible assets are stated at cost net off recoverable taxes, trade discount and rebates, less
accumulated depreciation and impairment losses, if any. Cost comprises the purchase price,
including duties and other non-refundable taxes or levies and directly attributable cost of
bringing the asset to its working condition and indirect costs specifically attributable to
construction of a project or to the acquisition of fixed asset. Subsequent expenditure related to
an item of tangible asset are added to its book value only if they increase the future benefits
from the existing asset beyond its previously assessed standard of performance.
d. Intangible Assets
Intangible Assets are stated at their cost of acquisition less accumulated amortization and
impairment losses. An asset is recognized where it is possible that future economic benefits
attributable to the assets will flow to the enterprise and where its cost can reliably measured.
e. Depreciation and Amortization
The Company provides for depreciation on tangible assets to the extent of depreciable amount
on Straight Line method. Depreciation is provided based on useful life and residual value of the
assets an prescribed in Schedule II to the Companies Act, 2013.
Depreciation on additions to assets or on sale/discardment of assets is provided on pro rata
basis from the month in which assets have been putto use, uptothe month priortothe month in
which assets have been disposed off.
Depreciation on intangible assets is provided using straight line basis method as per the useful
lives of the assets as estimated by the management.
f. Leases
Operating Lease
Leases where the lessor effectively retains substantially all the risks and benefits of ownership
over the leased term are classified as operating leases. Operating lease rentals are recognized as
an expense, as applicable, over the lease period.
g. Impairment
If internal / external indications suggests that an asset of the company may be impaired, the
recoverable amount from the asset / CGU is determined on the date of balance sheet and if it is
less than its carrying amount of the asset / CGU is reduced to the recoverable amount.
Subsequently, if there is change in any indication since the last impairment was recognized, so
that the recoverable amount of the asset exceeds its carrying amount, an impairment
recognized for an asset in prior accounting period is reversed. The recoverable amount is
measured as higher of the net selling price and value in use of such assets / CGU, which is
determined bv the Dresent value of the estimated future cash flows.
An impairment of intangible assets is conducted annually or more often it varies an indication of
any decrease in value. The impairment loss, if any, is charged to the statement of profit and loss
account.
h. Investments
(a) lnvestments that are readily realizable and intended to be held for not more than a year
are classified as current investments. All other investments are classified as long term
investments.
(b) Current investments are carried at lower of the cost and fair value determined on an
individual investment basis.
(c) Investments, which are long term, are stated at cost. Provision for diminution, if any, is
made to recognize a decline, other than temporary, in the value of investments.
I. Revenue Recognition
(a) 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.
(b) Revenue from sale of goods/ or on behalf of customers are recognized when the
substantial risk and rewards of ownership are transferred to the buyer under the terms of
the contract.
(c) Contract revenue is recognised over time to the extent of performance obligation
satisfied and control is transferred to the customer. Contract revenue is recognised at an
allocable transaction price which represents the cost of work performed on the contract
plus proportionate margin, using the percentage of completion method.
(d) Interest revenue is recognized on a time proportion basis taking into account the amount
outstanding and the rate applicable.
(e) Hire charges on machinery are recognized on the basis of number of days’ machinery
used.
J. Employee Benefits
Provident Fund-
Retirement benefit in the form of provident fund is a defined contribution scheme. The
contributions to the provident fund are charged to the statement of profit and loss for the
year when the contributions are due. The company has no further obligation, other than the
contribution payable to the provident fund.
Gratuity-
The Company operates a defined benefit gratuity plan which requires contributions to be
made to a separately administered fund by the Life Insurance Corporation of India (LIC). The
cost of providing benefits under the defined benefit plan is determined using the projected
unit credit method. The premium paid by the company is charged to the Statement of Profit
and Loss.
Leave Encashment-
The company does not permit accumulating of unused leaves.
k. Borrowing Cost
Borrowing costs that are directly attributable to the acquisition, construction or production
of qualifying assets are capitalized as part of the cost of such assets up to the date the asset
is ready for its intended use. Other borrowing costs are charged as an expense in the period
in which the same is incurred. Borrowing cost comprise of interest and other cost incurred in
connection with borrowing of funds.
l. Inventories
(a) 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.
(b) Revenue from sale of goods/ or on behalf of customers are recognized when the
substantial risk and rewards of ownership are transferred to the buyer under the terms of
the contract.
(c) Contract revenue is recognised over time to the extent of performance obligation
satisfied and control is transferred to the customer. Contract revenue is recognised at an
allocable transaction price which represents the cost of work performed on the contract
plus proportionate margin, using the percentage of completion method.
(d) Interest revenue is recognized on a time proportion basis taking into account the amount
outstanding and the rate applicable.
(e) Hire charges on machinery are recognized on the basis of number of days’ machinery
used.
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