Note 2: Summary of Material Accounting
policies
This note provides a list of the Material Accounting policies
adopted in the preparation of these financial statements.
These policies have been consistently applied to all the
years presented, unless otherwise stated.
(a) Basis for preparation
The financial statements presented herein reflect
the company's result of operations, assets and
liabilities, statement of changes in equity and cash
flows as at and for the period ended March 31, 2025.
The financial statements of the company have
been prepared in accordance with recognition
and measurement principles laid down in Indian
Accounting Standards (Ind AS), prescribed under
Section 133 of the Companies Act, 2013 (the ""Act"")
read with relevant rules issued thereunder and other
accounting principles generally accepted in India.
The accounting policies followed in the preparation
of the financial statements are consistent with those
followed in the preparation of Financial statements
as at and for the year ended March 31, 2024.
(b) Statement of Compliance
These financial statement of the Company
have been prepared in accordance with Indian
Accounting Standard (Ind AS) under the historical
cost convention on the accrual basis except for
certain financial instruments which are measured
at fair values, the provisions of the Companies Act,
2013 ('the Act') (to the extent notified). The Ind AS
are prescribed under Section 133 of the Act read
with Rule 3 of the Companies (Indian Accounting
Standards) Rules, 2015 and relevant amendment
rules issued thereafter.
(c) Use of estimates and judgement
The preparation of financial statement in conformity
with Ind AS requires management to make
judgements, estimates and assumptions that affect
the application of accounting policies and the
reported amount of assets and liabilities, revenues
and expenses and disclosure of contingent
liabilities. Such estimates and assumptions are
based on management's evaluation of relevant
facts and circumstances as on the date of financial
statement. The actual outcome may diverge from
these estimates.
The estimates and underlying assumptions are
reviewed on an on-going basis. Revisions to
accounting estimates are recognised in the period in
which the estimate is revised if the revision affects
only that period, or in the period of the revision and
future periods if the revision affects both current
and future periods.
(i) Useful lives of property, plant and
equipment:
The Company reviews the useful life of
property, plant and equipment at the end of
each reporting period. This re-assessment may
result in change in depreciation expense in
future periods.
(ii) Fair value of financial assets and liabilities
and investments:
The Company measures certain financial assets
and liabilities on fair value basis at each balance
sheet date or at the time they are assessed for
impairment. Fair value measurement that are
based on significant unobservable inputs (Level
3) requires estimates of operating margin,
discount rate, future growth rate, terminal
values, etc. based on management's best
estimate about future developments.
(iii) Provisions and contingent liabilities :
Provisions: A provision is recognised when
the Company has a present obligation as a
result of past events and it is probable that an
outflow of resources will be required to settle
the obligation, in respect of which a reliable
estimate can be made.
The amount recognised as a provision is the
best estimate of the consideration required to
settle the present obligation at the end of the
reporting period, taking into account the risks
and uncertainties surrounding the obligation.
When a provision is measured using the cash
flows estimated to settle the present obligation,
its carrying amount is the present value of
those cash flows (when the effect of time value
of money is material).
Contingent liabilities: Contingent liabilities
are not recognised but are disclosed in notes
to accounts.
(d) Functional and presentation currency
Items included in the financial statement of the
Company are measured using the currency of
the primary economic environment in which the
Company operates (i.e. the "functional currency”).
The financial statement are presented in Indian
Rupee, the national currency of India, which is the
functional currency of the Company.
(e) Revenue Recognition
a) Sale of goods: Revenue from the sale of
goods is recognized at the point in time when
control over the goods sold is transferred to the
customer. Revenue is measured based on the
transaction price, which is the consideration,
net of discounts, variable considerations,
other similar charges, as specified in the
contract with the customer. Additionally,
revenue excludes taxes collected from
customers, which are subsequently remitted to
governmental authorities.
b) Interest income: Interest income from a
financial asset is recognised when it is probable
that the economic benefits will flow to the
Company and the amount of income can be
measured reliably. Interest income is accrued
on a time basis, by reference to the principal
outstanding and at the effective interest
rate applicable, which is the rate that exactly
discounts estimated future cash receipts
through the expected life of the financial
asset of that asset's net carrying amount on
initial recognition.
c) Service Income: Service income is
recognized on rendering of services based
on the agreements / arrangements with the
concerned parties.
(f) Leases
The Company's lease asset classes consist of leases
for buildings. The Company, at the inception of a
contract, assesses whether the contract is a lease
or not lease. A contract is, or contains, a lease if
the contract conveys the right to control the use
of an identified asset for a time in exchange for a
consideration. This policy has been applied to
contracts existing and entered into on or after April
1, 2019 (standard effective date). The Company
recognises a right-of-use asset and a lease liability
at the later of lease commencement date or April 01,
2019. The right-of-use asset is initially measured at
cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at
or before the commencement date, plus any initial
direct costs incurred and an estimate of costs to
dismantle and remove the underlying asset or to
restore the underlying asset or the site on which it
is located, less any lease incentives received. The
right-of-use asset is subsequently depreciated using
the straight-line method from the commencement
date to the end of the lease term. The lease liability
is initially measured at the present value of the lease
payments that are not paid at the commencement
date, discounted using the Company's incremental
borrowing rate. It is premeasured when there is
a change in future lease payments arising from a
change in an index or rate, if there is a change in the
Company's estimate of the amount expected to be
payable under a residual value guarantee, or if the
Company changes its assessment of whether it will
exercise a purchase, extension or termination option.
When the lease liability is premeasured in this way,
a corresponding adjustment is made to the carrying
amount of the right-of-use asset, or is recorded in
profit or loss if the carrying amount of the right-of-
use asset has been reduced to zero.
The Company has elected not to recognise right-of-
use assets and lease liabilities for short-term leases
that have a lease term (Non Cancellable) of 12
months or less and leases of low-value assets. The
Company recognises the lease payments associated
with these leases as an expense over the lease term.
(g) Foreign currencies
Transactions in currencies other than the entity's
functional currency (foreign currencies) are
recognized at the rates of exchange prevailing at the
date of the transaction. At the end of each reporting
period, monetary items denominated in foreign
currencies are retranslated at the rates prevailing at
that date. Non-monetary items that are measured
in terms of historical cost in a foreign currency are
not retranslated. Exchange differences on monetary
items are recognised in the statement of profit and
loss in the period in which they arise except for
exchange differences on transactions designated
as fair value hedge, if any.
(h) Borrowing costs
Borrowing costs directly attributable to the
acquisition, construction or production of qualifying
assets, which are assets that necessarily take a
substantial period of time to get ready for their
intended use or sale are added to the cost of those
assets, until such time the assets are substantially
ready for their intended use or sale.
All other borrowing costs are recognised in profit or
loss in the period in which they are incurred.
(i) Employee benefits
Leave Encashment : Compensatory absence which
accrue to the employees which are expected to be
availed or encashed within twelve months after the
end of the period in which the employees render
the related service are short-term in nature. These
compensatory absences require measurement on
an actual basis and not on actuarial basis.
Defined contribution plan : The company makes
defined contribution to Provident Fund and
Employee State Insurance which are recognized in
the statement of Profit and Loss on accrual basis.
Defined benefit plan : The company's liability
towards gratuity is determined on the basis of year
end actuarial valuations applying the Projected Unit
Credit Method done by an independent actuary as
on the Balance sheet date.
Actuarial losses and gains are recognized in Other
Comprehensive Income (OCI) and are not reclassified
to the statement of profit and loss in any subsequent
periods. 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 costs.
(j) Taxation
Income tax expense represents the sum of the tax
currently payable and deferred tax.
a) Current tax: Current tax is the amount of tax
payable on the taxable income for the year as
determined in accordance with the applicable
tax rates and the provisions of the Income Tax
Act, 1961.
b) 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 highly probable
that future economic benefit associated with it
will flow to the Company.
c) Deferred tax: Deferred tax is recognized
using the balance sheet approach. Deferred
tax assets and liabilities are recognised on
temporary differences between the carrying
amounts of assets and liabilities in the financial
statement and the corresponding tax bases
used in the computation of taxable profit.
Deferred tax liabilities are generally recognised
for all taxable temporary differences. Deferred
tax assets are generally recognised for all
deductible temporary differences to the extent
that it is probable that taxable profits will
be available against which those deductible
temporary differences can be utilised. The
carrying amount of deferred tax assets is
reviewed at the end of each reporting period
and reduced to the extent that it is no longer
probable that sufficient taxable profits will be
available to allow all or part of the asset to be
utilised. Deferred tax liabilities and assets are
measured at the tax rates that are expected to
apply in the period in which the liability is settled
or the asset realised, based on tax rates (and tax
laws) that have been enacted or substantively
enacted by the end of the reporting period.
The measurement of deferred tax liabilities
and assets reflects the tax consequences that
would follow from the manner in which the
Company expects, at the end of the reporting
period, to recover or settle the carrying amount
of its assets and liabilities.
(k) Property, Plant and Equipment
Land and buildings held for use in the production
or supply of goods or services, or for administrative
purposes, are stated at cost less accumulated
depreciation and accumulated impairment losses.
Freehold land is carried at historical cost.
Property, plant and equipment are carried at cost
less accumulated depreciation and impairment
losses, if any. The cost of property, plant and
equipment comprises its purchase price/ acquisition
cost, net of any trade discounts and rebates, any
import duties and other taxes (other than those
subsequently recoverable from the tax authorities),
any directly attributable expenditure on making the
asset ready for its intended use, other incidental
expenses and interest on borrowings attributable
to acquisition of qualifying property, plant and
equipment up to the date the asset is ready for
its intended use. Subsequent expenditure on
property, plant and equipment after its purchase /
completion is capitalised only if such expenditure
results in an increase in the future benefits from
such asset beyond its previously assessed standard
of performance.
Depreciation on Property, plant and equipment
(other than freehold land) has been provided on the
straight-line method as per the useful life prescribed
in Schedule II to the Companies Act, 2013, except
in the case of fixtures at stores, has been provided
based on the lease period of the respective premises.
The estimated useful life of the tangible assets and
the useful life are reviewed at the end of the each
financial year and the depreciation period is revised
to reflect the changed pattern, if any. An item of
property, plant and equipment is derecognised upon
disposal or when no future economic benefits are
expected to arise from continued use of the asset.
Any gain or loss arising on the disposal or retirement
of an item of property, plant and equipment is
determined as the difference between the sale
proceeds and the carrying amount of the asset and
is recognised in the statement of profit and loss. Any
leasehold improvements is depreciated over the
lease term.
(l) Investment Property
Investment properties are properties held to earn
rentals and/or for capital appreciation (including
property under construction for such purposes).
Investment properties are measured initially at cost,
including transaction costs. Subsequent to initial
recognition, investment properties are measured in
accordance with Ind AS 16's requirements for cost
model. An investment property is derecognised
upon disposal or when the investment property is
permanently withdrawn from use and no future
economic benefits are expected from the disposal.
Any gain or loss arising on derecognition of the
property (calculated as the difference between
the net disposal proceeds and the carrying amount
of the asset) is included in profit or loss in the
period in which the property is derecognised. The
depreciation on Property, plant and equipment
(other than freehold land) has been provided on the
straight-line method as per the useful life prescribed
in Schedule II to the Companies Act, 2013.
(m) Intangible assets
Intangible assets are stated at cost less accumulated
amortisation and impairment. Intangible assets are
amortised over their respective estimated useful
lives on a straight line basis, from the date that they
are available for use. The estimated useful life of an
identifiable intangible asset is based on a number
of factors including the effects of obsolescence,
demand, competition and other economic
factors (such as the stability of the industry and
known technological advances) and the level of
maintenance expenditures required to obtain the
expected future cash flows from the asset. Estimated
useful lives of the intangible assets is 10 years. The
estimated useful life of the intangible assets and the
amortisation period are reviewed at the end of the
each financial year and the amortisation period is
revised to reflect the changed pattern, if any.
(n) Impairment of tangible and intangible assets
At the end of each reporting period, the Company
reviews the carrying amounts of its tangible and
intangible assets to determine whether there is
any indication that those assets have suffered an
impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in
order to determine the extent of the impairment
loss (if any). Recoverable amount is the higher of
fair value less costs of disposal and value in use. In
assessing value in use, the estimated future cash
flows are discounted to their present value using a
pre-tax discount rate that reflects current market
assessments of the time value of money and the
risks specific to the asset for which the estimates
of future cash flows have not been adjusted. If the
recoverable amount of an asset is estimated to be
less than its carrying amount, the carrying amount
of the asset is reduced to its recoverable amount. An
impairment loss is recognised immediately in profit
or loss.
When an impairment loss subsequently reverses,
the carrying amount of the asset is increased to
the revised estimate of its recoverable amount,
but so that the increased carrying amount does
not exceed the carrying amount that would have
been determined had no impairment loss been
recognised for the asset in prior years. A reversal
of an impairment loss is recognised immediately in
statement of profit and loss.
(o) Inventories
Inventories (including stock-in-transit) are stated
at lower of cost or net realizable value. Cost is
determined on the procurement cost basis. Due
to a large number and diverse nature of inventory
items, cost is estimated as near as possible for each
stock keeping unit including freight and applicable
taxes, etc.
Net realizable value represents the estimated selling
price less all estimated costs necessary to make
the sale.
No valuation is done for damaged stock since its
realizable value, if any, is negligible.
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