2. Significant Accounting Policies
2.1 Basis of Preparation :
The financial statements have been prepared with all material aspect with Indian Accounting Standards (Ind AS) notified
under section 133 of the companies Act, 2013 (the Act) read with the Companies (Indian Accounting standards) Rules,
2015 and other relevant provisions of the Act. The Accounting Policies adopted in the preparation of the financial
statements are consistent with those followed in the previous year.
2.2 Historical Cost Convention
The financial statements have been prepared on a historical cost basis.
2.3 Rounding of amounts
The financial statements are presented in INR and all values are rounded to the nearest Lakhs & decimal thereof.
2.4. Summary of Significant Accounting Policies
The following are the significant accounting policies applied by the Company in preparing its financial statements
consistently to all the periods.
2.5. Current Versus Non-Current Classification :
The company presents assets and liabilities in the Balance Sheet based on current/non-current classification.
An asset is treated as current when it is:
Ý Expected to be realized or intended to be sold or consumed in the normal operating cycle;
Ý Held primarily for the purpose of trading
Ý Expected to be realized within twelve months after the reporting period
Ý 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:
Ý It is expected to be settled in the normal operating cycle;
Ý It is held primarily for the purpose of trading;
Ý It is due to be settled within twelve months after the reporting period; or
Ý 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 noncurrent.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Operating cycle
The operating cycle is the time between acquisition of assets for processing and their realization in cash and cash
equivalents. The Company has identified twelve month as its operating cycle.
2.6. Use of estimates and judgments
The estimates and judgments used in the preparation of the financial statements are continuously evaluated by the
Company and are based on historical experience and various other assumptions and factors (including expectations of
future events) that the Company believes to be reasonable under the existing circumstances. Difference between actual
results and estimates are recognized in the period in which the results are known / materialized.
The said estimates are based on the facts and events, that existed as at the reporting date, or that occurred after that date
but provide additional evidence about conditions existing as at the reporting date.
2.7. Foreign Currencies :
The company's financial statements are presented in INR, which is also the Company's functional currency.
Transactions and balances
Transactions in foreign currencies are initially recorded in the company's functional currency at the exchange rates
prevailing on the date of the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are restated in the functional currency at the exchange
rates prevailing on the reporting date of financial statements.Exchange differences arising on settlement of such
transactions and on translation of monetary items are recognized in the Statement of Profit and Loss.
Non-monetary items that are measured in terms ofhistorical cost in a foreign currency are translatedusing the exchange
rates on the dates of the initialtransactions.
2.8. Impairment of assets
Consideration is given at each Balance Sheet date to determine whether there is any indication of impairment of the
carrying amounts of the Company's assets. If any indication exists, an asset's recoverable amount is estimated. An
impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount.
2.9. Property, Plant And Equipment (PPE):
PPE are stated at cost, net of GST and depreciation. No specific borrowing is incurred to increase the fixed assets so no
interest on borrowing is capitalized in fixed assets during the current financial year.Building includes road, staff quarters,
security room, gate, compound wall etc.
Company maintains a separate and special in-house research laboratory for the development, expansion and invention
of new and innovative techniques for easy and speedy process of output, for maintenance of quality of products and also
to search out new products for the betterment and expansion of business.
De-recognition
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss
when the asset is derecognized.
Depreciation:
- Depreciation, on fixed assets, has been provided in the accounts as per schedule II of the Companies Act,
2013.
- Depreciation on fixed assets is provided on Written Down Value method.
- Depreciation has been charged pro-rata from the date of additions on Written down Value Method as per Schedule
II of the Companies Act, 2013.
- One of the directors of the company himself handles the technical, manufacturing department and as per the written
representation received from the director, useful life of laboratory equipment is taken as 20 years.
- Residual value of all the assets is taken at 4%.
- As per schedule II the life of the office equipment is 5 years however there are some equipment which are already
used for more than 5 years and so the life is taken more than 5 years as the amount involved is very low.
- Additions made in the plant and machinery during the year are grouped on monthly basis for computation of prorate
depreciation.
2.10. Investment Property
Property which is held for long-term rental yields or for capital appreciation or both, is classified as Investment Property.
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment
properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.
The Company depreciates investment properties over their estimated useful lives, as specified in Schedule II to the
Companies Act, 2013.
Investment properties are derecognized either when they have been disposed off or when they are permanently withdrawn
from use and no future economic benefit is expected from their disposal. The difference between the net disposal
proceeds and the carrying amount of the asset is recognized in Statement of Profit and Loss in the period in which the
property is derecognized.
2.11. Financial assets
Initial recognition and measurement:
All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.
Subsequent measurement:
All recognized financial assets are subsequently measured in their entirety at either amortized cost or fair value, depending
on the classification of the financial assets.
Classification of financial assets:
Financial assets that meet the following conditions are subsequently measured at amortized cost (except for debt
instruments that are designated as at fair value through profit or loss on initial recognition):
- The asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows;
and
- The contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of
principal and interest.
All other financial asset is subsequently measured at fair value.
Financial assets at cost:
Investments in subsidiaries, associates and joint ventures are accounted for at cost.
De recognition of financial assets:
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.
On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the
consideration received / receivable and the cumulative gain or loss that had been recognized in other comprehensive
income and accumulated in equity is recognized in profit or loss if such gain or loss would have otherwise been
recognized in profit or loss on disposal of that financial asset.
2.12. Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance
with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.
Trade and other payables
Trade and other payables are recognized at the transaction cost, which is its fair value, and subsequently measured at
amortized cost.
De recognition of financial liabilities
The Company derecognizes financial liabilities when, and only when, the Company's obligations are discharged, cancelled
or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted
for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a
substantial modification of the terms of an existing financial liability is accounted for as an extinguishment of the original
financial liability and the recognition of a new financial liability. The difference between the carrying amount of the
financial liability derecognized and the consideration paid and payable is recognized in profit or loss.
2.13. Leases:
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the
inception of the lease. The company has not entered into any such transaction.
2.14. Inventories:
Inventories are valued at the lower of cost or net realizable value after providing for obsolescence and other losses,
wherever considered necessary.
Cost comprises of Following:
1) Raw Material cost includes cost of purchase;
2) Finished Goods cost is raw material and cost of conversion;
3) Stores & Spares cost is includes cost of purchase
Cost is determined on First-in-First-out (FIFO) basis or specific identification basis as applicable.
2.15. Cash And Cash Equivalent
Cash and cash equivalent in the balance sheet comprise cash on hand.
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