4. Material Accounting Policies

I. Use of Estimates and judgments

The preparation of the Financial Statements
in conformity with Ind AS requires
management to make estimates,
judgements and assumptions. These
estimates, judgements and assumptions
affect the application of accounting policies
and the reported amounts of assets and
liabilities, the disclosures of contingent
assets and liabilities at the date of Financial
Statements and reported amounts of
revenues and expenses during the period.
Accounting estimates could change from
period to period. Actual results could differ
from those estimates. Appropriate changes
in estimates are made as management
becomes aware of the circumstances
surrounding the estimates. Changes in
estimates are reflected in the financial
statement in the period in which changes
are made and if material, their effects are
disclosed in the notes to the Financial
Statements.

ii. Critical Accounting Estimates

The areas involving critical estimates or
judgements includes defined benefit
obligations, provisions, current/deferred tax
expense.

The Company has consistently applied the
following accounting policies to all periods
presented in these Financial Statements.

a) Revenue recognition:

Revenue is recognised upon transfer of
control of promised goods to customers in
an amount that reflects the consideration
which the Company expects to receive in
exchange for those goods or services. To
recognize revenues, the Company applies
the following five step approach:- identify
the contract with a customer,- identify the
performance obligations in the contract,-
determine the transaction price,- allocate
the transaction price to the performance
obligations in the contract, and- recognise
revenues when a performance obligation
is satisfied.

Sale of goods

Sales are recognised when control of the
products has transferred, generally being
when the products are delivered to the
customers. Delivery occurs when the
products have been shipped to the
specific location, the risks of obsolescence
and loss have been transferred to the
customer.

The timing of transfers of control varies
depending on the terms of sale. For
domestic sale of goods to the customers,
such transfer occurs when the products
are delivered to dealers. For FOB export
terms of sale, it will be considered as sale
when delivered to a carrier at the port of
the seller. For CIF terms of sale, it will be
considered as sales when it will be
received by buyer.

Revenue is measured based on the
transaction price, which is the

consideration, adjusted for trade discount,
cash discount, rebates, scheme

allowances, incentives and returns, if any,
as specified in the contracts with the
customers. Revenue excludes taxes
collected from customers on behalf of the
government. Accruals for

discounts/incentives and returns are
estimated (using the most likely method)
based on accumulated experience and
underlying schemes and agreements with
customers.

Sale of services

Revenue from sale of services is
recognized when the activity is performed
as per service contract. In arrangements
for sale of goods, the Company provides
after-sales service to the end customers
which entitles them to avail free of cost
maintenance services for a specified
period and after that a paid service. When
two or more revenue-generating activities
or deliverables are provided under a single
arrangement, each deliverable that is
considered to be a separate unit of
account is accounted for separately.

Other operating revenue -
I. Export incentive entitlements

are recognised as income when the right
to receive credit as per the terms of the
scheme is established in respect of the
exports made, and where there is no
significant uncertainty regarding the
ultimate collection of the relevant export
proceeds. These are presented as other
operating income in the Statement of
Profit and Loss.

ii. Dividend and interest income:

Dividend income is recognised when the
Company's right to receive the payment is
established, which is generally when
shareholders approve the dividend.

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 to that asset's net
carrying amount on initial recognition.

b) Tax Expense:

The tax expense comprises of income tax
and deferred tax. Tax is recognized in
Statement of Profit and Loss, except to the
extent that it relates to items recognized in
the comprehensive income or in equity.

i. Current Income taxes: Current income tax

for the current and prior periods are
measured at the amount expected to be
recovered from or paid to the taxation
authorities based on the taxable income
for the period. The tax rates and tax laws
used to compute the current tax amounts
are those that are enacted or
substantively enacted as at the reporting
date and applicable for the period. While
determining the tax provisions, the
Company assesses whether each
uncertain tax position is to be considered
separately or together with one or more
uncertain tax positions depending the
nature and circumstances of each
uncertain tax position. The Company
offsets current tax assets and current tax
liabilities, where it has a legally
enforceable right to set off the recognized
amounts and where it intends either to
settle on a net basis, or to realize the asset
and liability simultaneously.

ii. Deferred taxes: Deferred income tax is
recognized using the balance sheet
approach. Deferred income tax assets and
liabilities are recognized for deductible
and taxable temporary differences arising
between the tax base of assets and
liabilities and their carrying amount in
Financial Statements.

Deferred income tax assets are recognized
to the extent it is probable that taxable
profit will be available against which the
deductible temporary differences and the
carry forward of unused tax credits and
unused tax losses can be utilized.

Deferred income tax liabilities are
recognized for all taxable temporary
differences.

The Company offsets deferred income tax
assets and liabilities, where it has a legally
enforceable right to offset current tax
assets against current tax liabilities, and
they relate to taxes levied by the same
taxation authority on either the same
taxable entity, or on different taxable
entities where there is an intention to settle
the current tax liabilities and assets on a
net basis or their tax assets and liabilities
will be realized simultaneously.

c) Segment reporting:

As per Ind AS 108 - Operating Segments,
the Chief Operating Decision Maker
evaluates the Company's performance
and allocates the resources based on an
analysis of various performance indicators
by business segments. Inter segment sales
and transfers are reflected at market
prices. Segment revenue, segment
expenses, segment assets and segment
liabilities have been identified to segments
based on their relationship to the
operating activities of the segment. Inter
segment revenue is accounted based on
transactions which are primarily
determined based on market / fair value
factors. Revenue, expenses, assets and
liabilities which relate to the Company as
a whole and are not allocable to segments
on a reasonable basis have been included
under "unallocated revenue / expenses /
assets / liabilities". The company is dealing
in only one segment - manufacturing of
stainless steel (SS) pipes and tubes only.

d) Employee benefit expense:

I. Post-employment:

The Company participates in various
employee benefit plans. Post-employment
benefits are classified as either defined
contribution plans or defined benefit plans.
Under a defined contribution plan, the
Company's only obligation is to pay a fixed
amount with no obligation to pay further
contributions if the fund does not hold
sufficient assets to pay all employee
benefits. The related actuarial and
investment risks are borne by the

employee. The expenditure for defined
contribution plans is recognized as an
expense during the period when the
employee provides service. Under a
defined benefit plan, it is the Company's
obligation to provide agreed benefits to
the employees. The related actuarial and
investment risks are borne by the

Company. The present value of the
defined benefit obligations is calculated
by an independent actuary using the
projected unit credit method.

Re-measurement comprising actuarial
gains or losses and the return on plan
assets (excluding interest) are
immediately recognized in other
comprehensive income, net of taxes and
permanently excluded from profit or loss.

• Provident fund

Employees receive benefits from a
provident fund, which is a defined benefit
plan. The employer and employees each
make periodic contributions to the plan.
Contribution is made to the government
administered pension fund.

• Gratuity

In accordance with the Payment of
Gratuity Act, 1972, applicable for Indian
companies, the Company provides for a
lump sum payment to eligible employees,
at retirement or termination of
employment based on the last drawn
salary and years of employment with the
Company.

The Company's obligation in respect of
above plans, which are defined benefit
plans, are provided for based on actuarial
valuation using the projected unit credit
method. The Company recognizes
actuarial gains and losses in other
comprehensive income, net of taxes.

ii. Termination benefits

Termination benefits are expensed when
the Company can no longer withdraw the
offer of those benefits.

iii. Short-term benefits

Short-term employee benefit obligations
are measured on an undiscounted basis
and are recorded as expense as the
related service is provided. A liability is
recognized for the amount expected to be
paid under short-term cash bonus or
profit-sharing plans, if the Company has a
present legal or constructive obligation to
pay this amount as a result of past service
provided by the employee and the
obligation can be estimated reliably.

e) Property, Plant and Equipment:

I. Recognition and measurement :

Property, Plant and equipment are stated

at historical cost, less accumulated
depreciation, and accumulated
impairment losses, if any. The historical
cost comprises of the purchase price,
taxes, duties, freight, and other incidental
expenses directly attributable and related
to the acquisition and installation of the
concerned assets wherever applicable.

Subsequent costs are included in the
asset's carrying amount or recognized as
separate asset, as appropriate, only when
it is probable that future economic
benefits will flow to the entity and cost of
the item can be measured reliably. All
other repairs and maintenance are
charged to profit or loss during the
reporting period in which they are incurred.

ii. Depreciation and amortization method,
estimated useful lives and residual value:

Depreciation amount for assets is the cost
of an asset, or other amount substituted
for cost less its estimated residual value.
Depreciation on tangible assets is
calculated on a written-down value as per
the useful lives prescribed in Schedule II of
Companies Act, 2013. Depreciation on
additions is charged proportionately from
the date the asset is ready for its intended
use. Depreciation on sale / deduction from
tangible assets is provided up to the date
of sale / deduction or discarding date as
the case maybe.

The useful lives of assets and residual
value if any, would be reviewed by the
management at each financial year. In
case of a revision the unamortized
depreciable amount is charged over the
revised remaining useful life of the asset.

iii. De-Recognition:

An item of property, plant and equipment
and any significant part initially recognized
is derecognized upon disposal or when no
future economic benefits are expected
from its use or disposal. Any gain or loss
arising on the derecognition of the asset
(calculated as the difference between the
net disposal proceeds and the carrying
amount of the asset) is included in the
income statement when the asset is
derecognized.

f) Impairment of non-financial assets:

At each balance sheet date, the carrying
amount of fixed assets is reviewed by the
management to determine whether there
is any indication that those assets 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 (the
recoverable amount is the higher of an
asset's net selling price or value in use). In
assessing the value in use, the estimated
future cash flows expected from the
continuing use of the assets and from their
disposal are discounted to their present
value using a pre-discounted rate that
reflects the current market assessment of
the time value of money and risks specific
to the asset. Reversal of impairment loss is
recognized immediately as income in the
Profit and Loss Account.

g) Intangible assets:

Intangible assets that are acquired by the
Company and that have finite useful lives
are measured at cost less accumulated
amortisation and accumulated
impairment losses, if any. Subsequent
expenditures are capitalised only when
they increase the future economic benefits
embodied in the specific asset to which
they relate. Intangible assets are
amortised over their estimated useful life
on written down value method as follows:

• Computer Software - 3 years

h) Foreign currency transaction

In preparing the financial statements of
the Company, transactions in currencies
other than the entity's functional currency
(foreign currencies) are translated at
exchange rates on the date of the
transactions. Monetary assets and
liabilities denominated in foreign
currencies at the reporting date are
translated into the functional currency at
the exchange rate on that date.

Exchange differences arising on the
settlement of monetary items or on
translating monetary items at rates
different from those at which they were

translated on initial recognition during the
period or in previous period are recognised
in profit or loss in the period in which they
arise except for:

Exchange differences relating to the
translation of the results and the net
assets of the Company's foreign
operations from their functional currencies
to the Company's presentation currency
(i.e. INR) are recognised directly in the
other comprehensive income and
accumulated in the foreign currency
translation reserve. Exchange differences
in the foreign currency translation reserve
are reclassified to a statement of profit or
loss account on the disposal of the foreign
operation.

Non-monetary items that are measured in
terms of historical cost in foreign currency
are measured using the exchange rates at
the date of initial transaction.

i) Financial instruments:

A financial instrument is any contract that
gives rise to a financial asset of one entity
and a financial liability or equity
instrument of another entity.

I. Financial Assets:

Recognition and measurement:

Initial recognition and measurement:
Financial assets are classified, at initial
recognition, are measured as amortised
cost, fair value through other
comprehensive income and fair value
through profit and loss. The classification
of financial assets at initial recognition
depends on the financial asset's
contractual cash flow characteristics and
the company's business model for
managing them.

Subsequent measurement:

• Financial assets carried at amortized
cost: A financial asset is subsequently
measured at amortized cost if it is held
within a business model whose
objective is to hold the asset in order to
collect contractual cash flows and the
contractual terms of the financial asset
give rise on specified dates to cash
flows that are solely payments of

principal and interest on the principal
amount outstanding.

• Financial assets at fair value through
other comprehensive income: A
financial asset is subsequently
measured at fair value through other
comprehensive income if it is held
within a business model whose
objective is achieved by both
collecting contractual cash flows and
selling financial assets and the
contractual terms of the financial asset
give rise on specified dates to cash
flows that are solely payments of
principal and interest on the principal
amount outstanding.

• Financial assets at fair value through
profit and loss (FVTPL): A financial asset
is subsequently measured at fair value
through profit and loss if it is held
within a business model whose
objective is achieved by selling
financial assets.

Equity instruments

All equity instruments in scope of Ind AS
109 are measured at fair value. Equity
instruments which are held for trading are
classified as at FVTPL. For all other equity
instruments, the Company may make an
irrevocable election to present subsequent
changes in the fair value in OCI. The
Company makes such an election on an
instrument-by-instrument basis. The
classification is made on initial recognition
and is irrevocable. If the Company decides
to classify an equity instrument as at
FVTOCI, then all fair value changes on the
instrument, including foreign exchange
gain or loss and excluding dividends, are
recognised in the OCI. There is no recycling
of the amounts from OCI to profit or loss,
even on sale of investment. However, the
Company may transfer the cumulative
gain or loss within equity. Equity
instruments included within the FVTPL
category are measured at fair value with
all changes recognised in the profit or loss.

Derecognition of financial instruments

The Company derecognizes a financial
asset when the contractual rights to the
cash flows from the financial asset expire
or it transfers the financial asset and the

transfer qualifies for derecognition under
Ind AS 109. If the Company retains
substantially all the risks and rewards of a
transferred financial asset, the Company
continues to recognize the financial asset
and recognizes a borrowing for the
proceeds received. A financial liability (or a
part of a financial liability) is derecognized
from the Company's balance sheet when
the obligation specified in the contract is
discharged or cancelled or expires.
Derecognition of financial instruments The
Company derecognizes a financial asset
when the contractual rights to the cash
flows from the financial asset expire or it
transfers the financial asset and the
transfer qualifies for derecognition under
Ind AS 109. If the Company retains
substantially all the risks and rewards of a
transferred financial asset, the Company
continues to recognize the financial asset
and recognizes a borrowing for the
proceeds received. A financial liability (or a
part of a financial liability) is derecognized
from the Company's balance sheet when
the obligation specified in the contract is
discharged or cancelled or expires.

Impairment of financial assets

In accordance with Ind AS 109, the
company applies expected credit loss
(ECL) model for measurement and
recognition of impairment loss on the
Trade receivables or any contractual right
to receive cash or another financial asset
that result from transactions that are
within the scope of Ind AS 115.

The Company follows 'simplified
approach' for recognition of impairment
loss allowance on trade receivables or any
contractual right to receive cash or
another financial asset. The application of
simplified approach does not require the
Company to track changes in credit risk.
Rather, it recognises impairment loss
allowance based on lifetime ECLs at each
reporting date, right from its initial
recognition. As a practical expedient, the
uses a provision matrix to determine
impairment loss allowance on portfolio of
its trade receivables. The provision matrix
is based on its historically observed
default rates over the expected life of the
trade receivables and is adjusted for

forward-looking estimates. At every
reporting date, the historical observed
default rates are updated and changes in
the forward-looking estimates are

analysed.

ii. 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 recognised at the proceeds
received, net of direct issue costs.

Initial recognition and measurement:

All financial liabilities are classified at initial
recognition as financial liabilities at fair
value through profit or loss, loans and
borrowings, and payables, net of directly
attributable transaction costs. The
Company's financial liabilities include
loans and borrowings including bank
overdraft, trade payable, trade deposits
and other payables.

Subsequent measurement:

All financial liabilities are subsequently
measured at amortised cost using the
effective interest method or at FVTPL.

Derecognition:

A financial liability is derecognised when
the obligation under the liability is
discharged or cancelled or expires. When
an existing financial liability is replaced by
another from the same lender on

substantially different terms, or the terms
of an existing liability are substantially
modified, such an exchange or
modification is treated as the

derecognition of the original liability and

the recognition of a new liability. The
difference between the carrying amount of
the financial liability derecognised and the
consideration paid and payable is

recognised in profit or loss.

j) Inventories:

Inventories are valued at the lower of cost
or net realisable value. Cost is ascertained
on weighted average basis. Cost includes
purchase price, duties, transport &
handling costs and other costs directly
attributable to the acquisition and
bringing the inventories to their present
location and condition. Net realizable
value represents the estimated selling
price for inventories in normal course of
business, less all estimated cost of
completion and cost necessary to make
the sale. The basis of determination of cost
remains as follows:

a) Raw material, packing material: At cost

b) Work in progress: Cost of input plus
overhead up to the stage of completion.

c) Finished goods: Cost of input plus
appropriate overhead

k) Cash and cash equivalents:

Cash and cash equivalents in the balance
sheet comprise cash at bank, cash on
hand, other short-term deposits with
original maturities of three months or less
which are subject to an insignificant risk of
changes in value.