NOTE 1: Summary of Significant Accounting Policies
A. Basis of preparation of financial statements
These financial statements have been prepared to comply with the accounting
principles generally accepted in India, including the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the Companies
(Accounts) Rules, 2014. The financial statements have been prepared on a going
concern basis under the historical cost convention on accrual basis. The
accounting policies have been consistently applied by the Company unless
otherwise stated.
All assets and liabilities have been classified as current or non-current as per the
Company’s normal operating cycle and other criteria set out in the Schedule III
to the Companies Act, 2013. Based on the nature of products and the time
between the acquisition of assets for processing and their realization in cash and
cash equivalents, the Company has ascertained its operating cycle as 12 months
for the purpose of current and non-current classification of assets and liabilities.
B. Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires estimates and assumptions to be made that affect
the reported amount of assets and liabilities on the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Differences between actual results and estimated are recognized in the
period in which the results are known / materialized.
C. Revenue Recognition
Revenue from sale of goods is recognized on transfer of significant risks and
rewards of ownership of the goods to the buyer. Sales of products are stated net
of sales tax, returns, discounts and allowances.
Interest income are recognized on time proportion basis taking into account the
amount outstanding and the applicable interest rate except, where the recovery
is uncertain, in which case it is accounted for on receipt.
D. Other Income
Interest income is recognized on a time proportion basis taking into account the
amount outstanding and the rate applicable.
Dividend is accounted when the right to receive payment is established
E. Fixed Assets
There are no fixed assets as on the balance sheet date.
F. Depreciation
As there are no fixed assets, depreciation also not provided.
G. Investments
Investments are classified into long term investments and current investments.
Investments which are intended to be held for one year or more are classified as
long term investments and investments which are intended to be held for less
than one year are classified as current investments. Long term investments are
carried at cost less other than any temporary diminution in value, determined
separately for each investment. Current investments are carried at lower of cost
or fair value. The comparison of cost and fair value is done separately in respect
of each category of investment.
H. Inventories
Inventories are stated at the lower of cost or net realizable value. Cost includes
product’s invoice price, duties, vendor obligation, if any, and other expenses
incurred to bring the inventories to their present condition and location. Costs of
inventories are determined on the basis of First-In-First-Out (‘FIFO’) method.
I. Miscellaneous Expenditure
Preliminary expenditures are amortized in the year in which incurred.
J. Accounting for Taxation of Income
Tax expense for the period, comprising current tax and deferred tax, are included
in the determination of the net profit or loss for the period. Current tax is
measured at the amount expected to be paid to the tax authorities in accordance
with the taxation laws prevailing in the respective jurisdictions.
Deferred tax is recognized for all the timing differences, subject to the
consideration of prudence in respect of deferred tax assets. Deferred tax assets
are recognized and carried forward only to the extent that there is a reasonable
certainty that sufficient future taxable income will be available against which
such deferred tax assets can be realized. Deferred tax assets and liabilities are
measured using the tax rates and tax laws that have been enacted or
substantively enacted by the Balance Sheet date. At each Balance Sheet date, the
group reassesses unrecognized deferred tax assets, if any.
Current tax assets and current tax liabilities are offset when there is a legally
enforceable right to set off the recognized amounts and there is an intention to
settle the asset and the liability on a net basis. Deferred tax assets and deferred
tax liabilities are offset when there is a legally enforceable right to set off assets
against liabilities representing current tax and where the deferred tax assets and
the deferred tax liabilities relate to taxes on income levied by the same governing
taxation laws.
K. Accounting for Commodity Derivatives
Commodity Instruments are initially measured at cost, which is the fair value of
whatever was paid or received to acquire the financial asset or liability.
Transaction costs are included in the initial measurement of financial
instruments. Subsequent to initial measurement, at each reporting date, all such
instruments are re-measured to fair value (mark-to-market) with gains and
losses recognized in the statement of profit and loss immediately. Gains or losses
on settlement of Commodity Instruments during the year are recognized in the
statement of profit and loss immediately.
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