2. Significant Accounting policies
2.1 Basis of preparation:
Statement of Compliance:
The Company prepared its financial statements to comply with the accounting
standards specified under section 133 of the Companies Act, 2013 read with Companies
(Indian Accounting Standards) Rules, 2015, as amended from time to time. These
financial statements include Balance Sheet as at 31 March 2024, the Statement of Profit
and Loss including Other Comprehensive Income, Cash flows Statement and Statement
of changes in equity for the year ended 31 March 2024, and a summary of significant
accounting policies and other explanatory information (together hereinafter referred to
as "financial statements”).
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 Schedule III of the
Companies Act, 2013. Based on the nature of products and 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/non-current
classification of assets and liabilities.
The financial statements are presented in Indian Rupees.
Basis of Measurement:
The Financial Information for the year ended 31 March 2024 and year ended 31 March
2023 has been prepared on an accrual basis and a historical cost convention, except for
the following financial assets and liabilities which have been measured at fair value or
amortized cost at the end of each reporting period:
- Derivative financial instruments,
- Certain financial assets and liabilities (refer accounting policy regarding financial
instruments)
Historical cost is generally based on the fair value of the consideration given in
exchange for goods and services. Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date.
Summary of Significant Accounting Policies:
a. Classification of Current / Non-Current Assets and Liabilities:
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:
• Expected to be realized or intended to be sold or consumed in normal operating
cycle;
• Held primarily for the purpose of trading;
• Expected to be realized within twelve months after the reporting period; or
• 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 treated as current when:
• It is expected to be settled in normal operating cycle;
• It is held primarily for the purpose of trading;
• It is due to be settled within twelve months after the reporting period; or
• 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 non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
b. Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date. The fair
value measurement is based on the presumption that the transaction to sell the asset or
transfer the liability takes place either:
• In the principal market for the asset or liability, or
• In the absence of a principal market, in the most advantageous market for the
asset or liability
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market
participants would use when pricing the asset or liability, assuming that market
participants act in their economic best interest.
The Company uses valuation techniques that are appropriate in the circumstances and for
which sufficient data are available to measure fair value, maximizing the use of relevant
observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial
statements are categorized within the fair value hierarchy, described as follows, based on
the lowest level input that is significant to the fair value measurement as a whole:
• Level 1 — Quoted (unadjusted) market prices in active markets for identical assets
or liabilities
• Level 2 — Valuation techniques for which the lowest level input that is significant
to the fair value measurement is directly or indirectly observable
• Level 3 — Valuation techniques for which the lowest level input that is significant
to the fair value measurement is unobservable
For the purpose of fair value disclosures, the Company has determined classes of assets
and liabilities on the basis of the nature, characteristics and risk of the assets or liability
and the level of fair value hierarchy as explained above.
c. Property, Plant and Equipment
Property, Plant and Equipment's are stated at cost, net of accumulated depreciation and
impairment losses, if any. The cost comprises purchase price, borrowing costs if
capitalization criteria are met and directly attributable cost of bringing the asset to its
working condition for the intended use. Any trade discounts and rebates are deducted in
arriving at the purchase price.
Subsequent expenditure related to an item of property, plant and equipment is added to
its book value only if it increases the future benefits from the existing asset beyond its
previously assessed standard of performance. All other expenses on existing property,
plant and equipment, including day-to-day repair and maintenance expenditure and cost
of replacing parts, are charged to the Statement of Profit and Loss for the period in which
such expenses are incurred.
Capital work-in-progress comprises of property, plant and equipment that are not ready
for their intended use at the end of reporting period and are carried at cost comprising
direct costs, related incidental expenses, other directly attributable costs and borrowing
costs.
Gains or losses arising from derecognition of property, plant and equipments are
measured as the difference between the net disposal proceeds and the carrying amount of
the asset and are recognized in the Statement of Profit and Loss when the asset is
derecognized.
Depreciation on Property, plant and equipment's is calculated on pro rata basis on
straight-line method using the management assessed useful lives of the assets which is in
line with the manner prescribed in Schedule II of the Companies Act, 2013.
The residual values, useful lives and methods of depreciation of property, plant and
equipment are reviewed at each financial year end and adjusted prospectively.
Advances paid towards the acquisition of property, plant and equipment outstanding at
each Balance Sheet date is classified as capital advances under Current/Non-current as
assets and cost of assets not ready to use before such date are disclosed under 'Capital
work in-progress'. Subsequent expenditures relating to property, plant and equipment is
capitalized only when it is probable that future economic benefits associated with these
will flow to the Company and the cost of the item can be measured reliably. Repairs and
maintenance costs are recognized in the Statement of Profit and Loss when incurred. The
cost and related accumulated depreciation are eliminated from the financial statements
upon sale or retirement of the asset and the resultant gains or losses are recognized in the
Statement of Profit and Loss.
Property, plant and equipment with finite life are evaluated for recoverability whenever
there is any indication that their carrying amounts may not be recoverable. If any such
indication exists, the recoverable amount (i.e. higher of the fair value less cost to sell and
the value-in-use) is determined on an individual asset basis unless the asset does not
generate cash flows that are largely independent of those from other assets. In such cases,
the recoverable amount is determined for the Cash Generating Unit (CGU) to which the
asset belongs.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying
amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.
An impairment loss is recognised in the statement of profit and loss.
d. Intangible Assets
Intangible assets are stated at cost, net of accumulated amortization and impairment
losses, if any. The cost comprises purchase price, borrowing costs if capitalization
criteria are met and directly attributable cost of bringing the asset to its working
condition for the intended use.
Gains or losses arising from derecognition of intangible assets are measured as the
difference between the net disposal proceeds and the carrying amount of the asset and
are recognized in the Statement of Profit and Loss when the asset is derecognized.
Amortization on intangible assets is calculated on pro rata basis on straight-line method
using the useful lives of the assets and in the manner prescribed in Schedule II of the
Companies Act, 2013.
The residual values, useful lives and methods of depreciation of Intangible assets are
reviewed at each financial year end and adjusted prospectively.
The Company has Goodwill as Intangible Asset. Goodwill is shown at excess of
purchase consideration over net tangible assets valued at the time of Business Purchase.
Goodwill is not amortized.
e. Leases
The Company evaluates if an arrangement qualifies to be a lease as per the
requirements of Ind AS 116. Identification of a lease requires significant judgment. the
Company uses significant judgement in assessing the lease term (including anticipated
renewals) and the applicable discount rate. The Company determines the lease term as
the non-cancellable period of a lease, together with both periods covered by an option
to extend the lease if the Company is reasonably certain to exercise that option; and
periods covered by an option to terminate the lease if the Company is reasonably
certain not to exercise that option. In assessing whether the Company is reasonably
certain to exercise an option to extend a lease, or not to exercise an option to terminate a
lease, it considers all relevant facts and circumstances that create an economic incentive
for the Company to exercise the option to extend the lease, or not to exercise the option
to terminate the lease. The Company revises the lease term if there is a change in the
non-cancellable period of a lease.
The discount rate is generally based on the incremental borrowing rate specific to the
lease being evaluated or for a portfolio of leases with similar characteristics.
Applied the exemption not to recognize right-of-use assets and liabilities for leases with
less than 12 months of lease term on the date of initial application, variable lease and
low value asset.
f. Borrowing costs
Borrowing cost includes interest and amortization of ancillary costs incurred in
connection with the arrangement of borrowings.
Borrowing costs directly attributable to the acquisition, construction or production of an
asset that necessarily takes a substantial period to get ready for its intended use or sale
are capitalized as part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
g. Impairment of non-financial assets
The carrying amounts of assets are reviewed at each balance sheet date, if there is any
indication of impairment based on internal / external factors. Impairment Loss is
provided to the extent the carrying amount of assets exceeds their recoverable amount.
Recoverable amount is the higher of an asset's net selling price and its value in use.
Value in use is the present value of estimated future cash flows expected to arise from
the continuing use of an asset and from its disposal at the end of its useful life. Net
selling price is the amount obtainable from the sale of an asset in an arm's length
transaction between knowledgeable, willing parties, less the costs of disposal.
Impairment losses are recognized in the statement of profit and loss.
h. Non- Current assets held for sale
The Company classifies non-current assets as held for sale if their carrying amounts will
be recovered principally through a sale rather than through continuing use. Actions
required to complete the sale should indicate that it is unlikely that significant changes
to the sale will be made or that the decision to sell will be withdrawn. The Company is
committed to the sale expected within one year from the date of classification.
Non-current assets held for sale are measured at the lower of their carrying amount and
the fair value less costs to sell. Assets and liabilities classified as held for sale are
presented separately in the balance sheet. Property, plant and equipment and intangible
assets once classified as held for sale are not depreciated or amortized.
In the current year there are no such amounts recognized.
i. Inventories
Raw materials, traded goods, work in progress, finished goods, packing materials,
project material for long term contracts, scrap materials and stores and spares are
valued at lower of cost and net realizable value. However, materials and other items
held for use in the production of inventories are not written down below cost if the
finished products in which they will be incorporated are expected to be sold at or above
cost. Cost of raw materials, packing materials and stores & spares is determined on a
first in first out (FIFO) basis and includes all applicable cost incurred in bringing goods
to their present location condition.
Work-in-progress and finished goods are valued at lower of cost and net realizable
value. Cost includes direct material as aforesaid, direct labour cost and a proportion of
manufacturing overheads based on total manufacturing overheads to raw materials
consumed.
Traded goods are value at lower of cost and net realizable value. Cost includes cost of
purchase and other cost incurred in bringing the inventories at their location and
condition. Cost is determined on weighted average basis.
The stocks of scrap materials have been taken at net realizable value.
Net realizable value is the estimated selling price in the ordinary course of business, less
estimated costs of completion and estimated costs necessary to make the sale.
j. Revenue Recognition
Revenue is measured based on the consideration specified in a contract with a customer
and excludes amounts collected on behalf of third parties including taxes. Revenue is
recognized upon transfer of control of promised products or services to customers in an
amount that reflects the consideration we expect to receive in exchange for those
products or services.
The following specific recognition must also be met before revenue is recognized.
Sale of goods
Revenue from sale of the goods is recognized when all the significant risk and rewards
of ownership of the goods have been passed to the buyer, usually on dispatch of goods.
The company collects GST on behalf of the government and, therefore, these are not
economic benefits to the company. Revenue is disclosed net of discounts and returns, as
applicable.
Interest
For all financial asset measured either at amortized cost or at fair value through other
comprehensive income, interest income is recorded using the effective interest rate
(EIR).
Dividends
Dividend income is recognized when the Company's right to receive dividend is
established by the reporting date.
k. Employee benefits expense
A) Short-term employee benefits
All employee benefits payable wholly within twelve months of rendering the service are
classified as short-term employee benefits. Benefits such as salaries, wages, incetives, special
awards, medical benefits etc. and the expected cost of ex-gratia are charged to the
Statement of Profit & Loss account in the period in which the employee renders the related
service. A liability is recognised for the amount expected to be paid when there is 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.
B) Compensated absences
The Company has its leave policy applicable to all employees. The Company estimates and
provides the liability for such short-term and long term benefits based on the terms of the
policy. The Company does not treats accumulated leave expected to be carried forward
beyond twelve months, as long-term employee benefit for measurement purposes.
Accordingly, such long-term compensated advances are also provided in short term in
financials statements even based on the actuarial valuation using the
projected unit credit method at the year-end. Remeasurement gains/losses on defined
benefit plans are immediately taken to the Statement of Profit & Loss and are not
deferred.
C) Defined contribution plans:
Retirement benefit in the form of provident fund and 'Employer-Employee Scheme' are
defined contribution schemes. The Company recognises contribution payable to the
provident fund and 'Employer Employee' scheme as an expenditure, when an employee
renders the related service. The Company has no obligation, other than the contribution
payable to the funds. The Company's contributions to defined contribution plans are
charged to the Statement of Profit & Loss as incurred.
D) Defined benefit plan:
The Company operates a defined benefit gratuity plan for its employees. The costs of
providing benefits under this plan is determined on the basis of actuarial valuation at each
year-end using the projected unit credit method. Re-measurements, comprising of
actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net
interest on the net defined benefit liability and the return on plan assets (excluding
amounts included in net interest on the net defined benefit liability), are recognised
immediately in the Balance sheet with a corresponding debit or credit to retained earnings
through OCI in the period in which they occur. Re-measurements are not reclassified to
Statement of Profit & Loss in subsequent periods. Net interest is calculated by applying
the discount rate to the net defined benefit liability or asset. Past service costs are
recognised in profit or loss on the earlier of:
-The date of the plan amendment or curtailment, and
-The date that the Group recognises related restructuring costs
l. Foreign currency translation
The Company's financial statements are presented in Indian rupee (INR) which is also
the Company's functional currency.
Foreign currency transactions are recorded on initial recognition in the functional
currency, using the exchange rate prevailing at the date of transaction.
Measurement of foreign currency item at the balance sheet date
Foreign currency monetary assets and liabilities denominated in foreign currency are
translated at the exchange rates prevailing on the reporting date.
Exchange differences
Exchange differences arising on settlement or translation of monetary items are
recognized as income or expense in the statement of profit and loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency
are translated using the exchange rates at the dates of the initial transactions.
However, there are no foreign currency transactions during the year.
m. Income taxes
T ax expenses comprise current and deferred tax. Current income-tax is measured at the
amount expected to be paid to the tax authorities in accordance with the Income-tax
Act, 1961. The tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognized outside profit and loss is recognized
outside profit and loss (either in other comprehensive income or in equity). Current tax
items are recognized in correlation to the underlying transaction either in OCI or
directly in equity.
Deferred tax is provided using the liability method on temporary differences between
the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes at the reporting date. Deferred income tax is measured using the tax rates and
the tax laws enacted or substantially enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax
assets are recognized for deductible temporary differences only to the extent that there
is reasonable certainty that sufficient future taxable income will be available against
which such deferred tax assets can be realized.
At each reporting date, the Company re-assesses unrecognized deferred tax assets. It
recognizes unrecognized deferred tax asset to the extent that it has become reasonably
certain, as the case may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each reporting date. The
Company writes-down the carrying amount of deferred tax asset to the extent that it is
no longer reasonably certain, as the case may be, that sufficient future taxable income
will be available against which deferred tax asset can be realized. Any such write-down
is reversed to the extent that it becomes reasonably certain or virtually certain, as the
case may be, that sufficient future taxable income will be available.
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.
n. Segment reporting
Segment reporting required as per Ind AS-108 is not applicable as the Company
operates in one single primary business segment.
o. Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the period
attributable to equity shareholders by the weighted average number of equity shares
outstanding during the period. The weighted average number of equity shares
outstanding during the period is adjusted for events such as bonus issue that have
changed the number of equity shares outstanding, without a corresponding change in
resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the
period attributable to equity shareholders and the weighted average number of shares
outstanding during the period are adjusted for the effect of all potentially dilutive
equity shares.
|