COMPANY OVERVIEW
Shri Hare-Knshna Sponge Iron Limited is an unlisted public company registered in Kolkata, India. The Company is engaged in business of manufacturing Sponge iron and its manufacturing facility is located at Plot No.106, Phase II, Industrial Growth Centre, Siltara, Raipur, Chnattisgarn.
1.01 Basis of preparation of financial statements
These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis. GAAP comprises mandatory accounting standards as prescribed under Section 133 of the Companies Act,2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules. 2014. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
All the Assets and Liabilities have been classified as Current and Non-Current as per the Company's normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of activities, the Company has ascertained its operating cycle as 12 months for the purpose of Current and Non Current classification of Assets and Liabilities.
1.02 Use of estimates
The preparation of the financial statements is in conformity with Indian GAAP which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures relating to contingent liabilities as at the date of the financial statements and reported amounts of income and expenses during the period. The estimates and assumptions made and applied in preparing the financial statements are based upon management's best knowledge of current events and actions as on the date of financial statements. However, due to uncertainties attached to the assumptions and estimates made, actual results could differ from those estimated. Any revision to accounting estimates is recognized DrosDectivelv in current and future oeriods.
1.03 (i)Property, Plant & Equipment
(a) Initial Recognition
The tangible items of property, plant and equipment are carried at cost less accumulated depreciation and accumulated impairment losses, if any, using the cost model as prescribed under Accounting Standard, AS-10 “Property, Plant & Equipment". Cost of an item of property, plant and equipment comprises of the purchase price, including import duties, if any, non-refundable purchase taxes, after deducting trade discounts and rebates, and costs that are directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Leasehold property is amortised over the term of the lease.
(b) Depreciation
Depreciation on tangible property, plant & equipment is charged on written down value method over the useful life/remaining useful life of the asset as per Schedule II of the Companies Act 2013. Depreciation on assets purchased / acquired during the year is charged from the date of purchase / acquisition of the asset or from the day the asset is ready for its intended use. Similarly, depreciation on assets sold / discarded during the year is charged up to the date when the asset is sold/discarded.
(ii) Intangible Assets
(a) Initial Recognition
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, Intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any.
(b) Amortization
intangible assets are amortized on straight line basis over the estimated useful economic life of the asset. The company presumes that the useful economic life of the software is ten years from the year in which it is acquired and ready to use.
1.04 Inventories
Cost of inventories comprises all cost of purchase, cost of conversion and other costs including manufacturing overheads incurred in bringing the inventories to their present location and condition. Inventories are valued at cost lower of cost or net realizable value. Cost of inventories are determined on Weighted average.
1.05 Investment
long-term/ Non-Current investments:
Long-term/ Non-Current investments are stated at cost. Provision is made for diminution in the value of the investments, if, in the opinion of the management, the same is considered to be other than temporary in nature. Current investments are carried at lower of cost and fair value determined on an individual basis. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss.
1.06 Employee benefits
(ii Short-term employee benefits
Short-term employee benefits are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss for the year which includes benefits like Salary, wages and bonus, and are recognized as expenses in the period in which the employee renders the related service.
(ii) Post- Employment Benefits:
Defined Contribution Plans
The Company has Defined Contribution Plans'for Post employment benefits in the form of Provident Fund and Pension Fund for all employees which are administered by Regional Provident Fund Commissioner. Provident Fund and Pension Fund are classified as defined contribution plans as the Company has no further obligation beyond making the contributions. The Company’s contributions to Defined Contribution plans are charged to the Statement of Profit and Loss as and when incurred.
Defined Benefit Plans
Non-Funded Plan: The Company has a defined benefit plan for Post-employment benefit in the form of Gratuity.
Liability for the above defined benefit plan is provided on the basis of valuation, as at the Balance Sheet date, carried out by an independent actuary. The actuarial method used for measuring the liability is the Projected Unit Credit method.
liii) Other Long-Term Employee Benefit
Liability tor Compensated Absences is provided on the basis of valuation, as at the Balance Sheet date, carried out by an independent actuary. The Actuarial valuation method used for measuring the liability is the Projected Unit Credit method. The expense is recognised at the present value of the amount payable as per actuarial valuations. Actuarial gains and losses in respect of such benefits are recognised in the Statement of Profit and Loss.
Termination benefits are recognized as an expense as and when incurred.
1.07 Revenue recognition
I
Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection.
(i) Sales are recognised when the substantial risks and rewards of ownership in the goods are transferred to the buyer, upon supply of goods, and are recorded net of trade discounts, rebates and goods and services tax.
(ii) Dividend income is recognized wnen right to receive the same is established.
(iii) Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable.
(iv) All other income and expenditure are accounted for on accrual basis.
1.08 Earnines Per Share
Basic earnings per share is 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 net profit or loss for the year attributable to equity shareholders is the net profit or loss for the year after deducting preference dividends and any attributable tax thereto for the period. The weighted average number of equity shares is the number of equity shares outstanding at the beginning of the period, adjusted by the number of equity shares bought back or issued during the period multiplied by the time-weighing factor.
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 nurrlber of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. The number of equity shares is the aggregate of the weighted average number of equity shares and the weighted average number of equity shares which would be issued on the conversion of all the dilutive potential equity shares into equity shares. Dilutive potential equity shares are deemed to have been converted into equity shares at the beginning of the period or, if issued later, the date of the issue of the potential equity shares. Potential equity shares are treated as dilutive when, and only when, their conversion to equity shares would decrease net profit per share from continuing ordinary operations.
1.09 Taxes on Income
Tax expense for the year comprising current tax & deferred tax are considered in determining the net profit for the year. Provision is made for current tax and based on tax liability computed in accordance with relevant tax laws applicable to the Company. Provision is made for deferred tax for all timing difference arising between taxable incomes & accounting income at currently enacted or substantively enacted tax rates, as the case may be. Deferred tax assetsfother than in situation of unabsorbed depreciation and carry forward losses) are recognized only if there is reasonable certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each Balance Sheet date. Deferred Tax Assets and Deferred Tax Liability have been offset wherever the Company has a legally enforceable right to set off current tax assets against current tax liability and where the Deferred Tax Asset and Deferred Tax Liability relate to Income taxes is levied by the same taxation authority.
1.10 Provisions, contingent liability and contingent assets
Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.
Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed on the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
Contingent Assets are neither recognized nor disclosed in the financial statements.
1.11 Expenses
Expenses are accounted for on accrual basis and provision is made for all known losses and liabilities.
1.12 impairment of assets
impairment is ascertained at each Balance Sheet date in respect of cash generating units. An impairment loss is recognised when the carrying amount of an asset exceeds its 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.
1.13 Cash & cash equivalents
Cash & cash equivalents comprise cash and cash on deposit with banks and corporations. The company considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amount of cash to be cash equivalents.
1.14 Leases
Leases where the Lessor effectively retains substantially all the risks and benefits of ownership of the Leased Asset, are classified as ’Operating Leases". Lease rentals with respect to assets taken on ’Operating Lease’ are charged to Statement of Profit and Loss on a straight line basis over the lease term.
Leases which effectively transfer to the Company substantially all the risks and benefits incidental to the ownership of the leased item are classified as ’Finance Lease’. Assets acquired on Finance Lease which substantially transfer all the risks and rewards of ownership to the Company are capitalized as assets by the Company at the lower of the fair value and the present value of the minimum lease payment and a liability is created for an equivalent amount. Lease rentals payable is apportioned between the liability and finance charge so as to obtain a constant periodic rate of interest on the outstanding liability for each year
1.15 Borrowing cost
^JBacrpwing costs are interest, commitment charges and other costs incurred by an enterprise in connection with Short Term/ ,;;T^iing.Term borrowing of funds. Borrowing costs that are attributable to the acquisition or construction of a qualifying asset is Rjy^OcapitaIised^s part of the cost of such asset till such time the asset is ready for its intended use. A qualifyip?|^^^jhat ^;ej;e5Sariiy takes a substantial period of time to get ready for its intended use.pother borrowing^^f^e ci^e^o \^V Staterrrenpf Profit and Loss in the year in which they are incurred. \\ lol
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