SIGNIFICANT ACCOUNTING POLICES:
This note provides a list of the significant accounting policies adopted by the company in the preparation of these financial
statements. These policies have been consistently applied to all the years presented in these financial statements, unless
otherwise stated.
• BASIS OF PREPARATION OF FINANCIAL STATEMENTS
These financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) under the historical cost
convention on the accrual basis except for certain financial instruments which are measured at fair values. The Ind AS are
prescribed under Section 133 of the Companies Act, 2013 (“the Act”) read with Rule 3 of the Companies (Indian
Accounting Standards) Rules, 2015 as amended.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a
revision to an existing accounting standard require a change in accounting policy hitherto in use. These Financial Statements
are presented in Indian Rupees, which is also the Company’s functional currency and all amounts disclosed in financial
statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise
stated.
The Company follows the mercantile system of accounting and recognizes incomes and expenditures on accrual basis. The
accounts are prepared on historical cost basis, as a going concern, and are consistent with accounting principles generally
accepted in India.
All the assets and liabilities have been classified as current and non-current as per the Company’s normal operating cycle
which is based on the nature of the products and the time elapsed 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
• 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:
- Expected to be realised or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of sale/lease
- Expected to be realised 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.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash
equivalents. The Company has identified twelve months as its operating cycle.”
Ind AS 116 supersedes Ind AS 17 Leases and Appendix C to Ind AS 17 determining whether an Arrangement contains a
Lease. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases.
Lessor accounting under Ind AS 116 is substantially unchanged from Ind AS 17. Lessors will continue to classify leases as
either operating or finance leases using similar principles as in Ind AS 17. Therefore, Ind AS 116 did not have an impact for
leases where the Company is the lessor.
The Company as a lessee
In the Comparative period, a lease is classified at the inception date as a finance lease or an operating lease. A lease that
transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease.
Finance leases are capitalized at the commencement of the lease at the inception date fair value of the leased property or, if
lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and
reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance
charges are recognised in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying
assets, in which case they are capitalized in accordance with the Company’s general policy on the borrowing costs.
Contingent rentals are recognised as expenses in the periods in which they are incurred.
A leased asset is depreciated over the useftil life of the asset. However, if there is no reasonable certainty that the Company
will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useftil life of the
asset and the lease term.
Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the
lease term.
The Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified
as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant
lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the
leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as
revenue in the period in which they are earned.
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company
to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Company’s net investment in
the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net
investment outstanding in respect of the lease.”
• ROUNDING OF AMOUNTS
All amounts disclosed in financial statements and notes have been rounded off to the nearest lakhs, unless otherwise stated.
• REVENUE RECOGNITION
Revenue is recognized when control of the goods or services are transferred to the customer at an amount that reflects the
consideration to which the Company expects to be entitled in exchange for those goods or services, regardless of when the
payment is being made. . However, Goods and Services tax (GST) are not received by the Company on its own account.
Rather, it is tax collected on value added to the commodity by the seller on behalf of the government. Accordingly, it is
excluded from revenue.
Revenue from sales is recognized when the substantial risks and rewards of ownership of goods are transferred to the buyer
and the collection of the resulting receivables is reasonably expected. This usually occurs upon dispatch, after the price has
been determined and collection of the receivable is reasonably certain. Revenue from the sale of goods is measured at the fair
value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates.
• Sale of Services
The Company recognizes revenue when the significant terms of the arrangement are enforceable, services have been delivered
and the collectability is reasonably assured.
• Other income
Interest
For all debt instruments measured either at amortized cost or at fair value through other comprehensive income, interest
income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash
payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross
carrying amount of the financial asset or to the amortized cost of a financial liability. When calculating the effective interest
rate, the company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for
example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is
included in finance income in the statement of profit and loss.
• PROPERTY, PLANT & EQUIPMENT
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less
depreciation and impairment, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the
items. The cost of property, plant and equipment comprises its purchase price net of any trade discounts and rebates, any
import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable
expenditure on making the asset ready for its intended use, including relevant borrowing costs for qualifying assets and any
expected costs of decommissioning. Expenditure incurred after the property, plant and equipment have been put into
operation, such as repairs and maintenance, are charged to the Statement of Profit and Loss in the period in which the costs
are incurred. Major shut-down and overhaul expenditure is capitalized as the activities undertaken improves the economic
benefits expected to arise from the asset.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to
arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant
and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is
recognized in Statement of Profit and Loss.
Advances paid towards the acquisition of Property, Plant & Equipment outstanding at each reporting date is classified as
Capital advances under Other Non —Current Assets and assets which are not ready for intended use as on the date of
Balance sheet are disclosed as “Capital Work in Progress.”
• DEPRECIATION/ AMORTISATION
Depreciation on Property, Plant & Equipment is charged on Straight Line Method. Depreciations are charged over the
estimated useful lives of the assets as specified in Schedule II of the Companies Act, 2013. Depreciation in respect of
additions to/and deletion from assets has been charged on pro-rata basis from/till the date they are put to commercial use.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at regular
intervals and adjusted prospectively, if appropriate.
Depreciation on additions/deletions to Property plant and equipment during the year is provided for on a pro-rata basis with
reference to the date of additions/deletions.
Depreciation on subsequent expenditure on Property plant and equipment arising on account of capital improvement or other
factors is provided for prospectively over the remaining useful life.
Depreciation on refurbished/revamped Property plant and equipment which are capitalized separately is provide for over the
reassessed useful life
• IMPAIRMENT OF ASSESTS
Property, Plant & Equipment are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of the asset’s fair value less cost of disposal
and value in use.
• BORROWING COST
Borrowing costs that are attributable to the acquisition or construction of qualifying assets (assets which require substantial
period of time to get ready for its intended use) are capitalized as part of the cost of that asset. All other borrowing costs are
charged to the Statement of Profit and Loss for the period for which they are incurred.
• INVENTORIES
Inventories are valued at the lower of cost and net realizable value. Cost incurred in bringing each products to its present
location and condition are accounted for as follows:¬
- Raw Materials:
Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.
Cost is determined on first in, first out basis.
- Finished goods and Work In Progress:
Cost includes cost of direct materials and labour and a proportion of manufacturing overheads based on the normal operating
capacity. Cost in determined on first in, first out basis
- Traded Goods:
Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.
Cost is determined on first in, first out basis.
Net realizable values is the estimated selling price in the ordinary course of business, less estimated costs of completion and
the estimated costs necessary to make the sale.
Stores and spares which do not meet the definition of property, plant and equipment are accounted as inventories.
• TAXATION
The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the
applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the Company operates and generates taxable income. Management periodically
evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax base of
assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is also not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the
transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income tax is determined using tax rates
(and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when
the related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred tax assets are recognized for all deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilize those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities
and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where
the entity has a legally enforceable right to offset and intends either to settle on a net basis or to realize the asset and settle the
liability simultaneously.
Current and deferred tax is recognized in Profit or Loss, except to the extent that it relates to items recognized in other
comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly
in equity, respectively.
• CASH AND CASH EQUIVALENTS
Cash and cash equivalents for the purpose of Cash Flow Statement comprise cash and cheques in hand, bank balances,
demand deposits with banks (other than deposits pledged with government authorities and margin money deposits).
• CASH FLOW STATEMENT
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for
the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The
cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
|