3. Summary of significant accounting policies:
a) Use of estimates
These financial statements of the Company have been prepared in accordance with the
generally accepted accounting principles in India (the accounting standards notified under
Indian GAAP). The Company has prepared these financial statements to comply in all
material aspects with the accounting standards notified under Section 133 of the Companies
Act 2013, read together with Rule 7 of the Companies (Accounts) Rules 2014 The financial
statements have been prepared on an accrual basis under the historical cost convention
The Company has ascertained its operating cycle as twelve months for the purpose of
current/non-current classification of assets and liabilities
b) Revenue Recognition:
Revenue ie 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. The Company has concluded that it Is
principal in its revenue arrangements, because it typically controls the goods or services
before transferring them to the customer.
Revenue arises from sale of goods.
Most of the Company's revenue is derived from selling goods with revenue recognized at
a point in time when control of the goods is transferred to the customer and retains none
of the significant risks and rewards of the goods in question.
The Company recognises revenue from the sale of goods measured at the fair value of
the consideration received or receivable, net of returns and allowances, trade discounts
and volume rebates.
The Company provides retrospective volume rebates to its customers on products
purchased by the customer once the quantity of products purchased during the period
exceeds a threshold specified in the contract. Retrospective volume rebates give rise to
variable consideration To estimate the variable consideration, the Company considers
that the most likely amount method better predicts the amount of variable consideration.
Other Income
Other income is recognized on accrual basis except where the receipt of income is
uncertain.
c) Tangible fixed assets
fixed assets are stated at cost, net of accumulated depreciation and accumulated
impairment losses, if any The cost comprises purchase price, borrowing costs if
Capitalization criteria are met, the cost of replacing part of the fixed assets 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 refated to an item of fixed asset are added to its book value only
i it increases the future benefits from the existing asset beyond its previously assessed
standard of performance. All other expenses on existing fixed assets, including day-to-
day repair and maintenance expenditure are charged to the statement of profit and loss
for the period during which such expenses are incurred
The Group identifies and determines cost of each component/part of the assets
separately, if the component/part has a cost which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining asset.
Fixed Assets are reviewed for impairment on each Balance Sheet date.
An item of tangible fixed assets is derecognized upon disposal or when no future
economic benefits are expected to arise from the continued use of assets
d) Depreciation
Depreciation is calculated on cost of items of property, plant and equipment less their
estimated residual values over their estimated useful lives using the straight-line method
in respect of plant and machinery-Computer, Furniture and Fixtures and Office
Equipment's. Depreciation Is generally recognized in the Statement of Profit and Loss.
useful lives have been determined in accordance with Schedule II to the Companies Act.
2013 on written down value basis.
e) Inventories:
Items of Inventories are measured at lower of cost and net realisable value after
providing for obsolescence, wherever considered necessary. Cost of inventories have
been computed to include all cost of purchase, cost of conversion and other costs
incurred in bringing the inventories to their present location and condition.
Raw material and, component, stores and spares including packing material 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 wilt be incorporated are expected to be sold at or above cost
Costs are determined on weighted average basis. Work-in-progress and finished goods
are valued at lower of cost and net realizable value. Cost of direct material induce,
labour and proportion of manufacturing overhead based on normal operating capacity.
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.
Excess/ shortages, if any. arising on physical verification are absorbed in the respective
consumption accounts
f) Foreign Currency Transactions and balances:
(i) Initial Recognition
the Company's financial statements are presented in I NR which is also the Company's
functional currency Foreign Currency transactions are recorded in the reporting currency
by applying to the foreign currency amount the exchange rate between the reporting
currency and the foreign currency at the date of the transaction
In case of advance received/payments in the foreign currency, the spot exchange rate to
use on initial recognition of the related assets, expense or income on the derecognition of
a non-monetary assets or non monetary liability ’elating to advance consideration shall
be the date when an entity has received or paid advance consideration in a foreign
currency
{if) Conversion
Foreign currency monetary Items are retranslated using the exchange rate prevailing at
the reporting date. Non-monetary items, which are measured in terms of historical cost
denominated in a foreign currency are reported using the exchange rate at the date of
the transaction.
(Ill) Exchange Differences
The Company accounts for exchange differences arising on translatinn/sottlement of
foreign currency monetary items as below.-
a. Exchange difference arising on long term foreign currency monetary items related to
acquisition of a fixed asset are capitalized and depreciated at written down value
method.
b. All other exchange differences arerecognized as income or as expenses In the
period in which they arise
For the purpose of (a) above, the Company treats a foreign monetary item as “long
term foreign currency monetary items". If it has a term of twelve months or more at
the date of its origination.
g) Borrowing cost:
Borrowing costs directly attributable to the acquisition, construction or production of an
asset that necessarily takes a substantial period of time to get ready for its intended
use or sale are capitalized as part of the cost of the asset. All other borrowing costs are
expensed in the period in which they occur Borrowing costs consist of interest and
other costs that an entity incurs in connection with the borrowing of funds Tne
Borrowing cost includes Bank Charges. However, during the year, the Company has
not incurred any Borrowing Cost or borrow any money from Banks and Financial
Institutions.
h) Employee Benefits:
Provident Fund: Provisions of Provident Fund and Pension Schemes are not
applicable to the Company
Gratuity: The provisions of Gratuity Act are not applicable to the Company, during
the year under review
I) Income taxes
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 adjusted by changes in deferred
tax assets and liabilities attributable to temporary differences. The current income tax
charge is calculated on the basis or the rax laws enacted or substantively enacted at the
end of the reporting period in India. 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 tax
Deferred tax is provided using the liability method on temporary difference between the tax
bases of assets and liabilities and their carrying amounts for financial reporting purposes
at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences, except
When the deferred tax liability arises from an asset or liability in a transaction that Is not a
business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss
Deferred tax assets are recognized for all deductible temporary differences, the carry
forward of unused tax credits and any unused tax losses Deterred tax assets are
recognized to the extent that 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.
The carrying amount of deferred tax assets is reviewed at each reporting date and
reduced to the extent that it is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred
tax assets are re-assessed at each reporting date and are recognized to the extent that it
has become probable that future taxable profits will allow the deferred tax asset to be
recovered.
Deferred tax assets and liabilities are measured at the tax rales that are expected to apply
in the year when the asset is realized or the liability is settled, based on tax rates (and tax
laws) that have been enacted or substantively enacted at the reporting da*.e
j) Impairment of tangible assets:
At each Balance Sheet, the Company reviews the carrying amount of it’s fixed assets to
determine whether there is any indication that the assets suffered any impairment (oss. If
any such indication exists, the recoverable amount of the assets is estimated in order to
determine the extent or impairment loss. Recoverable amount is higher of an assets net
selling price and value in use In assessing value in use, the estimated future cash flows,
estimated future cash flows expected from the continuing use of the asset and from its
disposal are discounted to their present value using a pre-tax discount 'ate that reflects
the current market assessment of time value of money & the risk specific to the asset
k) Operating Cycle
Based on the nature of products/activities of the Company and the normal time
between purchase of raw materials and their realisation in cash or cash equivalents,
the Company has determined its operation cycle within 12 months for the purpose of
classification of its assets and liabilities as current and non-current.
|