2 SIGNIFICANT ACCOUNTING POLICIES:
(a) Basis of Preparation of Financial Statements:
Compliance with Accounting Standards: The financial statements of the company have been prepared in
accordance with the generally accepted accounting principles in India (Indian GAAP). The company has
prepared these financial statements to comply in all material respects with the accounting standards
notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies
(Accounts) Rules 2014 as amended.
Historical cost convention: The financial statements have been prepared on an accrual basis and under the
historical cost convention. The accounting policies adopted in the preparation of financial statements are
consistent with those used in the previous year.
Current / Non-current classification: The company presents assets and liabilities in the balance sheet
based on current/non-current classification.
An asset is classified as current when it is:
i expected to be realised or intended to be sold or consumed in the normal operating cycle,
ii held primarily for the purpose of trading,
iii expected to be realised within twelve months after the reporting period, or
iv cash or cash equivalents 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 classified as current when:
i it is expected to be settled in the normal operating cycle,
ii it is held primarily for the purpose of trading,
iii it is due to be settled within twelve months after the reporting period, or
iv there is no unconditional right to defer settlement of the liability for at least twelve months after the
reporting period.
All other liabilities are classified as non-current.
Deferred tax assets / liabilities are classified as non-current.
Rounding of amounts: All amounts disclosed in the financial statements and notes have been rounded off
to the nearest lakhs and decimals thereof (Rs.00,000.00) as per requirement of Schedule III, unless
otherwise stated.
(b) Use of Estimates
The preparation of the financial statements, in conformity with the accounting standards generally
accepted in India, requires the management to make estimates that affect the reported amount of assets &
liabilities, disclosure of contingent liabilities as at the date of the financial statement and reported amounts
of revenue and expenses for the year. Actual results could differ from these estimates. Difference between
the actual results and estimates are recognised in the period in which the results are known/materialized.
(c) Cash Flow Statement
Cash Flow statement has been prepared as per the requirement of Accounting Standard-3. Cash flows are
reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of
non cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of
income and expenses associated with investing or financing cash flows. Cash flows from operating,
investing and financing activities of the Company are segregated, accordingly.
(d) Contingencies and Event Occurring After the Balance Sheet Date
Effects of, event occurred after Balance Sheet date and having material effect on financial statements are
reflected where ever required.
(e ) Property, Plant and Equipment
Property, plant and equipment are stated at cost, less accumulated depreciation and impairment losses if
any. Cost comprises of purchase price, borrowing costs and any directly attributable cost of bringing the
asset to its working condition for its intended use.
An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. Any gain or loss arising from
derecognisition of a property, plant and equipment are measured as the difference between the net
disposal proceeds and the carrying amount of the property, plant and equipment and are recognised in the
statement of profit and loss when the asset is derecognised.
Capital work-in-progress is stated at cost, net of accumulated impairement loss, if any.
Intangible assets are stated at cost, less accumulated amortization thereon. Cost comprises the purchase
price inclusive of duties (net of GST), taxes and incidental expenses.
Goodwill represents the amount of difference between consideration and the value of net identifiable
assets acquired.
(f) Depreciation
i) Machinery spares which can be used only in connection with an item of fixed assets and whose use as
per technical assessment is expected to be irregular are capitalized and depreciated over the residual life of
the respective assets.
ii) Depreciation on fixed assets is provided on depreciable value of assets using straight line method on
the basis of useful life specified in Schedule II to the companies Act, 2013 or as estimated by the
management. The residual value of an asset for this purpose is determined at the rate of 5% of the original
cost of asset or as estimated by the management whichever is lower.
(g) Impairment of assets
Impairment loss is recognized wherever the carrying amount of an asset is in excess of its recoverable
amount and the same is recognized as an expense in the Statement of Profit & Loss and carrying amount of
the asset is reduced to its recoverable amount. Reversal of impairment losses recognized in previous years
is recorded when there is an indication that the impairment losses recognized for the assets no longer exist
or have decreased.
(h) Investments
Long term Investments are stated at cost less provision for diminution, other than temporary, in the value
of Investments.
(i) Inventories
Raw materials and stores and spares are valued at lower of cost or net realisable value and for this purpose
cost is determined on first in first out basis. However, these items are not valued below cost if the finished
products in which they are to be incorportaed are expected to be sold at or above cost.
Semi-Finished goods, Finished goods and By-products are valued at lower of cost or net realisable value
and for this purpose cost is determined on the basis of average cost basis which approximates the actual
cost.
Traded goods are valued at lower of cost or net realisable value and for this purpose cost is determined on
first in first out basis. Cost includes cost of purchase and other costs incurred in bringing the invetories to
their present location and condition.
(j) Goods and Service Tax (GST)
Accounts are maintained on exclusive method and accordingly the GST is accounted for by reducing the
purchase cost of the materials/fixed assets and is adjusted with output GST.
(k) Employee Benefits
Short Term Employee Benefits: The undiscounted amount of short-term employee benefits expected to be
paid in exchange for the services rendered by the employees are recognised during the year when the
employees render the service. These benefits include performance incentive and compensated absences,
which are expected to occur within twelve months after the end of the period in which the employee
renders the related service.
Post Employment Benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which the company pays specified
monthly contributions to Provident Fund. The Company's contribution is recognised as an expense in the
Statement of Profit and Loss during the period in which the employee renders the related service.
Defined benefit plans
The liability in respect of defined benefit plan related to gratuity, if applicable, is calculated at the end of
every year and net changes in the liability is included in the employee benefit expense in the statement of
profit and loss.
(l) Revenue Recognition
Sales comprise invoice value of goods net of GST and are recognized on transfer of risk and rewards
associated with the property in goods to the buyer which is normally on delivery as per terms of sales.
(m) Accounting for Government Grants
The Government grants/ incentives are accounted for on mercantile basis and are recognised in books to
the extent of approval of same from government i.e. as & when the same is crystallized and/or there is a
reasonable certainty of receipt of same.
(n) Borrowing Costs
Borrowing Costs relating to acquisition/ construction of qualifying assets are capitalized until the time all
substantial activities necessary to prepare the qualifying assets for their intended use complete. A
qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All
other Borrowing costs are charged to revenue.
(o) Taxation
Provision for Income Tax comprises of current tax and deferred tax charge or release. Deferred Tax is
recognized subject to consideration of prudence on timing differences being difference between taxable
and accounting Income/Expenditure that originate in one period and are capable of reversal in one or
more subsequent periods. Deferred Tax Assets are not recognized unless there is virtual certainty that
sufficient future taxable income will be available against which such deferred tax assets will be realized.
(p) Minimum Alternate Tax Credit
Minimum Alternate Tax Credit Entitlement is recognised in the books of account when there is convincing
evidence that the Company will pay normal income tax during the specified period. The Entitlement is
reviewed at each balance sheet date with regard to the correctness of the carrying amount.
|