1.00 Summary of significant accounting policies
1.01 Basis of preparation of financial statements
These financial statements have been prepared in accordance with the generally accepted accounting principles in India, under the historical cost convention and also on accrual basis. The Company has prepared these financial statements to comply in all material respects with the accounting standards and the relevant provisions of the Companies Act, 2013.
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 the Schedule III to the Companies Act, 2013.The Company has ascertained its Operating Cycle as 12 months for the purpose of current - non-current classification of assets and liabilities.
1.02 Use of Estimates
The preparation of the financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities as at the balance sheet date, the results of operation during the reported period and disclosure of contingent liabilities as on the reporting date. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable and are in their best knowledge of current event and actions. Actual results could
differ from these estimates and differences between actual results and estimates are recognized in the period in which the results are known or materialize. Significant estimates used by the management in the preparation of these financial statements include provision for employee benefits, estimates of the economic useful life of plant and equipment, provision for expenses, provisioning for taxation etc.
1.03 Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.
Sale of product revenue is recognized on transfer of the significant risks and rewards of ownership of the goods to the buyer and stated at values net of Goods and Services Tax (GST).
Interest income is recognized on time proportion basis.
1.04 Expenses
Expenses are accounted for on accrual basis and provisions are made for all ascertained and known liabilities and losses.
1.05 Property, plant and equipment
Property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment losses. The initial cost of an property, plant and equipment comprises its purchase price, any costs directly attributable to bringing the property, plant and equipment into the location and condition necessary for it to be capable of operating in the manner intended by management.
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 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 recognised in statement of profit and loss.
Depreciation amount for asset is the cost of an asset less its estimated residual value. In case of impairment, depreciation is provided on revised carrying amount over its remaining useful life.
1.07 Intangible Asset
Intangible assets comprises of application Software. Intangible assets are recognized, only if they are separately identifiable and have future economic benefits arising out of them, at cost less accumulated amortization and impairment, if any.
1.08 Amortization of Intangible Assets
Intangible assets comprises of Software & licences are amortized over the five years.
1.09 Impairment
The management assesses the carrying amount of plant and equipment and intangible asset at each balance sheet date to determine whether there is any indication of impairment based on internal/external resources. If any such indications exist, the recoverable amount of plant and equipment and intangible asset is a estimated.
An impairment loss is recognized wherever the carrying amount of an plant and equipment and intangible asset exceeds its recoverable amount. The recoverable amount is the greater of the plant and equipment and intangible asset’s, net selling price and value in use. An impairment loss is recognized in the statement of profit and loss in the year in which the plant and equipment and intangible asset is recognized as impaired.
1.10 Inventories
Inventories comprising of raw materials, work in progress and finished goods are valued at lower of cost or net realizable value. Cost here represents landed cost including custom duty in case of imports and is net of duty which is cenvatable or refundable. Cost of inventories is determined on FIFO basis. Net realizable value is the estimate of the selling price in the ordinary course of business less further cost expected to be incurred for its completion and disposal.
1.11 Borrowing cost
Borrowing costs which is attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue in the year of incurrence.
1.12 Employee benefit expenses:
i) The company does not carry forward the balance of earned leave balance of employees, balance earned leave is paid to the employees according to the policy of company.
ii) Company's contribution to Provident Fund and other Funds for the year is accounted on accrual basis and charged to the Statement of Profit & Loss for the year.
iii) Retirement benefits in the form of Gratuity are considered as defined benefit obligations and are provided on the basis of the actuarial valuation as at the date of the Balance Sheet.
1.13 Leases
Where Company is lessee, the lease payments under an operating lease are recognized as an expense in the statement of profit and loss on a straight line basis over the lease term unless another systematic basis is more representative of the time pattern of the Company's benefit. Initial direct costs such as legal costs, brokerage costs, etc. are recognized immediately in the statement of profit and loss.
1.14 Foreign Currency Transaction:
a) Foreign currency transactions are recorded at the exchange rates prevailing on the date of the transaction.
b) Short term monetary items denominated in foreign currencies (such as cash, receivable, payable etc.) outstanding at the year end, are translated /re-converted at the year-end exchange rate unless covered by a forward contract.
c) Any gain or loss arising on settlement and / or translation of short term monitory transaction in foreign currency is accounted for in the statement of Profit and Loss.
1.15 Taxation
Income tax:
Current tax is determined as the amount of tax payable in respect of taxable income for the period calculated as per the prevailing provisions of Income Tax Law.
Deferred Tax is calculated on timing differences, being the difference between taxable income and the accounting income that originates in one period and are capable of reversal in one or more subsequent periods.
Deferred tax assets, subject to the consideration of prudence, are recognized and carried forward only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.
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