II. Summary of Significant Accounting Policies
1. Accounting Convention
The standalone financial statements of the Company have
been prepared in accordance with the Generally Accepted
Accounting Principles in India (Indian GAAP) to comply
with the Accounting Standards specified under Section 133
of the Companies Act, 2013, read with the Companies
(Accounting Standards) Rules, 2021 and the relevant
provisions of the Companies Act, 2013 (the "Act”), as
applicable, Accounting Standards (‘AS')/guidance notes
issued by the Institute of Chartered Accountants of India
(ICAI) and other generally accepted accounting principles
in India. The financial statements have been prepared on
accrual basis under the historical cost convention. The
accounting policies adopted in the preparation of the
financial statements are consistent with those followed in
the previous year.
As per MCA Notification dated 16th February 2015,
Companies whose shares are listed on SME Platform as
referred in chapter XB of SEBI (issue of capital disclosure
requirement) regulations 2009 are exempted from
compulsory requirement of adoption of Indian Accounting
Standards (IND AS). As the company is covered under
exempted category, it has not adopted IND AS for
Preparation of standalone financial statements.
2. Use of Estimates
The preparation of standalone financial statements in
conformity with generally accepted principles requires
management to make estimates and assumptions that
effect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the
financial statements and the results of operations during
the reporting period end. Although these estimates are
based upon management's best knowledge of current
events and actions, actual results could differ from these
estimates.
3. Property, Plant, Equipment and Depreciation
Property, plant and equipment except Land are stated at
cost less accumulated depreciation.
Depreciation on additions or sale/ discard of asset is being
provided on pro-rata basis from the date on which such
asset is ready to be put to use or date of sale/ discard.
Depreciation is provided on Roll-sets on the basis of useful
life of three years on Straight Line Method (‘SLM') and
others as specified in schedule II of the Act on pro rata basis
from the date assets put to use.
Property, plant and equipment are acquired by the
Company are reported at acquisition value, with
deductions for accumulated depreciation and impairment
losses, if any. The acquisition value includes the purchase
price (excluding refundable taxes), and expenses directly
attributable to assets to bring it to the factory and in the
working condition for its intended use. Where the
construction or development of any such assets requiring a
substantial period of time to set up for its intended use, is
funded by borrowings if any, the corresponding borrowing
cost are capitalized up to the date when the asset is ready
for its intended use.
4. Intangible Assets
Intangible assets are reported at acquisition value with
deductio ns for accumulated amortization and any
impairme nt losses. Capital work in progress includes cost
of assets at sites and construction expenditure as well as
Trial Run Production Loss/ Gain.
Computer software costs capitalized are amortized on a
systematic basis over the estimate of their useful life,
commencing from the date the asset is available to the
Company for its use.
5. Inventories
Raw materials, stores, spares, consumables and finished
goods are valued at cost or net realizable value, whichever
is lower.
The cost for raw materials, stores, spares, and
consumables, has been arrived at using First in First Out
(‘FIFO') method, net of input tax credit availed.
The cost of finished goods is determined taking material
cost (net of input tax credit availed), labour and relevant
appropriate overheads.
Waste and scrap are valued at net realisa ble value.
The cost for traded goods arrived at using First in First Out
(‘FIFO') method, net of input tax credit availed.
6. Investments
Investments that are readily realizable and intended to be
held for not more than a year are classified as current
investments. All other investments are classified as long
term investments. Current Investments are stated at
lower of cost and net realizable value. A provision for
diminution is made to recognize a decline, other than
temporary, in the value of Long-term Investments.
7. 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. Sales return has been
recognized in this year, it was not recognized in previous
year.
a) Sale of Goods and Services
Revenue from sales of goods is recognized when all
the significant risks and rewards of ownership are
transferred to the buyer and the Company retains no
effective control of the goods transferred to a degree
usua lly associated with ownership; and no significant
uncertainty exists regarding the amount the
consideration that will be derived from the sales of
goods. Revenue from sale of service is recognised on
the basis of completion of services. No significant
uncertainty exists regarding the amount of the
consideration that will be derived from the service
performed and its ultimate collection. Revenue, as
disclosed, are exclusive of goods and services tax
(GST).
b) Dividend
Dividend income is recognized when the company's
right to receive dividend is established by the
reporting date.
c) Interest
Interest income is recognized on accrual basis on a
time proportion basis taking into account the amount
outstanding and the rate applicable. Interest income
is included under the head “Other Income” in the
statement of profit and loss.
8. Employee Benefits
a) Short-term Employee Benefits
Short-term employee benefits are recognised as
expense in the statement of profit and loss of the year
in which the related service is rendered at the
undiscounted amount as and when it accrues.
The Company is providing for the bonus liability at
the year end and is paid to the eligible employees in
the subsequent year.
b) Long-term Employee Benefits
Long-term employees benefits both through defined
contribution plans and defined benefit plans are
recognised in the financial statements.
Defined Contribution Plans
Employee Provident Fund (EPF)
The Company makes contribution to statutory
provident fund in accordance with Employees'
Provident Fund and Miscellaneous Provisions Act,
1952. The plan is a defined contribution plan and
contribution paid or payable is recognized as an
expense in the period in which services are rendered
by the employee.
Employee State Insurance (ESI)
The Company makes contribution to Employee State
Insurance scheme in accordance with Employees'
State Insurance Act, 1948. The scheme is a self¬
financing social security and health insurance scheme
for workers and contribution paid or payable is
recognized as an expense in the period in which
services are rendered by the employee.
Defined Benefit Plans
Gratuity
Gratuity is a post-employment benefit and is in the
nature of defined benefit plan. The liability
recognized in the balance sheet in respect of gratuity
is the present value of the defined benefit obligation
at the balance sheet date together with adjustments
for unrecognized actuarial gains or losses and past
service costs. The defined benefit obligation is
calculated annually by an independent actuary using
the projected unit credit method.
Actuarial gains and losses arising from adjustments
and changes in actuarial assumptions are charged or
credited to the Profit and loss account in the year in
which such gains or losses arise.
Leave Encashment
Leave Encashment are post-employment benefit and
are in the nature of defined benefit plans. The
liability recognized in the balance sheet in respect of
compensated absences is the present value of the
defined benefit obligation at the balance sheet date
together with adjustments for unrecognized
actuarial gains or losses and past service costs. The
defined benefit obligation is calculated annually by
an independent actuary using the projected unit
credit method.
Actuarial gains and losses arising from adjustments
and changes in actuarial assumptions are charged or
cred ited to the Profit and loss account in the year in
whic h such gains or losses arise.
9. Impairment of Assets
An asset is considered as impaired in accordance with
Accounting Standard 28 on impairment of assets when at
balance sheet date there are indications of impairment
and the carrying amount of the asset exceeds its
recoverable amount. The carrying amount is reduced to
the recoverable amount and the reduction is recognized
as an impairment loss in the profit and loss account.
10. Earning per Share
The Company reports basic and diluted Earnings Per Share
(EPS) in accordance with Accounting Standard 20 ‘Earnings
Per Share'. Basic EPS is computed by dividing the net profit
or loss after tax for the year attributable to equity
shareholders by the weighted average number of equity
shares ou tstanding during the year. Diluted earnings per
share is computed by dividing the net profit or loss after
tax for the year (after adjustment for diluted earning)
attributable to equity shareholders by the weighted
average number of equity shares outstanding during the
year.
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