a) Property, Plant and Equipment-
Property, plant and equipment are stated at cost of acquisition less accumulated
depreciation and impairment losses. Cost comprises the purchase price and any
directly attributable costs of bringing the assets to their working condition for its
intended use. Subsequent costs are included in the asset's carrying amount or
recognized as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Company and the cost of
the item can be measured reliably. All other repairs and maintenance cost are charged
to the Statement of Profit and Loss during the period in which they are incurred.
Gains or losses arising on retirement or disposal of property, plant and equipment
arerecognised in the Statement of Profit and Loss.
Property, plant and equipment which are not ready for intended use as on the date of
Balance Sheet are disclosed as "Capital work in-progress".
b) Depreciation:-
a. Depreciation on Fixed Assets is provided based on the useful life of the asset in the
manner prescribed in Schedule II to the Companies Act, 2013 in accordance with the
straight line method of depreciation
b. Intangible Assets are recognized only when future economic benefits arising out of
the assets flow to the enterprise and are amortized over their useful life ranging
from 3 to 5 years.
c. Cash generating units / Assets are assessed for possible impairment at balance sheet
dates based on external and internal sources of information. Impairment losses, if
any, are recognized as an expense in the statement of Profit & Loss. No provision is
made for impairment loss during the year.
d. The estimated useful lives, residual values and depreciation method are reviewed at
the end of each reporting period, with the effect of any changes in estimate accounted
for on a prospective basis.
e. The range of useful lives of the property, plant and equipment are as follows:
a) Plant and Machinery - 10 years
b) Furniture and fixtures -10 years
c) Office Equipments - 5 years
d) Factory Building - 30 years
e) Vehicles - 8 years
c) Inventory:-
a. Finished goods are valued at cost or net realizable value whichever is lower and raw
material is at cost as certified by the management based on FIFO method. Cost
includes all charges incurred for bringing the goods to the point of sales.
b. Consumables, Stores and Packing Materials are valued at cost less amount written
off. The cost formula used is First InFirst Out.
d) Revenue Recognition-
Sale of goods is recognized at the point of dispatch of finished goods whereby all
significant risks and rewards of ownership have been transferred to the buyers and no
significant uncertainty exists regarding the amount of consideration that will be derived
from the sale of goods.
Export Sales are accounted for as and when Sale Invoices are raised and goods are
dispatched out of factory as per RBI reference rate on the date of invoice. The
difference if any between negotiation / realization rate and exchange rate of invoice is
accounted as foreign exchange difference on receipt of particulars from negotiating
bank.
Company is entitled for Duty Draw Back on of Exports done. Accordingly, income on
account of Duty Draw Back is recognized for Sale Invoices raised up to March 31,
2024at the applicable rate.
Company is also entitled for Remission of Duties and Taxes on Exported Products
scheme (RODTEP) which is introduced from January, 2021. The incentive is in the
form of grant of Duty Credit Scrip from D.G.F.T. The said Scripts are in turn,
encashed by way of sale to importers at agreed rate. Accordingly, the entitlement of
scrips which are saleable is recognised as income on accrual basis at percentage
prevailing in the market as at end of the year.
e) Employeesbenefits:-
Retirement benefits: Defined benefit plans -
Contributions to defined contribution schemes such as Provident Fund and ESI are
charged to the Profit and Loss Account as incurred. The company also provides for
retirement and post-retirement benefits in the form of gratuity and leave encashment.
Such defined benefits are charged to the Profit and Loss Account based on valuations,
as at the balance sheet date. Provision for gratuity liability has been made on the basis
of independent actuarial valuation and the same is not funded.Encashment of leave is
charged off at the undiscounted amount in the year in which the related services are
rendered.
f) Financial Assets
The Company classifies its financial assets at amortized Costonly if both of the
following criteria are met:
the asset is held within a business model whose objective is to collect the
contractual cash flows, and
the contractual terms give rise to cash flows that are solely payments of
principal and interest
Financial assets classified at amortised cost comprise trade receivables,
loans and security deposit.
g) Trade Receivables
Trade receivables are amounts due fromcustomers for goods sold or services
performed in the ordinary course of business and reflect the Company's
unconditional right to consideration (that is, payment is due only on the passage of
time). Trade receivables are recognised initially at the transaction price as they do
not contain significant financing components. The Company holds the trade
receivables with the objective of collecting the contractual cash flows and therefore
measures them subsequently at amortised cost using the effective interest method,
less loss allowance. For trade receivables and contract assets, the company applies
the simplified approach required by IndAS 109, which requires expected lifetime
losses to be recognised from initial recognition of thereceivables.
2.3 Other Accounting Policies
a) Borrowing costs: -
Borrowing costs that are directly attributable to the acquisition or construction of a
qualifying asset were capitalized as part of the cost of that asset till such time the asset
is ready for its intended use.
There are no borrowing cost during the year.
b) Impairment of Assets:-
At each balance sheet date, the Company assesses whether there is any indication that
an asset may be impaired. If any such indication exists, the Company estimates the
recoverable amount. The recoverable amount is the greater of the asset's net selling
price and value in use. No such adjustments have been made during the year under
consideration. In assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital. If the carrying amount of
the assets exceeds its recoverable amount, an impairment loss is recognized in the
Profit and Loss Account to the extent the carrying amount exceeds the recoverable
amount.
c) Depending on the facts of each case and after studying the legal implications, the
Company makes a provision when there is a present obligation as a result of a past
event where the outflow of economic resources is probable and a reliable estimate
of the amount of obligation can be made. Provisions are measured at the best
estimate of the expenditure required to settle the present obligation at the balance
sheet date. The disclosure is made for all possible or present obligations that may
but probably will not require outflow of resources as contingent liability in the
financial statement.
d) Trade Receivables:
Out of the total receivable of Rs. 285.74 lakhs ( previous year Rs. 303 Lakhs ) Bill
discounted with Federal Bank Rs. 205.11 lakhs (previous year Rs 126.01 lakhs) under
FDBP limit with them, has been deducted from the trade receivable to arrive at the
net amount realizable
e) Use of Estimates:-
The preparation of financial statements in conformity with generally accepted
accounting principles,requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent liabilities
at the date of the financial statements and the results of operations during the
reporting year end. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ from these
estimates.
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