2. Significant Accounting Policies
2.1 Statement of Compliance
The Financial Statements have been prepared as a going concern in accordance with Indian Accounting Standards (Ind
AS) notified under the section 133 of the companies Act, 2013 ("the Act") read with the Companies (Indian Accounting
Standards) Rules, 2015 and other relevant provision of the Act.
2.2 Basis of Preparation and presentation
The financial statements have been prepared on the historical cost convention on accrual basis except for certain financial
instruments which are measured at fair value at the end of each reporting period, as explained in the accounting policies
mentioned below. Historical cost is generally based on the fair value of the consideration given in exchange of goods or
services.
All assets and liabilities have been classified as current or non-current according to the Company's operating cycle and
other criteria set out in the Act. Based on the nature of products and the time between the acquisition of assets for
processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as twelve
months for the purpose of current or non- current classification of assets and liabilities. The principal accounting policies
are set out below.
2.3 Use of Estimates and judgements
The preparation of financial statements in conformity with Ind AS requires management to make judgments, estimates
and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income,
expenses and disclosures of contingent assets and liabilities at the date of these financial statements and the reported
amount of revenues and expenses for the years presented. Actual results may differ from the estimates.
Estimates and underlying assumptions are reviewed at each balance sheet date. Revisions to accounting estimates are
recognized in the period in which the estimates are revised and future periods affected.
2.4 Revenue Recognition
Revenue from Operations
> Sale and operating income include sale of products, services, profit from partnership firms, income from job
work services, export incentives, etc.
> Sale of goods is recognized, net of returns and trade discounts, on transfer of significant risks and rewards of
ownership to the buyer. Sales include excise duty but exclude sales tax and value added tax.
> Sale of services is recognized when services are rendered and related costs are incurred.
> Profit from partnership firms which are in the same line of operation is considered as operating Income.
> Revenue from job work services is recognized based on the services rendered in accordance with the terms of
contracts.
> Export benefit is accounted for in the year of exports based on eligibility and when there is no Uncertainty in
receiving the same.
Other Income
> Interest income is recognized on time proportion basis taking into account the amount outstanding and the rate
applicable.
> Dividend income is recognized when right to receive is established.
2.5 Employee Benefits:
Liabilities for salaries are expected to be settled within the operating cycle after the end of the period in which the
employees render the related services are recognized in the period in which the related services are rendered.
2.6 Intangible Fixed Asset:
Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the asset
will flow to the enterprise and the cost of the asset can be measured reliably.
2.7 Impairment of Assets:
> The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment
based on internal / external factors. An impairment loss is recognized wherever the carrying amount of an asset
exceeds its recoverable amount. The recoverable amount is the greater of the asset's net selling price and value
in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the
asset. Net selling price is the amount obtainable from the sale of an asset in an arm's length transaction between
knowledgeable, willing parties, less the costs of disposal.
> After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful
life.
2.8 Inventories
Stock in trade, stores and spares are valued at the lower of the cost or net realizable value. 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. Cost of stock in trade procured for specific projects is assigned by specific identification of
individual costs of each item. Costs of stock in trade, that are interchangeable and not specific to any Project is
determined using the weighted average cost formula. Cost of stores and spare parts is determined using weighted
average cost.
2.9 Taxation
Tax expense comprises current and deferred tax. Current income tax expense comprises taxes on income from
operations in India and in foreign jurisdictions. Income tax payable in India is determined in accordance with the
provisions of the Income Tax Act, 1961 and tax expense relating to overseas operations is determined in accordance
with tax laws applicable in countries where such operations are domiciled.
> Deferred tax expense or benefit is recognized on timing differences being the difference between taxable
incomes and accounting income that originate in one period and are capable of reversal in one or more
subsequent periods.
> Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or
substantively enacted by the balance sheet date. Deferred income tax relating to items recognized directly in equity
is recognized in equity and not in the statement of profit and loss. Deferred tax assets and deferred tax liabilities are
offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred
tax assets and deferred tax liabilities relate to the taxes on income levied by the same governing taxation laws.
> Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized
only to the extent that there is reasonable certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized. In situations where the Company has unabsorbed
depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty
supported by convincing evidence that they can be realized against future taxable profits. In the situations
where the Company is entitled to a tax holiday under the Income realized against future taxable profits. In the
situations where the Company is entitled to a tax holiday under the Income tax Act, 1961 enacted in India, no
deferred tax (asset or liability) is recognized in respect of timing differences which reverse during the tax
Holiday period, to the extent the Company's gross total income is subject to the deduction during the tax
holiday period. Deferred tax in respect of timing differences which reverse after the tax holiday period is
recognized in the year in which the timing differences originate.
> At each balance sheet date, the Company re-assesses recognized and unrecognized deferred tax assets. The
Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably
certain or virtually certain, as the case may be, that sufficient future taxable income will be available against
which the deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be
available. The Company recognizes unrecognized deferred tax assets to the extent that it has become
reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
> Minimum Alternate Tax ('MAT') credit is recognized as an asset only when and to the extent there is
convincing evidence that the Company will pay normal income-tax during the specified period. In the year in
which the MAT credit becomes eligible to be recognized as an asset, the said asset is created by way of a credit
to the statement of profit and loss. The Company reviews the Same at each balance sheet date and writes down
the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal income-tax during the specified period.
|