SIGNIFICANT ACCOUNTING POLICIES
1. Use of Estimates
The preparation of Summary Financial Information in conformity with GAAP requires that the management of the Company
to make estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported
balances of assets and liabilities, and the disclosures relating to contingent liabilities as of the date of the financial
statements. Examples of such estimates include the useful lives of property, plant, and equipment and intangible assets,
provision for doubtful debts/ advances, future obligations in respect of retirement benefit plans, etc. The difference, if any,
between the actual results and estimates is recognized in the period in which the results are known.
2. Accounting Assumptions: -
(i) Going Concern: -
The enterprise is normally viewed as a going concern, that is, as continuing in operation for the foreseeable future.
It is assumed that the enterprise has neither the intention nor the necessity of liquidation or of curtailing materially
the scale of the operations.
(ii) Consistency: -
It is assumed that accounting policies are consistent from one period to another.
(iii) Accrual: -
Revenues and costs are accrued, that is, recognized as they are earned or incurred (and not as money is received
or paid) and recorded in the financial statements of the periods to which they relate. (The considerations affecting
the process of matching costs with revenues under the accrual assumption are not dealt with in this statement.)
3. Valuation of inventories
The stock of Finished goods are valued at a lower of Cost of material consumed plus manufacturing expenses incidental
thereto or market value. Scrap is valued lower at cost or market value.
4. Cash Flow Statements
Cash flows are reported using the indirect method as set out in Accounting Standard -3 on the cash flow statement issued
by the Institute of Chartered Accountants of India.
5. Depreciation and amortization
The depreciable amount for assets is the cost of an asset or other amount substituted for cost, less its estimated residual
value. Depreciation on tangible fixed assets has been provided on the Written Down Value (WDV) method as per the useful
life prescribed in Schedule II to the Companies Act, 2013.
6. Revenue Recognition
? Revenue is recognized to the extent it is possible that economic benefits will flow to the company and the revenue
can be reliably measured and there is reasonable certainty regarding ultimate collection.
? Revenue from the sale of materials/ products is recognized on a transfer of all significant risks and rewards of
ownership of the goods to the customers, which generally coincides with the dispatch of goods. Sales are stated
exclusive of Goods & Service Tax and netted of trade discounts, and sales returns.
? Interest income is recognized on a time proportionate basis taking into account the amount outstanding and the
rate applicable.
? Revenue in respect of other income is recognized when no significant uncertainty as to its determination or
realization exists.
7. Property, Plant and Equipment
Property, plant, and equipment are stated at cost less accumulated depreciation and accumulated impairment (if any).
The cost of a property, plant, and equipment comprises its purchase price and any attributable to the cost of bringing the
asset to its working condition for its intended use. Expenditure on addition, improvements and renewals are capitalized
and expenditure for maintenance and repair is charged to Profit and Loss account.
8. Earnings per Share
Basic Earnings per Share is calculated by dividing the net profit after tax for the year attributable to Equity Shareholders
of the Company. Diluted earnings per share is calculated by dividing net profit attributable to equity shareholders (after
adjustment for diluted earnings) by average number of weighted equities share outstanding at the end of the year.
9. Taxes on Income
Tax expenses comprise of current and deferred tax
Current tax is measured at the amount expected to be paid on the basis of relief and deductions available in accordance
to the provisions of 115BAA of the Income Tax Act, 1961 w.e.f. FY 2019-20. The company has an irrevocable option of
shifting to lower tax rates along with the consequent reduction in certain tax incentives including lapse of accumulated
MAT Credit.
Deferred income tax reflects the impact of the current year’s reversible timing differences between the taxable income
and accounting income for the Year and the reversal of timing differences of the earlier Year. Deferred tax is measured
based on the tax rates and tax laws enacted or substantively enacted as at the balance sheet date. Deferred tax assets are
recognized only to the extent there is virtual certainty that sufficient future taxable income will be available against which
such deferred tax assets can be realized.
10. Impairment of Assets
An Asset is considered as impaired in accordance with AS -28 "Impairment of Assets” when at the balance sheet date
there are indications of impairment and the carrying amount of the asset, or where applicable the cash-generating unit to
which the assets belong, exceeds its recoverable amount (i.e., the higher of the assets net selling price and value in use).
In assessing the value in use, the estimated future cash flows expected from the continuing use of the asset and from
its ultimate disposal are discounted to their present values using a predetermined discount rate. The carrying amount is
reduced to the recoverable amount and the reduction is recognized as an impairment loss in the profit and loss account.
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