II. Summary of Significant Accounting Policies
(a) Basis of preparation and measurement
The financial statements of the Company have been prepared in accordance with the
Accounting Standards (AS) to comply with the Section 133 of the Companies Act, 2013 ("the
2013 Act") and the relevant provisions and amendments, as applicable. The financial
statements have been prepared on accrual basis under the historical cost convention.
Accounting policies not specifically referred to otherwise, are consistent and in consonance
with the generally accepted accounting policies.
The financial statements of the Company for the year ended March 31, 2024 were approved
by the Board of Directors and authorized for issue on May 30, 2024.
(b) Operating cycle
All assets and liabilities have been classified as current and non-current as per the Company's
normal operating cycle. An operating cycle is the time between the acquisition of assets for
processing and their realization in cash or cash equivalents. As set out in the Schedule III to
the Companies Act, 2013, the normal operating cycle cannot be identified for the Company
and hence it is assumed to have duration of twelve months. Accordingly, assets and liabilities
have been classified into current and non- current based on a period of twelve months.
(c) Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. The
Company recognizes revenue when the amount of revenue can be reliably measured and it is
probable that future economic benefits will flow to the company.
Sales are recognized when significant risk and rewards are transferred to the buyer,usually
on delivery of the goods.
Rental income from operating leases is recognized on a straight-line basis over the leaseterm.
Interest income is recognized on accrual basis at effective interest rate.
Dividend income is accounted when right to receive is established.
However, where the ultimate collection of the same is uncertain, revenue recognition is
postponed to the extent of uncertainty.
(a) Property, Plant and Equipment: Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation
and impairment, if any. The cost of property, plant and equipment includespurchase price,
including freight, duties, taxes and any costs directly attributable to bringing the asset to the
location and condition necessary for it to be capable of operatingin the manner intended by
management.
If significant parts of an item of property, plant and equipment have different useful lives, then
they are accounted for as separate items (major components) of property, plant and equipment.
Property, plant and equipment are derecognized from financial statements, either on disposal
or when no economic benefits are expected from its use or disposal. The gain orlosses arising
from disposal of property, plant and equipment are recognized in the Statement of Profit and
Loss in the year of occurrence.
Assets under construction include the cost of property, plant and equipment that are notready
to use at the balance sheet date. Advances paid to acquire property, plant and equipment
before the balance sheet date are disclosed under other non-current assets. Assets under
construction are not depreciated as these assets are not yet available for use.
Subsequent expenditures
Subsequent expenditures related to an item of property, plant and equipment are addedto it
carrying value only when it is probable that the future economic benefits from the asset will
flow to the Company and cost can be reliably measured. All other repair andmaintenance
costs are recognized in the Statement of Profit and Loss during the year in which they are
incurred.
Depreciation and amortization
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost,less
its estimated residual value.
Depreciation / Amortization on property, plant & equipment of the Company has been
provided using the straight-line method based on the useful life specified in Schedule II to the
Companies Act, 2013.
Assets costing less than INR 5,000 are depreciated at 100% in the year of acquisition.
Assets acquired on lease and leasehold improvements are amortized over the primary period
of the lease on straight line basis.
The estimated useful lives and residual values of the property, plant & equipment and
intangible assets are reviewed at the end of each reporting period, with the effect of any
changes in estimate accounted for on a prospective basis.
(b) Impairment of non-financial assets:
The carrying values of assets / cash generating units at each balance sheet date are reviewed
for impairment if any indication of impairment exists.
If the carrying amount of the assets exceeds the estimated recoverable amount, an impairment
loss is recognized for such excess amount. The impairment loss is recognisedas an expense in
the standalone statement of profit and loss, unless the asset is carried at revalued amount, in
which case any impairment loss of the revalued asset is treated as a decrease to the extent a
revaluation reserve is available for that asset.
When there is indication that an impairment loss recognized for an asset (other than a revalued
asset) in earlier accounting periods which no longer exists or may have decreased, such
reversal of impairment loss is recognized in the standalone statement ofprofit and loss, to the
extent the amount was previously charged to the standalone statement of profit and loss. In
case of revalued assets, such reversal is not recognized.
(c) Foreign currency transactions:
Transactions in foreign currencies are translated into the Company's functional currency at
exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the reporting date are
translated into the functional currency at the exchange rate at that date.
Non-monetary items that are measured based on historical cost in a foreign currency are
translated at the exchange rate at the date of the transaction.
Exchange differences arising on the settlement of monetary items or on translating monetary
items at rates different from those at which they were translated on initial recognition during
the period or in previous standalone financial statements are recognized in the standalone
statement of profit and loss in the period in which they arise.
(d) Inventories:
Inventories are valued at lower of cost and net realizable value.
Cost of traded goods comprises cost of purchases. Cost of inventories also includes all other
costs incurred in bringing the inventories to their present location and condition. Costs are
assigned to individual items of inventory on the weighted average basis. Net realizable value
is the estimated selling price in the ordinary course of business less estimated costs necessary
to make sale.
(e) Income Tax:
The tax expense comprises current and deferred tax. Tax is recognized in the statement of
profit and loss except to the extent that it relates to items recognized directly in equity.
(f) Current Tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for
the year and any adjustment to the tax payable or receivable in respect of previous years. It is
measured using tax rates enacted or substantively enacted at the reporting date.
Current tax assets and liabilities are offset only if, the Company:
i) has a legally enforceable right to set off the recognized amounts; and
ii) intends either to realize the asset and settle the liability on a net basis or simultaneously.
Deferred Tax
Deferred tax is recognized in respect of temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes.
Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible
temporary differences to the extent there is convincing evidence that sufficient taxable profit
will be available against which such deferred tax asset can be realized. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that it is no longer probable that
the related tax benefit will be realized; such reductions are reversed when the probability of
future taxable profits improves.
Unrecognized deferred tax assets are reassessed at each reporting date and recognized to the
extent that it has become probable that future taxable profits will be available against which
they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary
differences when they reverse, using tax rates enacted or substantively enacted at the reporting
date.
The measurement of deferred tax reflects the tax consequences that would follow from the
manner in which the Company expects, at the reporting date, to recover or settle the carrying
amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only if:
i) The Company has a legally enforceable right to set off current tax assets against
current tax liabilities; and
ii) The deferred tax assets and the deferred tax liabilities relate to income taxes levied
bythe same taxation authority on the same taxable entity.
Minimum Alternative Tax (MAT)
MAT credit is recognized as a deferred tax asset only when and to the extent there is convincing
evidence that the Company will pay normal tax during specified period. MAT credit is
reviewed at each balance sheet date and written down to the extent the aforesaid convincing
evidence no longer exists.
(i) Employee benefits:
Short term employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange
for the services rendered by employees are recognized as an expense during the period when
the employees render the services.
Defined contribution plans
The Company's contribution to Provident Fund, Pension, Superannuation Fund and
Employees State Insurance Fund are considered as defined contribution plans, as the
Company does not carry any further obligations apart from the contribution made to the
respective fund/scheme and are charged as an expense based on the amount of contribution
required to be made.
Defined benefit plans
The liability recognized in the balance sheet in respect of defined benefit plans is the present
value of the defined benefit obligation at the end of the reporting period. The defined benefits
obligation is calculated annually by actuaries using the projected unit credit method.
The net interest cost is calculated by applying the discount rate to the net balance of the defined
benefit obligation. This cost is included in employee benefits expense in the Statement of Profit
and Loss. Re measurement gain and losses arising from experience adjustments, changes in
actuarial assumptions are recognized in the period in which they occur.
Leave Entitlement
Leave entitlement are provided based on an actuarial valuation, similar to that of gratuity
benefit. Re- measurement, comprising of actuarial gains and losses, in respect of leave
entitlement are recognized in the Statement of Profit and Loss in the period in which they
occur.
(j) Leases:
Finance Lease
Agreements are classified as finance leases, if substantially all the risks and rewards incidental
to ownership of the leased asset is transferred to the lessee.
Operating Lease
Agreements which are not classified as finance leases are considered as operating lease.
Operating lease payments/income are recognized as an expense/income in the standalone
statement of profit and loss on a straight-line basis over the lease term unless there is another
systematic basis which is more representative of the time pattern of the lease.
(k) Investments:
Investments, which are readily realizable and intended to be held for not more than one year
from the date on which such investments are made, are classified as current investments.
Current investments are carried in the financial statements at lower of cost and fair value
determined on an individual investment basis.
Investment other than current investments, are classified as long-term investments and are
stated at cost. Provision for diminution in value of long-term investments is made only if such
a decline is other than temporary.
(l) Borrowing Costs:
Borrowing cost includes interest, amortization of ancillary costs incurred in connection with
the arrangement of borrowings and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition, construction or production of an asset
that necessarily takes a substantial period of time to get ready for its intended use or sale are
capitalized as part of the cost of the respective asset. All other borrowing costs are expensed
in the period they occur.
All other borrowing costs are recognized as an expense in the period in which they are incurred.
(m) Earnings per share:
Basic earnings per share is calculated by dividing the profit / (loss) after tax by the weighted
average number of equities shares outstanding during the year.
Diluted earnings per share is calculated by dividing the profit / (loss) after tax as adjusted for
dividend, interest and other charges to expense or income (net of any attributable taxes) relating
to the dilutive potential equity shares, by the weighted average number of equity shares
considered for deriving basic earnings per share and the weighted average number of equity
shares which could have been issued on conversion of all dilutive potential equity shares.
(n) Cash and cash equivalents:
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand, demand
deposit and short-term deposits with an original maturity of three months or less, which are
subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and
short-term deposits, as defined above, net of outstanding bank overdrafts as they are
considered an integralpart of the Company's cash management.
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