Note 2.2 Material Accounting Policies:
i Property, Plant and Equipment
Property, Plant and Equipment are stated at cost of acquisition including attributable interest and finance costs, if any, till the date of acquisition/
installation of the assets less accumulated depreciation and accumulated impairment losses, if any. Subsequent expenditure relating to
Property, Plant and Equipment is capitalised 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 costs are charged to the Statement of Profit and
Loss as incurred. The cost and related accumulated depreciation are eliminated from the financial statements, either on disposal or when
retired from active use and the resultant gain or loss are recognised in the Statement of Profit and Loss.
Capital work-in-progress, representing expenditure incurred in respect of assets under development and not ready for their intended use, are
carried at cost.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from its use.
Difference between the sales proceeds and the carrying amount of the asset is recognised in profit and loss.
On transition to Ind AS, the Company has opted to continue with the carrying values measured under the previous GAAP as at 1 st April 2016 of
its tangible Assets and used that carrying value as the deemed cost.
ii Intangible Assets
Costs relating to acquisition of trademarks are capitalised as “Intangible Assets”
On transition to Ind AS, the Company has opted to continue with the carrying values measured under the previous GAAP as at 1 st April 2016 of
its Intangible Assets and used that carrying value as the deemed cost.
iii Depreciation/ Amortisation
Depreciation/ amortisation is provided:
Tangible Assets:
- No deprecation is charged on Freehold Land.
- Leasehold land have not been amortised being a perpetual in nature.
- Leasehold improvements are written off over the noncancellable period of lease
- Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation on
Property,Plant & Equipment of the company has been provided as per the Written Down value method as per the useful lives of the respective
Property,Plant & Equipment in the manner as prescribed by Schedule II of the Companies Act.
Intangible Assets:
- Goodwill & Trade marks has been amortized over a period of five years.
The useful lives have been determined based on technical evaluation carried out by the management's expert, in order to reflect the actual
usage of the assets. The asset's useful lives are reviewed and adjusted, if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated
recoverable amount.
iv Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another
entity.
a) Financial Assets
Initial Recognition
In the case of financial assets, not recorded at fair value through profit or loss (FVPL), financial assets are recognised initially at fair value plus
transaction costs that are directly attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery
of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date,
i.e., the date that the Company commits to purchase or sell the asset.
Subsequent Measurement
For purposes of subsequent measurement, financial assets are classified in following categories:
Financial Assets at Amortised Cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business model with an objective to
hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash
flows that are solely payments of principal and interest on the principal amount outstanding. Interest income from these financial assets is
included in finance income using the effective interest rate ("EIR") method. Impairment gains or losses arising on these assets are recognised in
the Statement of Profit and Loss.
Financial Assets Measured at Fair Value
Financial assets are measured at fair value through OCI if these financial assets are held within a business model with an objective to hold
these assets in order to collect contractual cash flows or to sell these financial assets and the contractual terms of the financial asset give rise
on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Movements in the
carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains
and losses which are recognised in the Statement of Profit and Loss.
Financial asset not measured at amortised cost or at fair value through OCI is carried at FVPL.
On transition to Ind AS, the Company has opted to continue with the carrying values measured under the previous GAAP as at 1 st April 2016 of
its equity investments in subsidiaries and used that carrying value as the deemed cost of these investments on the date of transition i.e. 1st
April 2016.
Impairment of Financial Assets
In accordance with Ind AS 109, the Company applies the expected credit loss ("ECL") model for measurement and recognition of impairment
loss on financial assets and credit risk exposures.
The Company follows ‘simplified approach' for recognition of impairment loss allowance on trade receivables. Simplified approach does not
require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECL at each reporting
date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a
significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for
impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the
instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising
impairment loss allowance based on 12-month ECL.
ECL is the difference between all contractual cash flows that are due to the group in accordance with the contract and all the cash flows that the
entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. Lifetime ECL are the expected credit losses resulting from all
possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from
default events that are possible within 12 months after the reporting date.
ECL impairment loss allowance (or reversal) recognised during the period is recognised as income/ expense in the Statement of Profit and
Loss.
De-recognition of Financial Assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the
financial asset and substantially all risks and rewards of ownership of the asset to another entity.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset,
the Company recognizes its retained interest in the assets and an associated liability for amounts it may have to pay.
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise
the financial asset and also recognises a collateralised borrowing for the proceeds received.
b) Equity Instruments and Financial Liabilities
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements
entered into and the definitions of a financial liability and an equity instrument.
Equity Instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity
instruments which are issued for cash are recorded at the proceeds received, net of direct issue costs. Equity instruments which are issued for
consideration other than cash are recorded at fair value of the equity instrument.
Financial Liabilities
1) Initial Recognition
Financial liabilities are classified, at initial recognition, as financial liabilities at FVPL, loans and borrowings and payables as appropriate. All
financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable
transaction costs.
2) Subsequent Measurement
The measurement of financial liabilities depends on their classification, as described below
Financial liabilities at FVPL
Financial liabilities at FVPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVPL.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on
liabilities held for trading are recognised in the Statement of Profit and Loss.
Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Any
difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the
borrowings in the Statement of Profit and Loss.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.
The EIR amortisation is included as finance costs in the Statement of Profit and Loss.
3) De-recognition of Financial Liabilities
Financial liabilities are de-recognised when the obligation specified in the contract is discharged, cancelled or expired. When an existing
financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as de-recognition of the original liability and recognition of a new liability. The difference
in the respective carrying amounts is recognised in the Statement of Profit and Loss.
c) Offsetting Financial Instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet if there is a currently enforceable legal
right to offset the recognised amounts and there is an intention to settle on a net basis to realise the assets and settle the liabilities
simultaneously.
v Inventories
Inventories are valued as follows:
a Finished Goods are valued at lower of cost or net realisable value*.
b Raw Materials are valued at lower of cost or net realisable value**.
c Packing Materials are valued at cost or net realizable value**.
d Stock in Trade is valued at lower of cost or net realisable value**.
* Cost is arrived at on comprises the cost of purchases, the cost of conversion and the cost of packing materials
** Cost is arrived at on weighted average cost method.
/i Employee Benefits
a Defined Contribution Plan
Contributions to defined contribution schemes such as provident fund, employees' state insurance, labour welfare are charged as an expense
based on the amount of contribution required to be made as and when services are rendered by the employees. The above benefits are
classified as Defined Contribution Schemes as the Company has no further obligations beyond the monthly contributions.
b Defined Benefit Plan
The Company also provides for gratuity which is a defined benefit plan, the liabilities of which is determined based on valuations, as at the
balance sheet date, made by an independent actuary using the projected unit credit method. Re-measurement, comprising of actuarial gains
and losses, in respect of gratuity are recognised in the OCI, in the period in which they occur. Re-measurement recognised in OCI are not
reclassified to the Statement of Profit and Loss in subsequent periods. Past service cost is recognised in the Statement of Profit and Loss in the
year of plan amendment or curtailment. The classification of the Company's obligation into current and non-current is as per the actuarial
valuation report.
c Leave entitlement and compensated absences
Accumulated leave which is expected to be utilised within next twelve months, is treated as short-term employee benefit. Leave entitlement,
other than short term compensated absences, are provided based on a actuarial valuation, similar to that of gratuity benefit. Re-measurement,
comprising of actuarial gains and losses, in respect of leave entitlement are recognised in the Statement of Profit and Loss in the period in
which they occur.
d Short-term Benefits
Short-term employee benefits such as salaries, wages, performance incentives etc. are recognised as expenses at the undiscounted amounts
in the Statement of Profit and Loss of the period in which the related service is rendered. Expenses on non-accumulating compensated
absences is recognised in the period in which the absences occur.
e Share - Based Compensation
The company recognizes compensation expense relating to employees stock option plan in statement of profit and loss account in accordance
with IND AS 102, Share - Based Payment. Accordingly,compensation expense as determined on the date of the grant is amortised over the
vesting period.The Company follows fair value method to calculate the value of the stock options.
vii Cash and Cash Equivalents
Cash and cash equivalents in the Balance Sheet comprises of cash at banks and on hand, which are subject to an insignificant risk of changes
in value.
viii Borrowing Costs
Borrowing costs consist of interest and other costs that the Company incurs in connection with the borrowing of funds. Also, the EIR
amortisation is included in finance costs.
Borrowing costs relating to acquisition, construction or production of a qualifying asset which takes substantial period of time to get ready for its
intended use are added to the cost of such asset to the extent they relate to the period till such assets are ready to be put to use. All other
borrowing costs are expensed in the Statement of Profit and Loss in the period in which they occur.
ix Government Grant
The Company recognizes government grants only when there is reasonable assurance that the conditions attached to them shall be complied
with, and the grants will be received.
Government grants relating to the purchase of property, plant and equipment are treated as deferred income and are recognized in net profit in
the statement of profit and loss on a systematic and rational basis over the useful life of the asset.
Government grants related to revenue are recognized on a systematic basis in net profit in the statement of profit and loss over the periods
necessary to match them with the related costs which they are intended to compensate.
When the Company receives grants of non-monetary assets, the asset and the grant are recorded at fair value amounts and released to profit
or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset i.e. by equal annual instalments.
x Foreign Exchange T ranslation and Accounting of Foreign Exchange T ransaction
a Initial Recognition
Foreign currency transactions are initially recorded in the reporting currency, by applying to the foreign currency amount the exchange rate
between the reporting currency and the foreign currency at the date of the transaction. However, for practical reasons, the Company uses a
monthly average rate if the average rate approximate the actual rate at the date of the transactions.
b Conversion
Monetary assets and liabilities denominated in foreign currencies are reported using the closing rate at the reporting date. Non-monetary items
which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the
transaction.
c Treatment of Exchange Difference
Exchange differences arising on settlement/ restatement of short-term foreign currency monetary assets and liabilities of the Company are
recognised as income or expense in the Statement of Profit and Loss except those arising from investment in Non Integral operations.
xi Revenue Recognition
a Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and that the revenue can be reliably
measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable,
taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
b Revenue in respect of export sales is recognised on shipment of products.
c Sales are recognised net of discounts, rebates and returns.
d Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest
income is included under the head "other income" in the Statement of Profit and Loss.
e Dividend income is recognized when the company's right to receive dividend is established.
f Claims for insurance are accounted on receipts/ on acceptance of claim by insurer.
xii Income Tax
Income tax comprises of current and deferred income tax. Income tax is recognised as an expense or income in the Statement of Profit and
Loss, except to the extent it relates to items directly recognised in equity or in OCI.
a Current Income Tax
Current income tax is recognised based on the estimated tax liability computed after taking credit for allowances and exemptions in accordance
with the Income Tax Act, 1961. Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to
the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the
reporting date.
b Deferred Income Tax
Deferred tax is determined by applying the Balance Sheet approach. Deferred tax assets and liabilities are recognised for all deductible
temporary differences between the financial statements' carrying amount of existing assets and liabilities and their respective tax base.
Deferred tax assets and liabilities are measured using the enacted tax rates or tax rates that are substantively enacted at the Balance Sheet
date. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in the period that includes the enactment date.
Deferred tax assets are only recognised to the extent that it is probable that future taxable profits will be available against which the temporary
differences can be utilised. Such assets are reviewed at each Balance Sheet date to reassess realisation.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset. Current tax assets and tax liabilities are offset
where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability
simultaneously.
xiii Impairment of Non-Financial Assets
As at each Balance Sheet date, the Company assesses whether there is an indication that a non-financial asset may be impaired and also
whether there is an indication of reversal of impairment loss recognised in the previous periods. If any indication exists, or when annual
impairment testing for an asset is required, the Company determines the recoverable amount and impairment loss is recognised when the
carrying amount of an asset exceeds its recoverable amount.
Recoverable amount is determined:
- In case of an individual asset, at the higher of the assets' fair value less cost to sell and value in use; and
- In case of cash generating unit (a group of assets that generates identified, independent cash flows), at the higher of cash generating unit's
fair value less cost to sell and value in use.
In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rate that reflects current
market assessments of the time value of money and risk specified to the asset. In determining fair value less cost to sell, recent market
transaction are taken into account. If no such transaction can be identified, an appropriate valuation model is used.
Impairment losses of continuing operations, including impairment on inventories, are recognised in the Statement of Profit and Loss, except for
properties previously revalued with the revaluation taken to OCI. For such properties, the impairment is recognised in OCI up to the amount of
any previous revaluation.
When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount
of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was
recognised, then the previously recognised impairment loss is reversed through the Statement of Profit and Loss.
xiv Trade receivables
A receivable is classified as a ‘trade receivable' if it is in respect of the amount due on account of goods sold or services rendered in the normal
course of business. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the EIR method,
less provision for impairment.
xv Trade payables
A payable is classified as a ‘trade payable' if it is in respect of the amount due on account of goods purchased or services received in the
normal course of business. These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial
year which are unpaid. These amounts are unsecured and are usually settled as per the payment terms stated in the contract. Trade and other
payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially
at their fair value and subsequently measured at amortised cost using the EIR method.
xvi Earnings Per Share
Basic earnings per share is computed by dividing the net profit or loss for the period attributable to the equity shareholders of the Company by
the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding
during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity
shares, that have changed the number of equity shares outstanding, without a corresponding change in resources.
Diluted earnings per share is computed by dividing the net profit or loss for the period attributable to the equity shareholders of the Company
and weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number
of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares are
adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the outstanding
equity shares).
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