II SIGNIFICANT ACCOUNTING POLICIES
A) i Accounting basis and Convention
The Financial Statements are prepared under the historical cost convention in
accordance with Generally Accepted Accounting Principles in India. The company has
been following accrual system of accounting both as to income and expenditure.
The assets and liabilities have been classified as current or non-current as per the
Company's normal operating cycle and other criteria set out in Schedule III to the
Companies Act, 2013.
Based on the nature of products and the time between the acquisition of assets for
procesing and their realisation in cash and cash equivalents, the Company has
ascertained its operating cycle as 12 months for the purpose of current and non-current
classification of assets and liabilites.
ii Revenue Recognition
Sale of Products is recognized when substantial risk and rewards of ownership in the
goods are transferred to the buyers, which is generally on the despatch of goods. Sales
excludes returns, direct discounts and GST.
Sale of services is recognized on rendering of services based on
agreements/arrangements with the concerned parties.
Interest income from a financial asset is recognised using effective interest rate
method.
Export benefits are recognised on receipt basis.
iii GST & ITC :
GST credit on materials purchased for production / service availed for production / input
service are taken into account at the time of purchase and GST credit on purchase of
capital items wherever applicable are taken into account as and when the assets are
acquired.
The GST credits so taken are utilized for payment of GST on supply of goods. The
unutilized GST credit is carried forward in the books. The GST credits so taken are utilized
for payment of tax on goods sold.
The preparation of financial statements requires estimates and assumptions which
affect the reported amount of assets, liabilities, revenues and expense of the reporting
period. The difference between the actual results and estimates are recognized in the
period in which the results are known or materialized.
B) Property, plant and equipment :
Property, plant and equipment are stated at actual cost, net of recoverable taxes,
trade discount and rebates less accumulated depreciation and impairment losses, if any.
Such cost includes purchase price, borrowing cost and any cost directly attributable to
bringing the assets to its working condition for its intended use, net charges on foreign
exchange contracts and adjustments arising from exchange rate variations attributable to
the assets.
C) Intangible assets :
Intangible Assets are stated at cost of acquisition net of recoverable taxes, trade
discount and rebates less accumulated amortisation/depletion and impairment loss, if any.
Such cost includes purchase price, borrowing costs, and any cost directly attributable to
bringing the asset to its working condition for the intended use, net charges on foreign
exchange contracts and adjustments arising from exchange rate variations attributable to
the intangible assets.
D) Depreciation / Amortisation
Depreciation on tangible assets is charged on WDV method on pro- rata basis at the
rates specified in Schedule II of the Companies Act, 2013 except on Office Building for
which useful life is considered as 30 year due to acquisition resell basis.
Trade Marks are amortised on a straight line basis in five annual installments.
E) Inventories :
Inventories are valued at lower of cost and net realisble value. Cost is generally
ascertained on FIFO basis. In case of work-in-progress and finished goods, appropriate
overheads are included. Obsolete inventories are adequately provided for.
F) Borrowing cost
Borrowing costs directly attributable to acquisition or construction of qualifying assets (i.e.
those property, plant and equipment which necessarily take a substantial period of time
to get ready for their intended use) are capitalised. Other borrowing costs are recognised
as an expense in the period in which they are incurred.
G) Income Tax Accounting :
(a) Current Tax Provision is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of Income Tax Act, 1961.
(b) Deferred Tax is recognised, on timing difference, being the difference between
taxable income and book profits that orginate in one period and are capable of reversal in
one or more subsequent periods.
Deferred tax liabilities and assets are measured at the tax rates that are expected
to apply in the period in which the liability is settled or the asset realised, based on tax
rates (and tax laws) that have been enacted or substantively enacted by the end of the
reporting period. The carrying amount of Deferred tax liabilities and assets are reviewed
at the end of each reporting period.
H) Contingent Liabilities :
Contingent liabilities are not provided for in the accounts and are shown separately in the
notes on accounts
I) Impairment of Assets :
At each balance sheet date, the company assesses whether there is any indication that an
asset may be impaired. If any indication exists, The company estimates the recoverable
amount. If the carrying amount of the asset exceeds its estimated recoverable amount, an
impairment loss is recognised in the Statement of Profit and Loss to the extent of carrying
amount exceeds recoverable amount.
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