“1” SIGNIFICANT ACCOUNTING POLICES:
This note provides a list of the significant accounting policies adopted in the preparation of
these financial statements. These policies have been consistently applied to all the years
presented, unless otherwise stated.
BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements of the Company have been prepared in accordance with Indian
Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards)
Rules, 2015 as amended by the Companies ( Indian Accounting Standards) (Amendment)
Rules, 2016.
The financial statements have been prepared on the historical cost basis, except for certain
financial instruments (including derivative instruments) which are measured at fair values at
the end of each reporting period, as explained in the accounting policies below.
The financial statements are presented in Indian rupees (INR) and all values are rounded to the
nearest lacs, except otherwise indicated.
All the assets and liabilities have been classified as current or non-current as per the
Company's normal operating cycle. Based on the nature of the 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 12 months for the purpose of current / non¬
current classification of assets and liabilities
CURRENT VERSUS NON-CURRENT CLASSIFICATION
The Company presents assets and liabilities in the balance sheet based on current/ non¬
current classification. An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of sale/lease
- Expected to be realised within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for
at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of sale/lease
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve
months after the reporting period
The Company classifies all other liabilities as non-current
The operating cycle is the time between the acquisition of assets for processing and their
realisation in cash and cash equivalents. The Company has identified twelve months as its
operating cycle.”
USE OF ESTIMATES
The preparation of the financial statements in conformity with Ind AS requires the
management to make estimates, judgments andassumptions. These estimates, judgments and
assumptions affect the application of accounting policies and the reported amounts ofassets
and liabilities, the disclosures of contingent assets and liabilities at the date of the financial
statements and reported amountsof revenues and expenses during the period. The application
of accounting policies that require critical accounting estimates involvingcomplex and
subjective judgments and the use of assumptions in these financial statements have been
disclosed below. Actualresults could differ from those estimates. Appropriate changes in
estimates are made as management becomes aware of changes incircumstances surrounding
the estimates. Changes in estimates are reflected in the financial statements in the period in
which changesare made and, if material, their effects are disclosed in the notes to the financial
statements.
REVENUE RECOGNITION
Revenue is recognized when control of the goods or services are transferred to the customer at
an amount that reflects theconsideration to which the Company expects to be entitled in
exchange for those goods or services, regardless of whenthe payment is being made. Revenue is
measured at the fair value of the consideration received or receivable, taking intoaccount
contractually defined terms of payment. The Company is the principal in all of its revenue
arrangements since itis the primary obligor in all the revenue arrangements as it has pricing
latitude and is also exposed to inventory and credit risks. However, Goods and Services tax
(GST) are not received by the Company on its own account. Rather, it is tax collectedon value
added to the commodity by the seller on behalf of the government. Accordingly, it is excluded
from revenue.
Sale of Goods:
Revenue from sales is recognized when the substantial risks and rewards of ownership of goods
are transferred to the buyer and the collection of the resulting receivables is reasonably
expected. This usually occurs upon dispatch, after the price has been determined and
collection of the receivable is reasonably certain. Revenue from the sale of goods is measured at
the fair value of theconsideration received or receivable, net of returns and allowances, trade
discounts and volume rebates.
Sale of Services:
The Company recognizes revenue when the significant terms of the arrangement are
enforceable, services have been delivered and the collectability is reasonably assured.
Other income:
Interest
For all debt instruments measured either at amortized cost or at fair value through other
comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is
the rate that exactly discounts the estimated future cash payments or receipts over the
expected life of the financial instrument or a shorter period, where appropriate, to the gross
carrying amount of the financial asset or to the amortized cost of a financial liability. When
calculating the effective interest rate, the company estimates the expected cash flows by
considering all the contractual terms of the financial instrument (for example, prepayment,
extension, call and similar options) but does not consider the expected credit losses. Interest
income is included in finance income in the statement of profit and loss.
PROPERTY, PLANT & EQUIPMENT
Freehold land is carried at historical cost. All other items of property, plant and equipment are
stated at historical cost less depreciation and impairment, if any. Historical cost includes
expenditure that is directly attributable to the acquisition of the items. The cost of property,
plant and equipment comprises its purchase price net of any trade discounts and rebates,
anyimport duties and other taxes (other than those subsequently recoverable from the tax
authorities), any directlyattributable expenditure on making the asset ready for its intended
use, including relevant borrowing costs for qualifyingassets and any expected costs of
decommissioning. Expenditure incurred after the property, plant and equipment havebeen put
into operation, such as repairs and maintenance, are charged to the Statement of Profit and
Loss in the period inwhich the costs are incurred. Major shut-down and overhaul expenditure
is capitalized as the activities undertakenimproves the economic benefits expected to arise from
the asset.
An item of property, plant and equipment is derecognized upon disposal or when no future
economic benefits areexpected to arise from the continued use of the asset. Any gain or loss
arising on the disposal or retirement of an item ofproperty, plant and equipment is determined
as the difference between the sales proceeds and the carrying amount ofthe asset and is
recognized in Statement of Profit and Loss.
Advances paid towards the acquisition of Property, Plant & Equipment outstanding at each
reporting date is classified as Capital advances under Other Non -Current Assets and assets
which are not ready for intended use as on the date of Balance sheet are disclosed as “Capital
Work in Progress.”
DEPRECIATION/ AMORTISATION
Depreciation on Property, Plant & Equipment is charged on Straight Line Method.
Depreciations are charged over the estimated useful lives of the assets as specified in Schedule
II of the Companies Act, 2013. Depreciation in respect of additions to/and deletion from assets
has been charged on pro-rata basis from/till the date they are put to commercial use.
The residual values, useful lives and methods of depreciation of property, plant and equipment
are reviewed at regular intervals and adjusted prospectively, if appropriate.
Depreciation on additions/deletions to Property plant and equipment during the year is
provided for on a pro-rata basis with reference to the date of additions/deletions.
Depreciation on subsequent expenditure on Property plant and equipment arising on
account of capital improvement or other factors is provided for prospectively over the
remaining useful life. Depreciation on refurbished/revamped Property plant and equipment
which are capitalized separately is provide for over the reassessed useful life
IMPAIRMENT OF NON - FINANCIAL ASSESTS
The Company assesses, at each reporting date, whether there is an indication that an asset
may be impaired. If any indication exists, the Company estimates the asset’s recoverable
amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating units
(CGU) fair value less costs of disposal and its value in use.
Recoverable amount is determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from other assets or group of
assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the
asset is considered impaired and is written down to its recoverable amount.
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 the risks specific to the asset. In determining fair value less costs of
disposal recent market transactions are taken into account, if available. If no such
transactions can be identified, an appropriate valuation model is used. After impairment,
depreciation is provided on the revised carrying amount of the asset over its remaining
useful life.
BORROWING COST
Borrowing costs that are attributable to the acquisition or construction of qualifying assets
(assets which require substantial period of time to get ready for its intended use) are capitalized
as part of the cost of that asset. All other borrowing costs are charged to the Statement of Profit
and Loss for the period for which they are incurred.
INVENTORIES
Inventories are valued at the lower of cost and net realizable value. Cost incurred in
bringing each products to its present location and condition are accounted for as follows:-
• Finished goods and Work In Progress:
Cost includes cost of direct materials and labour and a proportion of manufacturing
overheads based on the normal operating capacity. Cost in determined on first in,
first out basis.
• Traded Goods:
Cost includes cost of purchase and other costs incurred in bringing the inventories to
their present location and condition. Cost is determined on first in, first out basis.
Net realizable values is the estimated selling price in the ordinary course of business, less
estimated costs of completion and the estimated costs necessary to make the sale.
TAXATION
The income tax expense or credit for the period is the tax payable on the current period’s
taxable income based on the applicable income tax rate for each jurisdiction adjusted by
changes in deferred tax assets and liabilities attributable to temporary differences and to
unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or
substantively enacted at the end of the reporting period in the countries where the Company
operates and generates taxable income. Management periodically evaluates positions taken
in tax returns with respect to situations in which applicable tax regulation is subject to
interpretation. It establishes provisions where appropriate on the basis of amounts expected
to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences
arising between the tax base of assets and liabilities and their carrying amounts in the
financial statements. Deferred income tax is also not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a business combination that
at the time of the transaction affects neither accounting profit nor taxable profit (tax loss).
Deferred income tax is determined using tax rates (and laws) that have been enacted or
substantially enacted by the end of the reporting period and are expected to apply when the
related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred tax assets are recognized for all deductible temporary differences and unused tax
losses only if it is probable that future taxable amounts will be available to utilize those
temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset
current tax assets and liabilities and when the deferred tax balances relate to the same
taxation authority. 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 realize the
asset and settle the liability simultaneously.
Current and deferred tax is recognized in Profit or Loss, except to the extent that it relates to
items recognized in other comprehensive income or directly in equity. In this case, the tax is
also recognized in other comprehensive income or directly in equity, respectively.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents for the purpose of Cash Flow Statement comprise Cash and
Cheques in hand, bank balances, demand deposits with banks (other than deposits pledged
with government authorities and margin money deposits) with anoriginal maturity of three
months or less.
CASH FLOW STATEMENT
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary
items and tax is adjustedfor the effects of transactions of non-cash nature and any deferrals or
accruals of past or future cash receipts orpayments. The cash flows from operating, investing
and financing activities of the Company are segregated based onthe available information.
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