1. Significant accounting policies:
A. summary of the significant accounting policies applied in the preparation
of the financial statements is as given below. These accounting policies
have been applied consistently to all the periods presented in the
financial statements.
1.1 Ind AS 105: Non-Current Assets held for Sale or Discontinued
Operations:
This standard specifies accounting for assets held for sale, and the
presentation and disclosure for discontinued operations:
(a) Assets that meet the criteria to be classified as held for sale to be
measured at the lower of carrying amount and fair value less cost to sell,
and depreciation on such assets to cease; and
(b) Assets that meet the criteria to be classified as held for sale to be
presented separately in the balance sheet and the results of
discontinued operations to be presented separately in the statement of
profit and loss.
The books of accounts of the company does not carry Non-Current Assets
held for Sale or Discontinued Operations during the reporting period, hence
this accounting standard does not have financial impact on the financial
statements of the company.
1.2 Ind AS 106: Exploration for Evolution of Mineral resources:
This standard specifies the financial reporting for the exploration for
evaluation of mineral resources. In particular, this standard requires:
a. Limited improvements to existing accounting practices for exploration
and evaluation of expenditures
b. Entities that recognize exploration and evaluation of assets to assess
such assets for impairment in accordance with this standard and
measure any impairment.
Disclosures that identify and explain the amounts in the entity's financial
statements arising from the exploration for the evaluation of mineral
resources and help users of those financial statements understand the
amount, timing and certainty of future cash flows from any exploration
and evaluation of assets recognized.
This Ind AS 106 not applicable, the company is in the business of
Construction and project related activity. Hence this Ind AS does not
have any financial impact on the financial statements of the company.
1.3 Ind AS-16: Property, Plant and Equipment:
Property, Plant and Equipment are stated at cost less accumulated
depreciation.
Cost of an item of property, plants and equipment comprises its purchase
price, including import duties and non-refundable purchase taxes, after
deducting trade discounts and rebates, any directly attributable cost of
bringing the item to its working condition for its intended use and
estimated costs of dismantling and removing the item and restoring the
site on which it is located.
The cost of a self-constructed item of property, plant and equipment
comprises the cost of materials and direct labor, any other costs directly
attributable to bringing the item to working condition for its intended use,
and estimated costs of dismantling and removing the item and restoring
the site on which it is located.
Property, plant and equipment which are significant to the total cost of
that item of Property Plant and Equipment and having different useful life
are accounted for as separately.
Gains or losses arising from derecognition of property, plant and
equipment are measured as the difference between the net disposal
proceeds and carrying amount of the asset is recognized in the
statement of profit or loss when the asset is derecognized.
Depreciation on Property Plant and Equipment is provided on Straight
line method. Depreciation is provided based on useful life as prescribed
under part C of the schedule II of the Companies act, 2013.
Depreciation on additions (disposals) is provided on a pro-rata basis i.e., from
(up to) the date on which asset is ready for use (disposed of).
The books of accounts of the company does carry Property plan and
Equipment during the reporting period, and accordingly it is been treated.
Impairment
Property Plant and Equipment are evaluated for recoverability whenever
events or changes in circumstances indicate that their carrying amount may
not be recoverable. An impairment loss is recognised for the amount by which
the asset's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset's fair value less cost of disposal
and value in use. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash
inflows which are largely independent of the cash inflows from other assets or
groups of assets (cash-generating units).
1.4 Impairment Assets (Ind AS 36)
The Company's non-financial assets, other than deferred tax assets are
reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, then the asset's
recoverable amount is estimated.
For impairment testing, assets that do not generate independent cash
inflows are grouped together into cash-generating units (CGUs). Each
CGU represents the smallest group of assets that generates cash inflows
that are largely independent of the cash inflows of other assets or CGUs.
The recoverable amount of a CGU (or an individual asset) is the higher of
its value in use and its fair value less costs to sell. Value in use is based on
the estimated future cash flows, 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 CGU (or the asset).
An impairment loss is recognized if the carrying amount of an asset or
CGU exceeds its estimated recoverable amount. Impairment losses are
recognized in the statement of profit and loss. Impairment loss
recognized in respect of a CGU is allocated first to reduce the carrying
amount of any goodwill allocated to the CGU, and then to reduce the
carrying amounts of the other assets of the CGU (or group of CGUs) on a
pro rata basis.
The books of accounts of the company doesn't carry any impairment of
assets during the reporting period, hence this accounting standard does
not have financial impact on the financial statements of the company.
1.5 Intangible assets (Ind AS 38):
Intangible assets are stated at cost less accumulated amortization and
impairment. Intangible assets are amortized over their estimated useful
life on straight line basis.
Subsequent costs are included in assets carrying amount or recognized
or recognized as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow
to the entity and the cost can be measured reliably.
The residual Values, useful lives and methods of depreciation of Property
Plant and Equipment are reviewed at each financial year end and
adjusted prospectively, if appropriate.
Gains or losses arising from derecognition of Intangible asset are
measured as the difference between the net disposal proceeds and
carrying amount of the asset is recognized in the statement of profit or
loss when the asset is derecognized.
The books of accounts of the company doesn't carry any intangible
assets during the reporting period, hence this accounting standard does
not have financial impact on the financial statements of the company.
Cash flows are reported using the indirect method under Ind AS 7,
whereby profit/(loss) before extraordinary items and tax is adjusted for
the effects of transactions of non-cash nature and any deferrals or
accruals of past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments that
are readily convertible into known amounts of cash and which are subject
to insignificant risk of changes in value.
1.7 Operating Cycle:
The Company has adopted its normal operating cycle as twelve
months based on the nature of products and the time between the
acquisition of assets for processing and their realization, for the
purpose of current / non-current classification of assets and liabilities.
1.8 Capital Work in Progress
Capital Work in Progress (CWIP) includes Civil Works in Progress,
Plant & Equipment under erection and Preoperative Expenditure
pending allocation on the assets to be acquired/commissioned,
capitalized. It also includes payments made to towards technical
know-how fee and for other General Administrative Expenses incurred
for bringing the asset into existence.
1.9 Investments:
Investments are classified as Non-Current and Current investments.
Investments, which are readily realisable and are intended to be held
for not more than one year from the date on which such investments
are made, are classified as current investments. All other investments
are classified as non-current investments.
Current investments are carried at lower of cost and fair value. Non¬
Current Investments are carried at cost less provision for other than
temporary diminution, if any, in value of such investments.
1.10 Effects of changes in Foreign Rates (Ind AS 21):
Foreign currency transactions are recorded at the exchange rates
prevailing on the dates when the relevant transactions took place.
Exchange difference arising on settled foreign currency transactions
during the year and translation of assets and liabilities at the yearend
are recognized in the statement of profit and loss.
In respect of Forward contracts entered into to hedge risks associated
with foreign currency fluctuation on its assets and liabilities, the
premium or discount at the inception of the contract is amortized as
income or expense over the period of contract. Any profit or loss arising
on the cancellation or renewal of forward contracts is recognized as
income or expense in the period in which such cancellation or renewal
is made.
The company has not entered any foreign exchange transactions
during the reporting period; hence this accounting standard does not
have financial impact on the financial statements.
1.11 Borrowing Costs (Ind AS 23):
Borrowing costs directly attributable to the acquisition, construction or
production of qualifying assets, which are assets that necessarily take
a substantial period of time to get ready for their intended use or sale,
are added to the cost of those assets, until such time as the assets is
substantially ready for the intended use or sale.
Investment income earned on temporary investment of specific
borrowings pending their expenditure on qualifying assets is
recognized in statement of profit and loss.
Discounts or premiums and expenses on the issue of debt securities
are amortized over the term of related securities are included within
borrowing costs. Premiums payable on early redemptions of debt
securities, in lieu of future costs, are recognized as borrowing costs.
All other borrowing costs are recognized as expenses in the period in
which it is incurred.
1.12 Revenue Recognition (Ind AS 18):
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must also
be met before revenue is recognized:
a) Sales Revenue is recognized on dispatch to customers as per the
terms of the order. Gross sales are net of returns and applicable trade
discounts and excluding GST billed to the customers.
b) Subsidy from Government is recognized when such subsidy has been
earned by the company and it is reasonably certain that the ultimate
collection will be made.
c) 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.
d) All other incomes are recognized based on the communications held
with the parties and based on the certainty of the incomes.
1.13 Accounting for Government Grants and Disclosure of Government
Assistance (Ind AS 20):
Government grants:
Government grants are not recognized until there is reasonable
assurance that the Company will comply with the conditions attached
to them and that the grants will be received.
Government grants are recognized in the Statement of Profit and Loss
on a systematic basis over the years in which the Company
recognises as expenses the related costs for which the grants are
intended to compensate or when performance obligations are me.
Government grants, whose primary condition is that the Company
should purchase, construct or otherwise acquire non-current assets
and nonmonetary grants are recognised and disclosed as ‘deferred
income' under non-current liability in the Balance Sheet and
transferred to the Statement of Profit and Loss on a systematic and
rational basis over the useful lives of the related assets.
The benefit of a government loan at a below-market rate of interest and
effect of this favourable interest is treated as a government grant. The
loan or assistance is initially recognised at fair value and the
government grant is measured as the difference between proceeds
received and the fair value of the loan based on prevailing market
interest rates and recognised to the income statement immediately
on fulfillment of the performance obligations. The loan is subsequently
measured as per the accounting policy applicable to financial
liabilities.
1.14 Inventories (Ind AS 2):
Inventories are assets:
a. Held for sale in the ordinary course of business;
b. In the process of production for such sale;
c. In the form of materials or supplies to be consumed in the production
process or in the rendering of services
Net Realisable value is the estimated selling price in the ordinary
course of business less the estimated costs of completion and the
estimated costs necessary to make the sale.
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market
participants at the measurement date.
• Cost of Material excludes duties and taxes which are subsequently
recoverable.
• Stocks at Depots are inclusive of duty, wherever applicable, paid at the
time of dispatch from Factories.
• Based on the information provided the difference between physical
verification and valuation of the of inventories are charged to the profit
and loss account.
1.15 Trade Receivables - Doubtful debts:
A Trade receivable represents the company's right to an amount of
consideration that is unconditional.
Provision is made in the Accounts for Debts/Advances which is in the
opinion of Management are Considered doubtful of Recovery.
1.16 Retirement and other Employee Benefits:
Retirement benefit in the form of provident fund is a defined
contribution scheme. The Company has no obligation, other than
contribution payable to the provident fund. The Company recognizes
contribution payable to the provident fund scheme as expenditure,
when an employee renders related service.
Gratuity liability is a defined benefit obligation and the cost of providing
the benefits under this plan has not determined on the basis of
actuarial valuation at each year-end.
Accumulated leave, which is expected to be utilized within the next 12
months, is treated as short term employee benefit. The Company has
not provided any provision for leave encashment.
1.17 Ind AS 17- Leases
A Lease is classified as a Finance Lease if it transfers substantially all
the risks and rewards incidental to ownership. A lease is classified as
an operating lease if it does not transfer substantially all the risks and
rewards incidental to ownership.
Finance charges in respect of finance lease obligations are
recognized as finance costs in the statement of profit and loss. In
respect of operating leases for premises, which are cancellable /
renewable by mutual consent on agreed terms, the aggregate lease
rents payable are charged as rent in the Statement of Profit and Loss.
1.18 Insurance Claims:
Insurance Claims are accounted for on the basis of claims
admitted/expected to be admitted and to the extent that the amount
recoverable can be measured reliably and it is reasonable to expect
ultimate collection.
1.19 Earnings per Share (Ind AS 33):
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they are entitled to participate in dividends relative to a fully
paid equity share during the reporting period. The weighted average
number of equity shares outstanding during the period is adjusted for
events such as bonus issue, bonus element in a rights issue, share
split, and reverse share split (consolidation of shares) that have
changed the number of equity shares outstanding, without a
corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit
or loss for the period attributable to equity shareholders and the
weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
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