Notes 2 SIGNIFICANT ACCOUNTING POLICIES
a. Basis of preparation of Financial Statements
The financial statements are prepared under historical cost convention on accrual basis of accounting and in
accordance with generally accepted accounting principles.
b. Use of estimates
The preparation of financial statements requires estimates and assumptions to be made that affect the
reported amount of assets and liabilities on the date of the financial statements and the reported amount
of revenues and expenses during the reporting period. Difference between the actual results and estimates
are recognized in the period in which the results materialize or are known.
c. Property, Plant and Equipmentfixed assets
It is a practice of the Company to state the Fixed Assets at cost of acquisition/construction less
accumulated depreciation. However, on revaluation of certain fixed assets viz the Plant& Machinery,
Land, Factory Building and Non-factory Building such fixed assets have been stated at revalued amounts
on the basis of their replacement value determined by the approved valuer. Increase resulting on
revaluation of the fixed assets has been credited to Revaluation Reserve Account. The company during
the financial year under review has substantially disposed of its fixed assets viz Land, Factory Building,
Non-factory Building, Plant & Machinery. The industrial undertaking owned by the company has been
sold away during the financial year ended 31st March 2020.
d. Intangible assets
Intangible assets are stated at cost of acquisition less accumulated amortisation. Computer Software which
are capitalised, are amortised over a period of ten years on straight-line basis. The Carrying value of
intangible assets being NIL , they have been written off.
e. Impairment of Property, Plant and Equipment and intangible assets
Impairment loss is provided to the extent that the carrying amount(s) of assets exceed their recoverable
amount(s). Recoverable amount is the higher of an asset's net selling price and its value In use. Value in use
is the present value of estimated future cash-flow expected to arise from the continuing use of the asset and
from its disposal at the end of its useful life.Net selling prices are the amount obtainable from sale of
the asset in an arm's length transaction between knowledgeable, willing parties, less the costs of disposal.
f. Investments
Long-Term investments are carried at cost. Provision is made to recognize a diminution, other than
temporary, In the carrying amount of Long-Term investments. Current investments are carried individually,
at the lower of cost and fair value.
g. Retirement and other employee benefits
i. The Company has made provision in respect its liability by Gratuity in accordance with provisions of the
Payments of Gratuity Act 1972. However no actuarial valuation ascertaining the liability at the end of
the accounting year has been obtained by the company. Contribution to defined contribution schemes
such as provident fund is charged to the profit & loss account. The provident fund contribution is made
to government administered provident fund and therefore the report the company has no further
obligation beyond this contribution charged in financial statement
II. The company in terms of the agreement of employment has decided to pay leave encashment and
therefore provision In respect of leave encashment as computed by the management has been
provided.
h. Inventories:
Inventories are valued as under:
1. Raw & Packing Materials NIL
2. Other Materials At lower of cost or Net realizable value
3. Work-In- Process NIL
4. Finished Goods (Mfg) NIL
5. Goods for resale At lower of cost or Net realizable value
Note: The Company has not carried on any manufacturing activities with effect from November 2019
and had carried on business operation as trader in pharmaceutical products. However all the business
operation have been discontinued. The company accordingly did not have any stock at close of the year
in respect of any of the above related items.
i. Foreign Currency Transactions
Transactions in foreign exchange are accounted at exchange rates prevailing on the date on which the
transaction has taken place.
j. GST :
The amount of GST Input Tax credit in respect of materials purchased during the year has been
deducted from the cost of material purchased and expenses incurred by the company. The Invoices
prepared by the company for sale of the products are inclusive of GST if any, and GST is shown
separately in the invoices and in the books of account. Revenue from operations are exclusive of GST
collected by the company through the sales invoices.
k. Research and Development:
Current revenue expenditure incurred on Research and Development is charged to the statement of
Profit & Loss of the year, unless deferred. Capital expenditure on Research & Development is
transferred to Fixed Assets.
l. Revenue Recognition:
Revenue is generally recognized on being reasonably certain of settlement and ultimate collection.
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