2. Significant Accounting Policies
2.1 Basis of Preparation
The financial statements have been prepared with all material aspect with Indian Accounting Standards
(Ind AS) notified under section 133 of the companies Act, 2013 (the Act) read with the Companies
(Indian Accounting standards ) Rules, 2015 and other relevant provisions of the Act. The Accounting
Policies adopted in the preparation of the financial statements are consistent with those followed in the
previous year.
2.2 Historical Cost Convention
The financial statements have been prepared on a historical cost basis.
2.3 Rounding of amounts
The financial statements are presented in INR and all values are rounded to the nearest rupees.
2.4. Summary of Significant Accounting Policies
The following are the significant accounting policies applied by the Company in preparing its financial
statements consistently to all the periods.
2.5. Current versus non-current classification
The Company presents assets and liabilities in the Balance Sheet based on current/non-current
classification.
An asset is current when it is:
• Expected to be realized or intended to be sold or consumed in the normal operating cycle;
• Held primarily for the purpose of trading;
• Expected to be realized 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 the normal operating cycle;
• It is held primarily for the purpose of trading;
• 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.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Operating cycle
Operating cycle of the Company is the time between the acquisition of assets for processing and their
realization in cash or cash equivalents. As the Company’s normal operating cycle is not clearly
identifiable, it is assumed to be twelve months.
2.6. Use of estimates and judgments
The estimates and judgments used in the preparation of the financial statements are continuously
evaluated by the Company and are based on historical experience and various other assumptions and
factors (including expectations of future events) that the Company believes to be reasonable under the
existing circumstances. Difference between actual results and estimates are recognized in the period in
which the results are known / materialized.
The said estimates are based on the facts and events, that existed as at the reporting date, or that
occurred after that date but provide additional evidence about conditions existing as at the reporting
date.
2.7. Foreign currencies
The Company’s financial statements are presented in INR, which is also the Company’s functional and
presentation currency.
Transactions and balances
Transactions in foreign currencies are initially recorded by theCompany’s functional currency spot
rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional
currency spot rates of exchange at the reporting date. Differences arising on settlement of such
transaction and on translation of monetary assets and liabilities denominated in foreign currencies at
year end exchange rate are recognized in profit or loss.
2.8. Impairment of assets
Consideration is given at each Balance Sheet date to determine whether there is any indication of
impairment of the carrying amounts of the Company's assets. If any indication exists, an asset’s
recoverable amount is estimated. An impairment loss is recognized wherever the carrying amount of
an asset exceeds its recoverable amount.
2.9. Property, plant and equipment
Property, plant and equipment are stated at historical cost, net of accumulated depreciation and
accumulated impairment losses, if any. When significant parts of Property, plant and equipment are
required to be replaced at intervals, theCompany recognizes such parts as individual assets with specific
useful lives and depreciates them accordingly. Likewise, when a major inspection is performed, its cost
is recognized in the carrying amount of the plant and equipment as a replacement if the recognition
criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.
Borrowing cost relating to acquisition / construction of fixed assets which take substantial period of
time to get ready for its intended use are also included to the extent they relate to the period till such
assets are ready to be put to use.
Capital work-in-progress comprises cost of fixed assets that are not yet installed and ready for their
intended use at the balance sheet date.
Other Intangible Assets
Intangible assets acquired separately are measured on initial recognition at historical cost. Intangibles
assets have a finite life and are subsequently carried at cost less any accumulated amortization and
accumulated impairment losses if any.
Intangible assets with finite lives are amortized over the useful life and assessed for impairment
whenever there isan indication that the intangible asset may be impaired. The amortization period and
the amortization method for anintangible asset with a finite useful life are reviewed at least at the end
of each reporting period. Changes in theexpected useful life or the expected pattern of consumption of
future economic benefits embodied in the asset areconsidered to modify the amortization period or
method, as appropriate, and are treated as changes in accounting Estimates. The amortization expense
on intangible assets with finite lives is recognized in the statement of profit andloss unless such
expenditure forms part of carrying value of another asset.
Gains or losses arising from derecognition of an intangible asset are measured as the difference
between the netdisposal proceeds and the carrying amount of the asset and are recognized in the
statement of profit or loss when the asset is derecognized.
Estimated useful life
Assets Estimated Useful life
Software 5 Years
Derecognition
An item of property, plant and equipment is derecognized upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on DE recognition of the
asset(calculated as the difference between the net disposal proceeds and the carrying amount of the
asset) is included in the Statement ofProfit and Loss when the asset is derecognized.
Depreciation
Depreciation on property, other than Plant & Machinery is calculated on the basis of Written down
Value Method. In case of Plant & Machinery, depreciation is provided on Straight Line Method (SLM)
basis. The depreciation on Property, Plant and Equipment are calculated as per Schedule II of
Companies Act 2013.
Depreciation on property, Plant and Equipment purchased/sold during a period is proportionately
charged for the period of use.
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.
2.10 Financial assets
Initial recognition and measurement:
All regular way purchases or sales of financial assets are recognized and derecognized on a trade date
basis.
Subsequent measurement:
All recognized financial assets are subsequently measured in their entirety at either amortized cost or
fair value, depending on the classification of the financial assets.
Classification of financial assets:
Financial assets that meet the following conditions are subsequently measured at amortized cost
(except for debt instruments that are designated as at fair value through profit or loss on initial
recognition):
• The asset is held within a business model whose objective is to hold assets in order to
collect contractual cash flows; and
• The contractual terms of the instrument give rise on specified dates to cash flows that are
solely payments of principal and interest.
All other financial asset is subsequently measured at fair value.
Financial assets at cost:
Investments in subsidiaries, associates and joint ventures are accounted for at cost.
Derecognition of financial assets:
The Company derecognizes a financial asset when the contractual rights to the cash flows from the
asset expire, or when it transfers the financial asset and substantially all the risks and rewards of
ownership of the asset to another party.
On derecognition of a financial asset in its entirely, the difference between the asset’s carrying amount
and the sum of the consideration received / receivable and the cumulative gain or loss that had been
recognized in other comprehensive income and accumulated in equity is recognized in profit or loss if
such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial
asset.
2.11. Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as
equity in accordance with the substance of the contractual arrangements 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 an entity after
deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds
received, net of direct issue costs.
Trade and other payables are recognized at the transaction cost, which is its fair value, and
subsequently measured at amortized cost.
Derecognition of financial liabilities
The Company derecognizes financial liabilities when, and only when, the Company’s obligations are
discharged, cancelled or have expired. An exchange between with a lender of debt instruments with
substantially different terms is accounted for as an extinguishment of the original financial liability and
the recognition of a new financial liability. Similarly, a substantial modification of the terms of an
existing financial liability is accounted for as an extinguishment of the original financial liability and the
recognition of a new financial liability. The difference between the carrying amount of the financial
liability derecognized and the consideration paid and payable is recognized in profit or loss.
2.12 Inventories
Inventories are valued at lower of cost or net realizable value .Cost comprises of cost of Purchases,
cost of conversion and other costs incurred in bringing the inventories to their present location and
condition. Cost is determined on First-in-First-out (FIFO) basis. Net realizable value 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.
2.13. Cash and cash equivalent
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term
deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in
value.
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