1.0 Corporate Information
ARROWHEAD SEPERATION ENGINEERING LIMITED is a Limited Company, incorporated under the
provisions of Companies Act, 2013 and having CIN U74210MH1991PLC062643. The Company is mainly engaged the
primary objective for the formation of the Company is to carry on the business of designing, manufacturing, erection,
commissioning trading and consultancy of chemical and process equipment by means of technology available
indigenously or otherwise. The Registered office of the Company is situated at SURVEY NO 40 VILLAGE
MUNDHEGAON TAL IGATPURI, NASIK, Maharashtra, India, 422403.
1.1 Basis of preparation of financial statements
a. Accounting Convention: -
These financial statements of the Company have been prepared in accordance with Generally Accepted
Accounting Principles in India (“Indian GAAP”). Indian GAAP comprises mandatory accounting standards as
prescribed under Section 133 of the Companies Act, 2013 (“the Act”) read with the Rule 7 of the Companies
(Accounts) Rules, 2014. The financial statements have been prepared on an accrual basis and under the
Historical Cost Convention and the Companies (Accounting Standards) Amendment Rules 2016 and the
relevant provisions of the Companies Act, 2013.
b. Functional and Presentation Currency
The functional and presentation currency of the company is Indian rupees. This financial statement is presented
in Indian rupees.
All amounts disclosed in the financial statements and notes are rounded off to lakhs the nearest INR rupee in
compliance with Schedule III of the Act, unless otherwise stated.
Due to rounding off, the numbers presented throughout the document may not add up precisely to the totals and
percentages may not precisely reflect the absolute figures.
c. Use of Estimates and Judgments
The preparation of financial statement in conformity with accounting standard requires the Management to
make estimates, judgments, and assumptions. These estimates, judgments and assumptions affects the
application of accounting policies and the reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of financial statement and reported amounts of revenue and expenses during the
period. Accounting estimates could change form period to period. Actual result could differ from those
estimates. As soon as the Management is aware of the changes, appropriate changes in estimates are made. The
effect of such changes are reflected in the period in which such changes are made and, if material, their effect
are disclosed in the notes to financial statement.
Estimates and underlying assumptions are reviewed at each balance sheet date. Revisions to accounting
estimates are recognised in the period in which the estimate is revised and in future periods affected.
d. Current and Non - Current Classification
An asset or a liability is classified as Current when it satisfies any of the following criteria:
i. It is expected to be realized / settled, or is intended for sales or consumptions, in the Company's Normal
Operating Cycle;
ii. It is held primarily for the purpose of being traded.
iii. It is expected to be realized / due to be settled within twelve months after the end of reporting date;
iv. The Company does not have an unconditional right to defer the settlement of the liability for at least
twelve months after the reporting date.
All other assets and liabilities are classified as Non - Current.
For the purpose of Current / Non - Current classification of assets and liabilities, the Company has ascertained its
operating cycle as twelve months. This is based on the nature of services and the time between the acquisition of
the assets or liabilities for processing and their realization in Cash and Cash Equivalents.
1.1 Basis of Preparation
a) Property, Plant & Equipment and Intangible Assets:-
i. The company has adopted Cost Model to measure the gross carrying amount of Property Plant &
Equipment.
ii. Tangible Property Plant & Equipment are stated at cost of acquisition less accumulated depreciation.
Cost includes the purchase price and all other attributable costs incurred for bringing the asset to its
working condition for intended use.
iii. Intangible assets are stated at the consideration paid for acquisition and customization thereof less
accumulated amortization.
iv. Cost of fixed assets not ready for use before the balance sheet date is disclosed as Capital Work in
Progress.
v. Cost of Intangible Assets not ready for use before the balance sheet date is disclosed as Intangible
Assets under Development.
b) Depreciation / Amortisation : -
Depreciation has been provided under Written down Method at the rates prescribed under schedule III of
the Companies Act, 2013 on single shift and Pro Rata Basis to result in a more appropriate preparation or
presentation of the financial statements.
In respect of assets added/sold during the year, pro-rata depreciation has been provided at the rates
prescribed under Schedule II.
Intangible assets being Software are amortized over a period of its useful life on a straight line basis,
commencing from date the assets is available to the company for its use.
c) Impairment of Assets:-
An asset is treated as impaired when the carrying cost of an asset exceeds its recoverable value. An
impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as
impaired. The impairment loss recognised in prior period is reversed if there has been a change in the
estimate of the recoverable amount.
d) Investments:-
• Long term investments are stated at cost. Provision for diminution in the value of long-term investment
is made only if such decline is other than temporary.
• Current investments are stated at lower of cost or market value. The determination of carrying amount
of such investment is done on the basis of specific identification.
e) Government Grants and Subsidies:-
The Company is entitled to receive any subsidy from the Government authorities or any other authorities in
respect of manufacturing or other facilities are dealt as follows:
• Grants in the nature of subsidies which are non - refundable are credited to the respective accounts to
which the grants relate, on accrual basis, where there is reasonable assurance that the Company will
comply with all the necessary conditions attached to them.
• Grants in the nature of Subsidy which are Refundable are shown as Liabilities in the Balance Sheet at
the Reporting date.
f) Retirement Benefits:-
a) Short Term Employee Benefits:
All employee benefits payable within twelve months of rendering the service are classified as short term
benefits. Such benefits include salaries, wages, bonus, short term compensated absences, awards, ex-gratia,
performance pay etc. and the same are recognised in the period in which the employee renders the related
service.
b) Employment Benefits:
Short Term Employee Benefits:
All employee benefits payable within twelve months of rendering the service are classified as short term
benefits. Such benefits include salaries, wages, bonus, short term compensated absences, awards, ex-gratia,
performance pay etc. and the same are recognised in the period in which the employee renders the related
service.
a) Provident Fund/ESIC :
The company has not exceed minimum criteria for eligibility to contribute into Defined Contribution
Plans & Defined Contribution Plans for post-employment benefit in the form.
g) Valuation of Inventory : -
Inventories of the raw material, work-in-progress, finished goods, packing material, stores and spares,
components, consumables and stock in trade are carried at lower of cost and net realizable value. However,
raw material and other items held for use in production of inventories are not written down below cost if
the finished goods in which they will be incorporated are expected to be sold at or above cost. The
comparison of cost and net realizable value is made on an item by item basis.
Cost of inventories included the cost incurred in bringing the each product to its present location and
conditions are accounted as follows:
a) Raw Material:- Cost included the purchase price and other direct or indirect costs incurred to bring the
inventories into their present location and conditions. Cost is determined on First in First out basis (FIFO).
b) Finished Goods and Work-in-Progress:- Work in progress are valued at cost which includes raw
materials and cost incurred till the stage of production of process. Finished Goods are valued at cost or Net
realizable value whichever is lower. Cost included cost of direct materials and the labor cost and a
proportion of manufacturing overhead based on the normal operating capacity, but excluding the borrowing
costs. Cost is determined on “First in First out basis (FIFO) ”.
c) Stock in Trade:- Cost included the purchase price and other direct or indirect costs incurred in bringing
the inventories to their present location and conditions. Cost is determined on “WeightedAverage Basis”.
All other inventories of stores and spares, consumables, project material at site are valued at cost. The stock
of waste or scrap is valued at net realizable value.
“Net Realizable Value” is the estimated selling price in the ordinary course of business, less estimated costs
of completion and estimated cost necessary to make the sales of the products.
h) Revenue Recognition :-
Revenue is recognized when it is probable that economic benefit associated with the transaction flows to
the Company in ordinary course of its activities and the amount of revenue can be measured reliably,
regardless of when the payment is being made. Revenue is measured at the fair value of consideration
received or receivable, taking into the account contractually defined terms of payments, net of its returns,
trade discounts and volume rebates allowed.
Revenue includes only the gross inflows of economic benefits, including the excise duty, received and
receivable by the Company, on its own account. Amount collected on behalf of third parties such as sales
tax, value added tax and goods and service tax (GST) are excluded from the Revenue.
Sale of goods is recognized at the point of dispatch of goods to customers, sales are exclusive of Sales tax,
Vat, GST and Freight Charges if any. The revenue and expenditure are accounted on a going concern basis.
Interest Income is Recognized on a time proportion basis taking into account the amount outstanding and
the rate applicable i.e. on the basis of matching concept..
Dividend from investments in shares / units is recognized when the company.
Other items of Income are accounted as and when the right to receive arises.
i) Accounting for effects of changes in foreign exchange rates :-
Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the
time of the transactions.
Any income or expenses on account of exchange difference either on settlement or on Balance sheet
Valuation is recognized in the profit and loss account except in cases where they relate to acquisition of
fixed assets in which case they are adjusted to the carrying cost of such assets.
Foreign currency transactions accounts are given in the notes of accounts.
Commodity Hedging: - The realized gain or loss in respect of commodity hedging contracts, the principal
period of which has expired during the year, is recognized in profit and loss account. In respect of
contracts, that are outstanding as on date of Balance sheet are valued at prevailing market price and the
resultant loss, if any, is provided.
j) Borrowing Cost
Borrowing Cost includes the interest, commitments charges on bank borrowings, amortization of ancillary
costs incurred in connection with the arrangement of borrowings.
Borrowing costs that are directly attributable to the acquisition or construction of qualifying property,
plants and equipments are capitalized as a part of cost of that property, plants and equipments. The amount
of borrowing costs eligible for capitalization is determined in accordance with the Accounting Standards -
16 “Borrowing Costs”. Other Borrowing Costs are recognized as expenses in the period in which they are
incurred.
In accordance with the Accounting Standard - 16, exchange differences arising from foreign currency
borrowings to the extent that they are regarded as adjustments to interest costs are recognized as Borrowing
Costs and are capitalized as a part of cost of such property, plants and equipments if they are directly
attributable to their acquisition or charged to the Standalone Statement or Profit and Loss.
k) Related Party Disclosure :-
The Disclosures of Transaction with the related parties as defined in the related parties as defined in the
Accounting Standard are given in notes of accounts.
l) Accounting for Leases :-
A lease is classified at the inception date as finance lease or an operating lease. A lease that transfers
substantially all the risk and rewards incidental to the ownership to the Company is classified as a finance
lease.
The Company as a lessee:
a) Operating Lease:- Rental payable under the operating lease are charged to the Standalone Statement of
Profit and Loss on a Straight line basis over the term of the relevant lease.
b) Finance Lease: - Finance lease are capitalized at the commencement of the lease, at the lower of the fair
value of the property or the present value of the minimum lease payments. The corresponding liability to
the lessor is included in the Balance Sheet as a finance lease obligation. Lease payments are apportioned
between finance charges and the reduction of the lease obligation so as to achieve a constant rate of interest
on the remaining balance of the liability. Finance charges are charged directly against the income over the
period of the lease.
The Company has not provided any of its assets on the basis of operating lease or finance lease to others.
m) Cash flow:-
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects
of transactions of a non-cash nature and any deferrals of past or future cash receipts and payments. The
cash flows from regular operating, investing and financing activities of the company are segregated.
n) Earnings Per Share :-
The Company reports the basic and diluted Earnings per Share (EPS) in accordance with Accounting
Standard 20, “Earnings per Share”. Basic EPS is computed by dividing the Net Profit or Loss attributable to
the Equity Shareholders for the year by the weighted average number of equity shares outstanding during
the year. Diluted EPS is computed by dividing the Net Profit or Loss attributable to the Equity
Shareholders for the year by the weighted average number of Equity Shares outstanding during the year as
adjusted for the effects of all potential Equity Shares, except where the results are Anti - Dilutive.
The weighted average number of Equity Shares outstanding during the period is adjusted for events such a
Bonus Issue, Bonus elements in right issue, share splits, and reverse share split (consolidation of shares)
that have changed the number of Equity Shares outstanding, without a corresponding change in resources.
o) Taxes on Income :-
1. Current Tax: -
Provision for current tax is made after taken into consideration benefits admissible under the
provisions of the Income Tax Act, 1961.
2. Deferred Taxes: -
Deferred Income Tax is provided using the liability method on all temporary difference at the balance
sheet date between the tax basis of assets and liabilities and their carrying amount for financial
reporting purposes.
I. Deferred Tax Assets are recognized for all deductible temporary differences to the extent that
it is probable that taxable profit will be available in the future against which this items can be
utilized.
II. Deferred Tax Assets and liabilities are measured at the tax rates that are expected to apply to
the period when the assets is realized or the liability is settled, based on tax rates ( and the
tax) that have been enacted or enacted subsequent to the balance sheet date.
p) Discontinuing Operations :-
During the year the company has not discontinued any of its operations.
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