Summary of significant accounting policies
A. Basis of Preparation of Financial Statements.
The financial statements have been prepared in accordance with Indian Generally Accepted Accounting
Principles (GAAP) under the historical cost convention on an accrual basis and on the principles of
going concern. All expenses and incomes to the extent considered payable and receivable respectively,
unless stated otherwise, have been accounted for on mercantile basis.
All the Assets and Liabilities have been classified as Current and Non-Current as per company's normal
operating cycle and other criteria set out in Schedule III of the Company's Act, 2013. The company has
ascertained its operating cycle as 12 months for the purpose of current, non-current classifications of
Assets and Liabilities.
B. Use of estimates
The preparation of financial statements in conformity with Indian GAAP requires management to make
judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities on the date of financial statements and the results of operations during
the reporting period end.
Accounting Estimates could change from period to period; actual results could differ from the estimates.
Appropriate changes are made as management becomes aware of changes in circumstances
surrounding the estimates. Changes in estimates are reflected in the financial statements in the period
in which changes are made and if material, their effects are disclosed in the notes to financial
statements.
C. Current-Non-Current Classification
Assets
An asset is classified as current when it satisfies any of the following criteria:
i) It is expected to be realized in, or is intended for sale or consumption 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 within 12 months after the reporting date; or
iv) It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability
for at least 12 months after the reporting date.
Current assets include the current portion of non-current financial assets. All other assets are classified
as non-current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria:
i) It is expected to be settled in the Company's normal operating cycle;
ii) It is held primarily for the purpose of being traded;
iii) It is due to be settled within 12 months after the reporting date;
iv) The Company does not have an unconditional right to defer settlement of the liability for at least 12
months after the reporting date.
D. Property, Plant and Equipment
I. Tangible assets
Tangible Assets are capitalized at acquisition cost, including directly attributable cost of bringing the
assets to its working condition for the intended use and are stated at capitalized cost less accumulated
depreciation and impairment loss (if any).
Factory Premises Not Owned by the Company
The Company's business operations are conducted from factory premises that are not owned by the
Company. The specific factory premises are located is located at LP, 4/84/4, Ganipur Maheshtala,
B.R. Road(W) Kolkata, West Bengal, India 700141 Ganipur, Maheshtala, 24 Parganas 743352
These factory premises are leased from Mr. Jagjit Singh Dhillon, the Company's promoter and
Managing Director, who is the owner of the properties. The lease agreements for these properties
are governed by leave and license agreements dated 1st April 2023 and 1st October 2023,
respectively.
Potential Impact on Business Operations
In the event that the Company is required to vacate the current premises, it would necessitate
securing alternative factory locations and infrastructure. There is no assurance that such new
arrangements can be made on commercially acceptable or favourable terms. A forced relocation of
business operations could result in operational disruptions and potentially higher rental costs. These
factors could have an adverse effect on the Company's business, prospects, results of operations,
and financial condition.
II. Intangible assets
Intangible Assets expected to provide future ending economic benefits are stated at cost less
amortization and impairment loss (if any). Cost comprises purchase price and directly attributable
expenditure on taking the assets ready for its intended use.
Subsequent expenditure relating to intangible assets is capitalized only if such expenditure results in an
increase in the future benefits from such asset beyond its previously assessed standard of performance.
E. Operating cycle
Operating cycle is the time between the acquisition of assets for processing and their realisation in cash
and cash equivalents. Based on the above definition and nature of business, the company has
ascertained its operating cycle as less than 12 months for the purpose of current / non-current
classification of assets and liabilities
F. Depreciation on property, plant and equipment
(i) Tangible Assets Depreciation on PPE is provided on written down value method as prescribed in
Schedule II to the companies Act, 2013. Depreciation on Assets is provided on Pro-rata basis.
(ii) Intangible Assets Intangible Assets are amortized over the useful life of 5 years on a straight-line
basis.
G. Inventories
Inventories are valued at the lower of Cost and Net realizable value. Cost of inventories comprises cost
of purchase and other costs incurred in bringing the inventories to their present location and condition.
Cost of inventories are computed using weighted average cost formula, except is case of inventories
which is individually identifiable in which case the actual cost of inventory is taken.
H. Investments
Investments are classified as current and non-current based on management intention to hold the
investment for a long or short period. Non-current investments are valued at cost. Current investments
are valued at cost or fair value, whichever is lower.
I. Borrowing Costs
Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the
arrangement of borrowings and exchange differences arising from foreign currency borrowings to the
extent they are regarded as an adjustment to the interest cost.
Borrowing costs that are directly attributable to the acquisition, construction or production of an asset
that takes a substantial period of time to get ready for its intended use are capitalized. All other
borrowing costs are recognized as expenditures in the period in which they are incurred.
J. Revenue recognition
Revenue / Incomes and Costs / Expenditures are accounted for on accrual basis.
Revenue is recognized when significant risk and reward with respect to ownership of goods have been
transferred to the buyer and it is probable that the economic benefits will flow to the company.
Interest Income
Interest Income is recognized on a time proportion basis taking into account the amount outstanding
and applicable interest rate.
K. Retirement and other employee benefits
Defined contribution plan
The Company makes defined contribution to Government Employee Deposit Linked Insurance and ESI,
which are recognised in the Statement of Profit and Loss on accrual basis. The Company has no further
obligations under these plans beyond its monthly contributions.
Defined Benefit Plan- Gratuity
The company has a defined benefit plan for post-employment benefit in the form of Gratuity.
Liability for the above defined benefit plan is provided on the basis of valuation, as at balance sheet
date, carried out by an independent actuary. The actuarial method used for measuring the liability is the
Projected Unit Credit Method.
L. Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits with banks.
M. Taxes On Income
Tax expenses comprise of Current and Deferred taxes. Current Income Tax is determined as per the
provisions of the Income Tax Act in respect of Taxable Income for the year. Deferred Tax arising on
account of “timing differences” and which are capable of reversal in one or more subsequent periods is
recognized, using the tax rates and tax laws that are enacted or subsequently enacted Deferred Tax
Assets is recognized only to the extent there is reasonable certainty with respect to reversal of the same
in future years as to matter of prudence.
|