B. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF ACCOUNTING AND PREPARATION OF FINANCIAL STATEMENTS
The accounting principles and policies, recognized as appropriate for the measurement and
reporting of the financial performance and financial position on accrual basis except as otherwise
disclosed, using historical costs (i.e. not taking into account changing money values impact of
inflation) are applied in the preparation of the financial statements and those which are considered
materials to the affairs are suitably disclosed. The financial statements are in accordance with the
requirements of the companies Act, 2013.
2. USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting
principles ('GAAP') in India requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date
of the financial statements, and the reported amount of revenue and expenses during the reporting
period. The estimates and assumptions used in the accompanying financial statements are based
upon management's evaluation of the relevant facts and circumstances as of the date of the
financial statements which in management's opinion are prudent and reasonable. Actual results
may differ from the estimates used in preparing the accompanying financial statements. Any
revision to accounting estimates is recognized prospectively in current and future periods.
3. CURRENT/NON CURRENT CLASSIFICATIONS
The Schedule III to the Act requires assets and liabilities to be classified as either Current or Non¬
current. An asset is classified as current when it satisfies any of the following criteria:
a) It is expected to be realized in, or is intended for sale or consumption in, the entity's normal
operating cycle;
b) It is held primarily for the purpose of being traded;
c) It is expected to be realized within twelve months after the balance sheet date; or
d) It is cash or a cash equivalent unless it is restricted from being exchanged or used to settle a
liability for at least twelve months after the balance sheet date.
Current assets include the current portion of non-current financial assets. All other assets are
classified as non-current.
A liability is classified as current when it satisfies any of the following criteria:
a) It is expected to be settled in, the entity's normal operating cycle;
b) It is held primarily for the purpose of being traded;
c) It is due to be settled within twelve months after the balance sheet date; or
d) The Company does not have an unconditional right to defer settlement of the liability for at
least twelve months after the balance sheet date.
Current liabilities include current portion of non-current financial liabilities. All other liabilities
are classified as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for processing and their realization
in cash or cash equivalents.
4. INVENTORIES
Companies measures its inventories at lower of the cost or net realizable value. Stock in trade
computed on the basis of cost of purchases (exclusive of taxes), and other cost incurred for bringing
the inventories to the present location and condition.
5. CASH & CASH EQUIVALENTS
Cash comprises Cash on hand and Demand Deposits with Banks. Cash equivalent are short-term
balances (with an original maturity of three month 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.
6. PROPERTY, PLANT AND EQUIPMENT & INTANGIBLES
Property, Plant and Equipment are stated at cost less accumulated depreciation and impairment
losses, if any. Cost comprises of all expenses incurred to bring the assets to its present location and
condition. Borrowing cost directly attributable to the acquisition/construction are included in the
cost of fixed assets. Adjustments arising from exchange rate variations attributable to the fixed
assets are capitalized.
In case of new projects/expansion of existing projects, expenditure incurred during construction
/preoperative period including interest and finance charge on specific/general purpose loans,
prior to commencement of commercial production are capitalized. The same are allocated to the
respective; on completion of construction/erection of the capital project/fixed assets.
Subsequent expenditure related to an item of tangible asset are added to its book value only if they
increase the future economic benefits from the existing asset beyond its previously assessed
standard of performance.
7. DEPRECIATION ON TANGIBLE FIXED ASSETS
The company depreciates Property, Plant and Equipment on Written down value method.
Depreciation is provided based on useful life of the assets as prescribed in Schedule II to the
Companies Act, 2013. Depreciation on addition/deletion from fixed assets made during the period
is provided on Pro-rata basis from or up to the date of such addition/deletion as the case may be.
8. REVENUE RECOGNITION
Sales of goods:
Revenue is recognized to the extent that it is probable to the economic benefits will flow to the
Company and revenue can be reliably measured at the fair value of consideration received or
receivable, as reflected in relevant documents taking into account contractually defined terms of
payments and excluding Taxes and Duties. Sales are recognized on Net, Return or Trade discounts,
on transfer of significant risks and rewards of ownership to the buyers which generally coincides
with the delivery of goods to the customers.
Other Income:
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 head "other
income" in the statement of profit and loss.
9. BORROWING COST
Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalized
as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period
of time to get ready for intended use. All other borrowing costs are recognized as an expense in
the period in which they are incurred. Capitalization of borrowing costs is suspended during the
extended period in which active development is interrupted. Capitalization of borrowing costs is
ceased when substantially all the activities necessary to prepare the qualifying asset for its
intended use or sale are complete. Other borrowing costs are charged to statement of profit and
loss as and when incurred.
10. ACCOUNTING TAXES ON INCOME
Tax Expenses for the year, i.e. Current tax is included in determining the net profit for the year. A
provision is made for the Current tax-liability computed in accordance with relevant tax rates and
tax laws.
11. DEFERRED TAX-ASSET/LIABILITY
As per the Prudence concept, Deferred Tax Assets are recognized and carried forward only to the
extent that there is reasonable certainty of their realization. However considering past record of
the company and by making realistic estimates of profit for the future, its prudence we are not
recognizing differed Assets as on date. However, the same will be recognized as and when there
is realistic estimates of the Profits.
12. IMPAIRMENT OF ASSETS
In accordance with AS 28 on 'Impairment of assets' as prescribed in the Companies (Accounting
Standards) Rules, 2006, the Company assesses at each balance sheet date, whether there is any
indication that an asset may be impaired. If any such indication exists, the Company estimates the
recoverable amount of the asset.
The recoverable amount of the assets (or where applicable that of the cash generating unit to which
the asset belongs) is estimated as the higher of its net selling price and its value in use. Value in
use is the present value of estimated future cash flows expected to arise from the continuing use
of the assets and from its disposal at the end of its useful life.
An impairment loss is recognized whenever the carrying amount of an asset or the cash-generating
unit to which it belongs, exceeds it recoverable amount. Impairment loss is recognized in the
statement of profit and loss or against revaluation surplus, where applicable. If at the balance sheet
date, there is an indication that a previously assessed impairment loss no longer exists, the
recoverable amount is re-assessed and the asset is reflected at the recoverable amount subject to a
maximum of the depreciated historical cost.
13. INVESTMENTS
Investments, which are readily realizable and 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 long-term investments.
On initial recognition, all investments are measured at cost. The cost comprises purchase price
and directly attributable acquisition charges such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of cost and fair value
determined on an individual investment basis. Long-term investments are carried at cost.
However, provision for diminution in value is made to recognize a decline other than temporary
in the value of the investments.
On disposal of an investment, the difference between its carrying amount and net disposal
proceeds is charged or credited to the statement of profit and loss. However, during the current
year, Company does not have any current investments.
14. EMPLOYEE BENEFITS
Short - term employee benefits are recognized as an expense at the undiscounted amount in the
profit & loss account of the year in which the related services is rendered.
Post - employment and other long term employee benefits are recognized as an expense in the
profit & loss account of the year in which the liabilities are crystalized.
15. FOREIGN CURRENCY TRANSLATION
Initial recognition:
Foreign currency transactions are recorded in the reporting currency which is Indian Rupee, by
applying to the foreign currency amount the exchange rate between the reporting currency and
the foreign currency at the date of the transaction.
Conversion:
Monetary assets and liabilities in foreign currency, which are outstanding as at the year-end, are
translated at the year-end at the closing exchange rate and the resultant exchange differences are
recognized in the Statement of Profit and Loss. Non-monetary foreign currency items are carried
at cost.
Exchange Differences
Exchange differences arising on the settlement of monetary items or on reporting monetary items
of the Company at rates different from those at which they were initially recorded during the year,
or reported in previous financial statements, are recognized as income or as expenses in the year
in which they arise.
16. SEGMENT ACCOUNTING
(i) Business Segment:
The Company operates in one Business Segment only and hence no separate information for
business segment wise disclosure is required.
(ii) Geographical Segment:
The Company operates in one Geographical Segment namely "within India" and hence no
separate information for geographic segment wise disclosure is required.
17. EARNINGS PER SHARE:
Basic earnings per share are computed by dividing the net profit for the year attributable to the
equity shareholders by the weighted average number of equity shares outstanding during the year.
Diluted earnings per share is computed by dividing the net profit attributable to the equity
shareholders for the year by the weighted average number of equity and dilutive equity equivalent
shares outstanding during the year, except where the results would be anti-dilutive.
18. CASH FLOW:
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the
effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with investing or financing cash
flows. Cash flows from operating, investing and financing activities of the Company are
segregated, accordingly.
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