(a) Basis of Accounting and Preparation of the Financial Statements
The financial statements of the Company have been prepared in accordance with the Generally
Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards
specified under Section 133 of the Companies Act, 2013 (“the 2013 Act”) and the relevant provisions
of the 1956 Act / 2013 Act, as applicable. The financial statements of the Company are prepared
under the historical cost convention using the accrual method of accounting. The accounting policies
adopted in the preparation of the financial statements are consistent with those of the previous year.
All assets and liabilities have been classified as current or non-current as per the Company’s normal
operating cycle and other criteria set out in Schedule III to the 2013 Act.
(b) Use of Estimates
The presentation of the financial statements, in conformity with Indian GAAP, requires the
Management to make estimates and assumptions that affect the reported amounts of assets and
liabilities, revenues and expenses and disclosure of contingent liabilities. Management believes that
the estimates used in the preparation of the financial statements are prudent and reasonable, future
results could differ, the differences between the actual results and the estimates are recognized in the
period in which the results are known / materialize.
(c) Property, plant and equipment (PPE)
Tangible assets are carried at cost less accumulated depreciation and accumulated impairment losses,
if any. Cost comprises of the purchase price including import duties and non-refundable taxes, and
directly attributable expenses incurred to bring the asset to the location and condition necessary for it
to be capable of being operated in the manner intended by management. Capital expenditure
incurred on rented properties is classified as ‘Leasehold improvements’ under property, plant and
equipment.
Subsequent costs related to an item of Property, Plant and Equipment are recognized in the carrying
amount of the item if the recognition criteria are met. Items of Property, Plant and Equipment that
have been retired from active use and are held for disposal are stated at the lower of their net
carrying amount and net realizable value and are shown separately in the financial statements under
the head ‘Other current assets’. Any write-down in this regard is recognised immediately in the
Statement of Profit and Loss. An item of Property, Plant and Equipment is derecognized on disposal
or when no future economic benefits are expected from its use or disposal. The gain or loss arising
on derecognition is recognised in the Statement of Profit and Loss.
Depreciation on tangible asset is recognised on a straight-line basis based on a useful life of the assets
prescribed in Schedule II to the Act. If the management’s estimates of the useful life of an asset at
the time of acquisition of assets or of the remaining useful life on a subsequent review is shorter than
that envisaged in the aforesaid schedule, depreciation is provided at a higher rate owing to their risk
of higher obsolesce / wear & tear. The useful life of the assets has been reassessed based on the
number of years for which the assets have already been put to use and the estimated minimum
balance period for which the assets can be used in the Company. The estimated life of property,
plant and equipment has been determined as follows:
No further depreciation is provided in respect of assets that are fully written down but are still in use.
Leasehold land in the nature of perpetual lease is not amortised. Other leasehold land is amortised
over the period of the lease. All property, plant and equipment individually costing less than ?5,000/-
are fully depreciated in the year of purchase.
(d) Intangible assets
Intangible assets are stated at acquisition cost, net of accumulated amortization and accumulated
impairment losses, if any. Intangible assets are amortised on a straight-line basis over their estimated
useful lives. A rebuttable presumption that the useful life of an intangible asset will not exceed fifteen
years from the date when the asset is available for use is considered by the management. The
amortisation period and the amortisation method are reviewed at least at each financial year end. If
the expected useful life of the asset is significantly different from previous estimates, the amortisation
period is changed accordingly.
Gains or losses arising from the retirement or disposal of an intangible asset are determined as the
difference between the net disposal proceeds and the carrying amount of the asset and recognized as
income or expense in the Statement of Profit and Loss. The estimated useful lives of intangible assets
are as follows:
(e) Impairment
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.
If such recoverable amount of the asset or the recoverable amount of the cash generating unit to
which the asset belongs is less than its carrying amount, the carrying amount is reduced to its
recoverable amount and the reduction is treated as an impairment loss and is recognized in the
Statement of Profit and Loss account. If at the balance sheet date there is an indication that if a
previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the
asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost.
(f) Inventories
The figure of closing stock is taken on the basis of physical count of stock by the management at the
end of the year. Inventories are valued at cost or net realizable value whichever is lower and on FIFO
method.
(g) Revenue Recognition
1) Revenue from sale of product
Revenue is recognized in respect of sales on dispatch of product to the customers. Quality
rebates, claims and other discounts, if any, are disclosed separately.
2) Other revenue
Interest on bank deposits is recognized on the time proportion basis taking into account the
amounts invested and the rate of interest as applicable.
(h) Employee Benefits
1) Gratuity
Gratuity is calculated in the manner prescribed under Income Tax Act, 1961 and is recognized as
expense on actual payment basis.
2) Other Short-Term Benefits
Other short-term benefits are recognized as expenses on actual payment basis for the period
during which services are rendered by the employee.
(i) Taxation
The tax expense comprises of current tax and deferred tax. Current tax is the amount of income tax
determined to be payable in respect of taxable income for a period as per the provisions of Income
Tax Act, 1961. Deferred tax is the effect of timing differences between taxable income and
accounting income that originate in one period and are capable of reversal in one or more
subsequent periods. Deferred tax is measured based on the tax rates and the tax laws enacted or
substantively enacted at the balance sheet date. Deferred tax assets are reviewed at each balance
sheet date and recognised/derecognized only to the extent that there is reasonable/virtual certainty,
depending on the nature of the timing differences, that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
Minimum Alternate Tax (‘MAT’) credit is recognised as an asset only when and to the extent there is
convincing evidence that the Company will pay normal income tax during the specified period. In the
year in which MAT credit becomes eligible to be recognised as an asset in accordance with the
recommendations contained in Guidance Note on Accounting for Credit Available in respect of
Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of a credit
to the Statement of Profit and Loss and shown as MAT credit entitlement. The Company reviews
the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement
to the extent it is not reasonably certain that the Company will pay normal income tax during the
specified period.
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