2 SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Preparation
The financial statements have been prepared and presented in accordance with the Indian Accounting Standards ("Ind AS") notified under the
Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.
These Ind As financial statements have been prepared Dn the historical cost convention and on an accrual basis, except for the following material
items in the balance sheet:
^ Employee defined benefit assets/(liability) are recognised as the net total of the fair value of plan assets, plus actuarial losses, less actuarial
gains and the present value of the defined benefit obligation;
(ii) Long-term borrowings, except obligations under finance leases, are measured at amortized cost using the effective interest rate method;
(b) Use of Estimates
The preparation of financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from
these estimates.
Although these estimates are based on the management's best knowledge of the current events and actions, uncertainty about these assumption
and esti mates could result in the outcomes requiring a materia I adjustment to the ca Trying amount of the asset & liabilities i n the future period,
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which
the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and
critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is
included in the following notes:
- Useful lives of property, plant and equipment and intangible assets (Refer 2(c)&(d))
- Valuation of inventories { Refer 2(f)}
- Employee benefits {Refer 2(h))
- Provisions, contingent liability and contingent assets) Refer 2(1))
- Sales returns (Refer 2(g))
- Evaluation of recoverability of deferred tax assets { Refer 2 (i))
(c) Property, plant and equipment
Recognition and measurement
The items of property, plant and equipment are measured at cost of acquisition or construction less accumulated depreciation and accumulated
impairment losses, if any. The cost comprises of its purchase price and other incidental expenses that are directly attributable to the acquisition of
the asset. The cost of self-constructed assets includes the cost of materials and other costs directly attributable to bringing the asset to a working
condition for its intended use. Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future
benefits from the existing asset beyond its previously assessed standard of performance.
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the
future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of repairs and
maintenance are recognised in the statement of profit and loss as incurred.
Gains or losses arising from de-recognition of property, plant and equipment are measured as the difference between the net disposal proceeds
and the carrying a mount of the asset and are recognized in the Statement of Profit and Loss when the asset is de-recognized.
Intangible Assets
Intangible assets initially recognized at costand are subsequently carried at cost less accumulated amortisation and accumulated impairment
losses. These costs are amortised to profit or loss using the straight line method over their estimated useful lives.
The Company has adopted Policy of reviewing the intangible in the year of recognition for possible returns. In case of the returns are not
sustainable the intangible assets could be written off with in a period of 2-3 years. And if sustainable the same would be written off as provided
under the applicable standard. Since the Company is required to adopt Ind-As compulsory with effect from 01st April 2018 and it has specifically
defined in these forthcoming standards that any such Intangible Assets needs to be reviewed at each balance sheet date for any impairment {if
any) whereas existing accounting standards require to amortize such intangibles compulsory within maximum of 5/10 years. Further the
management foresee that there would not be any impairment requirement comparing to its carrying value as on 31 march 2022 (even in near
future as well) and hence no amortization of intangible asset has been made in the period under report.
Depreciation
Depreciation is recognised on pro-rata basis in the statement of profit and loss on a straight line basis over the estimated useful lives of property,
plant and equipment.
The residual values, useful lives and method of depreciation of property, plant and equipment are reviewed at each financial year end and
adjusted prospectively, if appropriate.
Advances paid towards the acquisition of property, plant and equipment outstanding at each reporting date is disclosed as capital advances under
other non current assets. The cost of property, plant and equipment not ready to use before such date are disclosed under capital work-in¬
progress. Assets not ready for use are not depreciated.
(d) Impairment of Non Financial Assets
The Management periodically assesses using, external and internal sources, whether there is an indication that an asset may be impaired. An
Impairment loss is recognized wherever the carrying value of an asset exceeds its recoverable amount. The recoverable amount is higher of the
asset's net selling price or value in use, which means the present value of future cash flows expected to arise from the continuing use of the asset
and its eventual disposal. An impairment loss for an asset is reversed if, and only if, the reversal can be related objectively to an event occurring
after the impairment loss was recognized. The carrying amount of an asset is increased to its revised recoverable amount, provided that this
amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no
impairment loss been recognized for the asset in prior years
Goodwill
CGlfs to which goodwill has been allocated are tested for Impairment annually or more frequently when there is indication for impairment. If the
recoverable amount of a CGU is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill
allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
Determination of recoverable amount of CGU requires the management to estimate the future cash flows expected to arise and a suitable
discount rate in order to calculate the present value. An impairment loss recognised for goodwill is not reversed in subsequent periods,
(e) Investments
Investments, which are readily realisable and intended to be held for not more than a year from the date on which such investments are made,
are classified as current investments. All other investments are classified as Non-current investments.
Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis.
Non-current investments are carried at cost. Investments in share of foreign subsidiaries are reported in Indian Currency at the rate of exchange
prevailing on the date of transaction. However, provision for diminution in value is made to recognise a decline other than temporary in the value
of the investments.
On disposal of an investment, the difference between its carrying cost and net disposal proceeds is charged or
credited to the statement of profit and loss.
(f) Inventories
(1} Raw materials. Packing materials, fuel, stores and spares are valued at lower of cost and net realizable value. Cost Includes Purchase Price
and other directly attributable costs incidental thereto. However, materials and other items held for use in the production of inventories are
not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is
determined on a weighted average basis.
(ii)
Work-in-progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a
proportion of manufacturing overheads based on normal operating capacity. Cost is determined on a weighted average basis.
{iii} Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs
necessary to make the sale.
(iv) Provision for diminution in value of inventories has been made for expired, obsolete, non-moving and slow-moving inventories as per the
management's estimate.
(g) Revenue Recognition
Revenue is recognized to the extent that the economic benefits will flow to the Company and the revenue can be reliably measured regardless of
when the payment is being made.
(i)
Revenue is measured at fair value of the consideration received or receivable. Revenue from sale of goods includes excise duty and are net
of discounts, applicable taxes, rebates and estimated returns.
Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the
buyer, usually on delivery of the goods, recoverability of consideration is probable, the amount of revenue and cost incurred or to be
incurred in respect of transaction can be measured reliably and there is no continuing managerial involvement over the goods sold.. The
company collects GST (01.04.2021 to 31.03.2022) on behalf of the government and, therefore, these are not economic benefits flowing to
the company. Hence, they are excluded from revenue.
(ii) Income from services is recognized when the services are rendered or based on stage of completation.
(iii) Interest income is accounted on accrual basis at applicable rate.
(iv) Other incomes are accounted as and when the right to receive arises.
(h) Employees retirement and other benefits
Retirement/ Post retirement Benefits: The Company has not made any provision for gratuity and leave encashment as prescribed by the Indian
Accounting Standard (IndAS) -19 on Employee Benefits. Please refer Note 28.
(I) Income Taxes
Income tax expense comprises current and deferred tax expense. Income tax expenses are recognized in statement of profit and loss, except
when they relate to items recognized in other comprehensive income or directly in equity, in which case, income tax expenses are also recognized
in other comprehensive income or directly in equity respectively.
Current tax is the tax payable on the taxable profit for the year, using tax rates enacted or substantively enacted by the end of reporting period by
the governing taxation laws, and any adjustment to tax payable in respect of previous periods. Current income tax assets and liabilities are
measured at the amount expected to be recovered from or paid to the taxation authorities. Management periodically evaluates positions taken in
the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where
appropriate.
Deferred taxes arising from deductible and taxable temporary differences between the tax base of assets and liabilities and their carrying amount
in the financial statements are recognized using substantively enacted tax rates and laws expected to apply to taxable income in the years in
which the temporary differences are expected to be received or settled. The deferred tax arising from the initial recognition of goodwill or an
asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the
transaction are not recognized.
Deferred tax asset are recognized only to the extent that it is probable that future taxable profit will be available against which the deductible
temporary differences can be utilized. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax assets to be utilized.
In respect of taxable temporary differences associated with investments in subsidiaries, associates and interest in jointly controlled entities, when
the timing of reversal of temporary differences can be controlled and it is probable that temporary differences will reverse in foreseeable future.
Deferred tax assets and liabilities are offset when the Company has a legally enforceable right to do the same.
MAT credit is recognized as an asset only when there is convincing evidence that the company will pay normal
income tax within specified period. The assets are reviewed at each balance sheet date
(j) Earnings Per Share
Basic earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the
period. Diluted earnings per share is computed by dividing the profit after tax by the weighted average number of equity shares considered for
deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon conversion of all
dilutive potential equityshares. The number of shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented
for any share splits and bonus shares issues including for changes effected prior to the approval of the financial statements by the Board of
Directors. Basic earnings per share is computed by dividing profit or loss attributable to equity share holders of Group by the weighted average
number of equity shares outstanding during the period. Oilutes earnings per share is determined by the adjusting profit or toss attributable to
ordinary shareholders and weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.
(k) Cash and cash equivalents
Cash and cash equivalents consists of cash on hand, short demand deposits and highly liquid Investments, that are readily convertible into known
amounts of cash and which are subject to an insignificant risk of change in value. Short term means investments with original maturities / holding
period of three months or less from the date of investments. Bank overdrafts that are repayable on demand and form an Integral part of the
Group's cash management are included as a component of cash and cash equivalent for the purpose of statement of cash flow.
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