2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Preparation: -
a. Functional and presentation currency
These financial statements are presented in Indian Rupees, which is the company's functional currency. All amounts have been rounded to nearest lakh, unless otherwise stated.
b. Basis of measurement
These financial statements have been prepared in accordance with the generally accepted accountin g principles in India under the historical cost conventio n on accrual basis pursuant to section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.
All assets and liabilities have been classified as current or non-current as per the Company's operatin g cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of services and the time betwee the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operatin g cycle as 12 months for the purpose of current - non current classification of assets and liabilities.
c. Use of estimates
The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities, including the disclosure of contingent liabilities as of the date of the financial statements and the reporte d income and expenses during the reportin g period like provision for employee benefits, provision for doubtful debts, useful lives of property, plant and equipmen t, calculation of work in progress and tax expenses etc. The management believe that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates between the actual results and the estimates are recognized in the periods in which the results are known/ materialize.
B. Significant Accounting Policies: -
a. Revenue recognition
Revenue is recognize d only when risks and rewards incidental to ownershi p are transferred to the customer, it can be reliably measured, it is reasonable to expect ultimate collection and it is probable that the economic benefits will flow to the company.
b. Property, plant and equipment (PPE)
Property, Plant & Equipment stated at cost net of recoverable taxes, trade discount s and rebates and include amounts added on revaluation (if any), less accumulated depreciation and impairment loss, if any. The cost of Property, Plant & Equipment comprise s its purchase price, borrowin g cost and any cost directly attributable to bringing the asset to its working condition for its intended use, net charges on foreign exchange contract s and adjustments arising from exchange rate variations attributable to the assets.
Subsequent expenditures related to an item of Property, Plant & Equipment are added to its book value only if they increase the future benefits from the existing asset beyond previously assessed standard of performance. All other expenses on existing Property, Plant & Equipmen t, including day- to-day repair and maintenance expenditure and cost of replacing parts , are charged to the statement of profit and loss for the period during which such expenses are incurred.
Gains or losses arising from derecognition of Property, Plant & Equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
c. Depreciation and amortization
Depreciation on Property, Plant & Equipment is provided to the extent of depreciableamount on the Straight-Line Method (SLM) . Depreciation is provided based on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013.
In respect of additions or extensions forming an integral part of existing assets and insurance spares, including incremental cost arising on account of translation of foreign currency liabilities for acquisition of Property, Plant & Equipment, depreciation is provided as aforesaid over the residual life of the respective assets.
Amortizationon Intangible assets (i.e., Computer Software, website development etc.)- useful life taken as five years and accordingly SLM Method of depreciation is being charge d.
d. Impairment of Assets
At each balance sheet date, the management reviews the carrying amounts of its assets included in each cash generatin g unit to determine whethe r there is any indicatio n that those assets were impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment. Recoverable amount is the higher of an asset's net selling price and value in u se.
In assessing value in use, the estimated future cash flows expected from the continuin g use of the asset and from its disposal are discounted to their present value usinga pre-taxdiscount rate that reflects the current market assessment s of time value of money and the risks specific to the asset.
Reversal of impairment loss is recognized as income in the statement of profit & loss.
e. Investment
Investment in Quoted shares valued at cost.
f. Inventories
All the Stocks of Finished Goods are valued at cost or Net Realizable Value Whichever is lower.
g. Foreign currency transactions
Initial recognition
Foreign currency transactions are recorded in the reporting currency 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
Foreign currency monetary items are reported using the closing rate. Non - monetary items which are carried in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction; and non monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
Exchange differences
Exchange differences arising on the settlement of monetary items or on restatement of monetary items at rates different from those at which they were initially recorded during the period, are recognized as income or as expenses in the period in which they arise.
h. Tax expenses
Tax expense comprises of current tax and deferred tax. Current tax is measured at the amount expected to be paid to the tax authorities, using the applicable tax rates. Deferred income tax reflect the current period timing difference s between taxable income and accountin g income for the period and reversal of timing difference s of earlier years/perio d. Deferred tax assets are recognized only to the extent that there is a reasonable certainty that sufficient future income will be available except that deferred tax assets, in case there are unabsorbed depreciation or losses, are recognized if there is virtual certainty that sufficient future taxable income will be available to realize the same.
i. Employee Benefits
Short- term employee benefits
Short- term employee benefits such as salary, bonus, etc. payable within 12 months are accounted on accrual basis.
Defined contribution plans
Eligible employees receive benefits from a provident fund (EPF) and Employer's State Insurance (ESI), which are defined contribution plans. Both the employees and the Company make monthly contributions as per conditions and regulations prescribed under EPF & MP Act, 1952 and ESI Act, 1948 respectively.
Defined benefit plans
The Company provides for gratuity under the defined benefit retirement plans covering eligible employees. The Gratuity provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount base on the respective employee's salary and the tenure of employment with the company.
Liabilities with regard to defined benefit plans are determined by actuarial valuation, performed by an independent actuary, at each Balance Sheet date using the projected unit credit method. The Company recognized the net obligatio n of the gratuity plan and leave encashment benefits in the Balance Sheet as an asset or liability, respectively in accordance with Accountin g Standard (AS) 15, "Employee Benefits". Actuarial gains and losses arising from experience adjustments and changes in actuarial assumption are recognized in the Statement of Profit and Loss in the period in which they arise.
j. Earnings per share
Basic earnings per share is calculated by dividing the net profit(loss) for the year attributable to equity shareholders by the weighte d average numbe r of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share , the net profit/(loss) for the year attributable to equity shareholders and the weighted average numbe r of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
k. Cash and cash equivalen ts
The company considers all highly liquid financial instrument s, which are readily conevrtible into cash and have original maturities of three monhs or less from the date of purchase, to be cash equivalent.
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