2 Significant accounting policies
The Company is a Small and Medium Sized Company as defined in the General Instructions in
respect of Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006
(as amended). Accordingly, the Company has complied with the Accounting Standards as applicable
to a Small and Medium Sized Company and also setout below. Policies have been consistently
applied to all the years presented, unless otherwise stated.
2.1 Basis of accounting and preparation of financial statements
The financial Statements comply in all material respects with Indian Accounting Standards (Ind AS)
notified under Section 133 of the Companies Act, 2013 (the Act) read with [Companies (Indian
Accounting Standards) Rules, 2015] and other relevant provisions of the Act. The Financial
Statements have been prepared on a historical cost basis except for Certain financial assets and
liabilities that are measured at fair value.
2.2 Significant estimates, judgements and assumptions
The preparation of financial statements in conformity with Ind AS requires the management to make
estimates, assumptions and exercise judgment in applying the accounting policies that affect the
reported amount of assets, liabilities and disclosure of contingent liabilities at the end of the financial
statements and reported amounts of income and expense during the year.
The management believes that these estimates are prudent and reasonable and are based on
management’s best knowledge of current events and actions. Actual results could differ from these
estimates and difference between actual results and estimates are recognized in the period in which
results are known or materialized.
2.3 Current and non-current classification
All assets and liabilities have been classified as current or non-current as per the Company’s normal
operating business cycle (12 months) and other criteria set out in the Schedule III to the Act.
2.4 Inventories
Inventories are valued at the lower of cost and the net realisable value after providing for
obsolescence and other losses, where considered necessary. Cost includes all charges in bringing the
goods to the point of sale, including octroi and other levies, transit insurance and receiving charges.
Work-in-progress and finished goods include appropriate proportion of overheads and, where
applicable, excise duty, GST.
2.5 Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term
balances (with an original maturity of three months 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.
2.6 Cash flow statement
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items
and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from operating, investing and financing
activities of the Company are segregated based on the available information.
2.7 Depreciation and amortisation
Depreciation has been provided on the straight-line method as per the rates calculated on basis of life
estimates prescribed in Schedule II to the Companies Act, 2013.
The company plant and machinery has been taken with useful life to 2.50 years. Assets individually
costing Rs. 5,000/- or less are fully depreciated in the year of purchase.
2.8 Revenue recognition
Sale of goods / Services
Sales/Service revenue are recognised, net of returns and trade discounts, on transfer of significant
risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to
customers or delivery of services. Sales excludes excise duty, sales tax , value added tax, Good and
service tax. 'Interest & Other income is accounted on accrual basis except in disputed cases.
Dividend income is accounted for when the same is received.
2.9 Other income
Other incomes are accounted on accrual basis, when due.
2.10 Tangible fixed assets
Fixed assets, are carried at cost less accumulated depreciation and impairment losses, if any. The
cost of fixed assets includes interest on borrowings attributable to acquisition of qualifying fixed
assets up to the date the asset is ready for its intended use and other incidental expenses incurred up
to that date. Machinery spares which can be used only in connection with an item of fixed asset and
whose use is expected to be irregular are capitalised and depreciated over the useful life of the
principal item of the relevant assets. Subsequent expenditure relating to fixed assets is capitalised
only if such expenditure results in an increase in the future benefits from such asset beyond its
previously assessed standard of performance. An item of property, plant and equipment is
derecognised upon disposal or when no future economic benefits are expected to arise from the
continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of
property, plant and equipment is determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in the statement of profit and loss.
2.11 Employee benefits
Employee benefits include provident fund, superannuation fund, gratuity fund, medical benefits, etc.
Defined contribution plans
Retirement benefit in the form of provident fund and Employee State Insurance Scheme is a defined
contribution scheme. The Group has no obligation, other than the contribution payable to the
provident fund and Employee State Insurance scheme which are charged as an expense as they fall
due based on the amount of contribution required to be made.
Defined benefit plans
For defined benefit plans in the form of gratuity fund the company has made arrangement with Life
Insurance Corporation of India.
2.12 Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs incurred. Costs in connection with
the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to
and utilised for qualifying assets, pertaining to the period from commencement of activities relating
to construction / development of the qualifying asset upto the date of capitalisation of such asset is
added to the cost of the assets. Company has not provided for expenses / interest on loan which is
not being paid / disputed / and is also subject to court outcome. Note 24.9
2.13 Segment reporting
Being Primarily into single business hence company don’t prepare segment reporting.
2.14 Earnings per share
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax
effect of extraordinary items, if any) by the weighted average number of equity shares outstanding
during the year. Diluted earnings per share is same as company has no dilutive potential equity
shares.
2.15 Taxes on income
Current tax is the amount of tax payable on the taxable income for the year as determined in
accordance with the provisions of the Income Tax Act, 1961.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic
benefits in the form of adjustment to future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal income tax. Accordingly, MAT is
recognised as an asset in the Balance Sheet when it is probable that future economic benefit
associated with it will flow to the Company.
2.16 Deferred Tax
Deferred tax is recognised on timing differences, being the differences between the taxable income
and the accounting income that originate in one period and are capable of reversal in one or more
subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or
substantially enacted as at the reporting date. Deferred tax assets are reviewed at each Balance Sheet
date for their realisability.
2.17 Impairment of assets
The carrying values of assets at each Balance Sheet date are reviewed for impairment. If any
indication of impairment exists, the recoverable amount of such assets is estimated and impairment
is recognised, if the carrying amount of these assets exceeds their recoverable amount. The
recoverable amount is the greater of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value based on an appropriate
discount factor. When there is indication that an impairment loss recognised for an asset in earlier
accounting periods no longer exists or may have decreased, such reversal of impairment loss is
recognised in the Statement of Profit and Loss, except in case of revalued assets.
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