| a. Use of estimates: The preparation of the financial statements in
the conformity with the GAAP 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. Actual results could differ from those estimates.
Any revision to accounting estimates is recognized prospectively in
current and future periods.
b. Fixed Assets: Fixed assets are stated at historical cost of
acquisition/construction inclusive of duties, taxes, incidental
expenses and erection/commissioning expenses up to the date the asset
is ready for intended use.
c. Depreciation and amortization: On fixed assets, depreciation is
provided on straight line method. The depreciation has been provided as
per schedule II, on the basis of useful life of assets. Useful life of
Plant & Machinery (Continuous process plant), and electrical
installations as per Schedule II of Companies Act, 2013, is 8yrs and
10yrs respectively but it has been taken 25yrs as per the certificate
from technical consultant dated 30.10.2014
d. Impairment of assets: At each Balance Sheet date, management
assesses, using external and internal sources, whether there is an
indication that an asset may be impaired. Impairment occurs where the
carrying value exceeds the present value of future cash flows expected
to arise from the continuing use of the asset and its eventual
disposal. The impairment loss to be expensed is determined as the
excess of the carrying amount over the present value as determined
above. Actual results could differ from those estimates.
e. Inventories: Items of inventories are measured at lower of cost or
net realizable.
f. Revenue recognition:
i. Sales: Revenue is recognized to the extent that it is probable the
economic benefits will flow to the company and revenue can be reliably
measured. Revenue from sale of goods is when all the significant risks
& rewards of ownership of the goods have been passed to the recognized
buyers, usually on delivery of the goods. The provisions of AS-9 are
complied with the extent applicable to the company.
ii. Income and expenditure: Income and Expenditure are accounted for on
accrual basis, wherever ascertainable.
g. Employee benefits: Short-term employees' benefits are recognized as
an expense in the Statement of Profit and Loss of the year in which the
related service is rendered.
Regarding post employment benefits, the registration under LIC Group
Gratuity scheme is under process. Provision for gratuity has been made
in the accounts on the basis of Actuarial valuation made by LIC.
Provisions of Employees Provident Funds and Miscellaneous Provisions
Act, 1952 are, at present, not applicable to the company.
h. Foreign exchange transactions: Since the company did not have any
foreign exchange transactions, the provisions of AS -11 are not
applicable to the company
i. Borrowing cost: Borrowing cost that are directly attributable to
the acquisition/ construction of the qualifying asset are capitalized
until the time all the substantial activities necessary to prepare such
assets for the intended use are complete. All other borrowing costs are
recognized as expenditure during the period in which they are incurred
j. Government grants: Government Grants related to fixed assets are
adjusted with the value of fixed assets/credited to capital reserve.
Govt. Grants related to revenue items are adjusted with the related
expenditure/taken as income.
k. Contingencies: Contingent liability is a possible obligation that
arises from past events and the existence of which will be confirmed
only by the occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the enterprise, or is a
present obligation that arises from past events but is not recognized
because either it is not probable that an outflow of resources
embodying economic benefits will be required to settle the obligation,
or a reliable estimate of the amount of the obligation cannot be made.
l. Taxation: Tax expense comprises of current and deferred tax.
Current income tax is measured at the amount expected to be paid to the
tax authorities in accordance with the Income-tax Act, 1961 enacted in
India. Deferred income taxes reflects the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years.
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