2.1 Statement of Compliance
These financial statements have been prepared in accordance with the Indian Accounting Standards (referred to as “Ind AS”) as prescribed under Section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time and other Accounting Principles generally accepted in India.
2.2 Basis of Preparation
These Standalone Financial Statements of the company are prepared in accordance with Indian Accounting Standards (Ind AS), under the historical cost convention on the accrual basis as per the provisions of the Companies Act, 2013 (“the Act”), except for certain financial instruments which are measured at fair values at the end of each reporting period. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Current and Non - Current Classification
The Company presents assets and liabilities in the balance sheet based on current/non-current classification.
An asset is classified as current when it satisfies any of the following criteria:
0 It is expected to be realised in, or is intended for sale or consumption in, the Company’s normal operating cycle and it is held primarily for the purpose of being traded;
0 It is expected to be realised within 12 months after the reporting date; or
0 It is cash or cash equivalent unless it is restricted tom being exchanged or used to settle a liability for at least 12 months after the reporting date.
0 All other assets are classified as non-current.
A liability is classified as current when it satisfies any of the following criteria:
0 It is expected to be settled in the Company’s normal operating cycle;
0 It is held primarily for the purpose of being traded
0 It is due to be settled within 12 months after the reporting date; or the Company does not have an unconditional right to defer setdement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its setdement by the issue of equity instruments do not affect its classification.
0 AD other liabilides are classified as non-current.
Deferred tax assets and liabilides are classified as non-current only.
Accounting pohcies have been consistendy applied except where a newly issued accoundng standard is initially adopted or a revision to an existing accoundng standard requires a change in the accounting policy hitherto in use.
The Standalone Financial Statements have been presented in Indian Rupees (IXR), which is the Company’s functional currency.
2.3 Use of Estimates and Judgements
The preparadon of these Financial Statements in conformity with the recognidon and measurement principles of Ind AS requires the management of the Company to make estimates and assumpdons that affect the reported balances of assets and liabilides, disclosures relating to contingent liabiUdes as at the date of the Financial Statements and the reported amounts of income and expense of the periods presented.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised m the period in which the estimates are revised and future periods are affected.
Informadon about cndcal judgments in applying accounting policies, as well as estimates and assumpdons that have the most significant effect to the carrying amounts of assets and liabilides within the next financial year are included in the foUowmg notes.
Useful Lives of Property, Plant and Equipment
The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future period.
Valuation of Deferred Tax Liabilities/Assets
The Company reviews the carrying amount of deferred tax liabilides/assets at the end of each reporting period.
Impairment of unquoted investments
The Company reviews its carrying value of investments annually, or more frequently when there is indicadon for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for.
Provisions and Contingent Liabilities Provisions
A provision is recognized when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions {except retirement benefits and leave encashments) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.
Contingent liabilities & commitments
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation or it cannot be measured with sufficient reliability. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
Recove rabiI ity of a dvan ces/recei va b les
The Company makes provisions for expected credit loss based on an assessment of the recoverability of trade and other receivables. The identification of doubtful debts requires use of judgment and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying value of the trade and other receivables and expenses on account of provision for doubtful debts in the period in which such estimate has been changed. At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expected credit loss on outstanding receivables and advances.
Provision for Inventories
Management reviews the inventory ageing on a periodic basis. This review involves comparison of the carrying value of the aged inventory items with the respective net realizable value. The purpose is to ascertain whether a provision is reqtured to be made in the financial statements for any obsolete and slow-moving items and that adequate provision for obsolete and slow-moving inventories has been made in the financial statements.
2.4 Property, Plant and Equipment
The Company had applied for the one-time transition exemption of considering the carrying cost on the transition date i.e., 1* April 2016 as the deemed cost under Ind AS. Hence regarded thereafter as historical cost.
The cost of property, plant and equipment comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, including relevant borrowing costs for qualifying assets and any expected costs of decommissioning. Expenditure incurred after the property, plant and equipment has been put mto operation, such as repairs and maintenance, are charged to the Statement of Profit and Loss in the year in which the costs are incurred. Major shutdown and overhaul expenditure is capitalized as the activities undertaken improves the economic benefits expected to arise from the asset.
It includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Company's accounting policy based on Ind AS 23 - Borrowing costs. Such properties are classified to the appropriate categories of PPE when completed and ready for intended use.
Assets in the course of construction are capitalised in the assets under construction account. At the point when an asset is operating at management's intended use, the cost of construction is transferred to the appropriate category of property, plant and equipment and depreciation commences. Costs associated with the commissioning of an asset and any obligatory decommissioning costs are capitalised where the asset is available for use but incapable of operating at normal levels until a year of commissioning has been completed. Revenue generated from production during the trial period is capitalised.
Property, plant and equipment except freehold land held for use in the production, supply or administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses, if any.
Subsequent expenditure and componentisation
Parts of an item of PPE having different useful lives and significant value and subsequent expenditure on Property, Plant and Equipment arising on account of capital improvement or other factors are accounted for as separate components only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period m which they are incurred.
Depreciation and Useful Life
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Assets m the course of development or construction and freehold land are not depreciated.
Other assets are stated at cost less accumulated depreciation and any provision for impairment. Depreciation commences when the assets are ready for their intended use.
Depreciation is calculated on the depreciable amount, which is cost of an asset less its residual value. Depreciation is provided at rates calculated to write off the cost, less estimated residual value, of each asset on a written down value basis over its expected useful life as per the useful life prescribed in Schedule II to the Companies Act, 2013.
When significant spare parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Depreciation methods, useful lives and residual values are reviewed at each financial year end and changes in estimates, if any, are accounted for prospectively. Fully depreciated assets still in use are retained in financial statements at residual value.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
Derecognition
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognized net within other income/other expense in Statement of Profit and Loss.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gam or loss arising on de-recogmtion of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognized in profit or loss when the asset is derecognized.
2.5 Capital Works -in-Proqress
Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost and related incidental expenses.
Depreciation commences when the assets are ready for their intended use. Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation is recognized so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, as per the useful life prescribed in Schedule 13 to the Companies Act, 2013. The Company reviews the residual value, useful lives and depreciation method annually and, if expectations differ from previous estimates, the change is accounted for as a change m accounting estimate on a prospective basis.
2.6 Intangib le Assets
Software: Cost of software which is not an integral part of the related hardware acquired for internal use is capitalized as intangible asset.
Intangible assets acquired are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses.
Intangible assets are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. 3he amortization period and amortization method for an intangible asset are reviewed at the end of each reporting period. The amortization expense on intangible asset is recognized m the Statement of Profit and Loss unless such expenditure forms part of carrying value of another asset.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in Statement of Profit and Loss when the asset is derecognized.
2.7 Impairment of Assets
The Company assesses the impairment of assets at each Balance Sheet date. If events or circumstances indicate that the carrying amount of the asset exceeds the recoverable amount, the loss on account of impairment is accounted accordingly. The recoverable amount is the higher of an asset’s fair value less costs of disposal & value m use.
2.8 Inventories Raw materials
Raw materials and stores, work m progress, traded and finished goods are stated at the lower of cost and net realisable value. Cost of raw materials and traded goods comprises cost of purchases.
Work in progress and finished goods
Cost of work-in-progress and finished goods comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure. Fixed overheads are allocated on the basis of normal operating capacity. Cost of inventories also include all other costs incurred in bringing the inventories to their present location and condition. Costs are assigned to the individual items m a group of inventories on the basis of weighted average cost basis. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
Costs of inventories are determined on weighted average basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.
2.9 Financial Instrument
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and liabilities (other than financial assets and financial Labilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial LabiLty. Transaction costs directly attributable to the acquisition of financial assets or financial Labdities at fair value through profit and loss are recognized immediately in Statement of Profit and Loss.
Financial Assets at Fair Va lue through other Comprehensive Income (FVTOCI)
Financial assets are measured at Fair Value through Other Comprehensive Income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows that give rise on specified dates to solely payments of principal and interest on the principal amount outstanding and by selling financial assets.
Financial Assets at Fair Value through Statement of Profit and Loss (FVTPL)
Financial assets are measured at fair value through Statement of Profit and loss unless it is measured at amortized cost or at fair value through other comprehensive income on initial recognition. The transaction cost directly attributable to the acquisition of financial assets and liabilities at fail value through statement of profit & loss are immediately recognized in the statement of profit and loss.
Financial Assets at Amortized Cost
Financial Assets are subsequently measured at amortized cost if these financial assets are held within a business whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
2.10Trade Receivables
The Company classifies the right to consideration in exchange for deliverables as either a receivable or as contract asset. A receivable is a right to consideration that is unconditional and only the passage of time is required before the payment of that consideration is due.
The Company assesses at each Balance Sheet date whether a financial asset or a group of financial assets is impaired. Ind AS 109 requires expected credit loss to be measured through a loss allowance.
The Company recognizes lifetime expected credit loss for all trade receivables that do not constitute a financial transaction. Impairment loss allowance is based on a simplified approach as permitted by Ind AS 109.
Full provision is made for all trade receivables considered doubtful of recovery if it is probable/certain that the debt is not recoverable.
Impairment loss allowance (or reversal) that is required to be recognized at the reporting date is recognized as an impairment loss or gain in the statement of profit and loss account.
2.11 Cash and Cash Equivalents
Cash and Cash Equivalents consist of cash on hand and balances with banks which are unrestricted for withdrawal and usage.
2.12 Foreign Currency Transactions
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (Le., the “functional currency’"). The financial statements are presented in Indian Rupee, the national currency of India, which is the functional currency of the Company.
In the Financial Statements of the Company, transactions in currencies other than the functional currency are translated into the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in other currencies are translated into the functional currency at exchange rates prevailing on the reporting date. Xon-monetary assets and liabilities denominated in other currencies and measured at historical cost or fair value are translated at the exchange rates prevailing on the dates on which such values were determined. All exchange differences are included in the Statement of Profit and Loss.
2.13 Contract Assets
Where the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, the Company presents the contract as a contract asset. A contract asset is a company’s right to consideration in exchange of goods or services that the Company has transferred to a customer. Contract Assets are reviewed for impairment in accordance with Ind AS 109.
2.14 Contract Liabilities
Where the Company receives consideration, or the Company has the right to an amount of consideration that is unconditional (Le., a receivable), before the Company transfers the good or service to the customer, the Company presents the contract as a contract liability when the payment is made or the payment is due (whichever is earlier). A contract liability is a company’s obligation to transfer goods or services to a customer for which the Company has received consideration {or an amount of consideration is due) from the customer.
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