2 Significant accounting policies
This note provides a list of the significant accourt-ng policies adopted in the preparation of these financial statements, "'"hese policies have been consistently applied to all tne perods presented, unless otherwise stated.
3 Basis of preparation
(i) Compliance with Ind AS
These financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of Ihe L,ompames Act, 2013 (ihe Act) (Companies (Indian Accounting Standards) Rules 2015, as amended] and other relevant provisions of the Act.
(ii) Historical cost convention
The financial statements have beer prepared on an accrual basis and under the historical cost convention except for the following assets and liabilities which have been measured at fair value or reva ced amount:
* defined benefit plans — plan assets measured at fair value; ard
" certain financial assets and liaouities measured al fair value (Refer accounirg policy regarding ^nancial
instruments).
(iii) Classification of assets and liabilities
The classification of assets and liabilities into current and non-current, wherever applicable, are based on norma: operating cycle of business activilies of Ihe Company, which is twelve months
(iv| Use of estimates
The preparation of financial slatemenls in conformity with generally accepted accounting principles (GAAP) requires management to make judgements, estimates and assumplions that affect the application of accounting policies and reported amount of assets, labilities, income ana expenses and disclosures of contingent -labilities on the dale of financ.al slatemenls Actual results could differ from those estimates. Underlying estimates are reviewed on ar ongoing basis. Any revision to accounting estimates is recognised prospect-vely in current and future periods Sigr-ficant judgement and est.mates to the carrying amounts of assets and liabilities within the next financial year, is in respect of uselul lives of property, plant and equipment and intangible assets, valuation of deferred tax assets, provisions and contingent liabil ties, estimation for employee defined ber.ef Is obligations etc.
Significant judgement and estimates to the carrying amounts cf assets and liabilities w-thin the next financial year is in respect of useful lives of property, plant and equipment and intangible assets, valuation cf deferred tax assets' provisions and conlingenl iiabililies, estimation for employee defined benefits obligations etc.
(v) New and amended standards adopted by the Company
The Minislry of Corporate Affairs has vide notification dated March 31, 2023 notified Companies (Indian Accounting Standards) Amendment Rules, 2023 (Ihe Rules’) which amends certain accounting standards, and are effective Apul 01 2023
The Rules predominantly amend Ind AS 12. Income taxes, and Ind AS 1, Presenta:o-' of financial statements. The nlher amendments to Ind AS notified by these rules are primarily in Ihe nature of clarifications These amendments are not expected to have a materal impact on the company in the current or future reporting oerieds and on foreseeable future transactors. Speoifisally, no changes wculd be necessary as a consequence ol amendments made to Ind A3 12 as the company's accounting policy already complies with the now mandatory treatment.
<vi> Revenue recognition
Revenue is recognized upon transfer cf control of promised products or services to customers either over time or at a poirt of time al an amount that reflects the consideration the Company expects to be entitled ro
in exchange for those producls or services. Control is defined as the ability to direct Ihe use of and oblain substantially all of the economic benefits from an asset.
Revenue is
measured based on the transaction price, which is the expected consideration to be received, to the extent that it is highly probable that there will not be a significant reversal of revenue in future periods. At the inception of the contract, the Company identifies the goods or services promised in the contract and assesses which of the promised goods or services shall be identified as seoarate oerformance obligations. Premised goods or services give nse to separate performance obligations if they are capable of being distinct. Revenue from the delivery of products is recogmsea at the point in time when control over Ihe products is passed to the customers, which is determined based on the individual terms of delivery agreed in the customer contract. The Company does not expect to have any contracts where the period between the transfer of the promised gcodsor services to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any or Ihe transaction pnees for the time value of money.
(vii) Valuation of Inventories
Raw materials and stores, work in progress, traded and finished goeds are stated at Ihe lower of cost and net realisable value. Cost of raw materials and stores, and Iraded goods comprises cosl of purchases, olher directly attributable expenditure, non-refundable taxes and duties; nel of any rebates or discounts . Cost of work-inprogress and finished goods comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, Ihe latter being allocated on the basis of normal operating capacity Cost of inventories also include all other costs incurred in bringing the inventories lo their present location and condition Costs are assigned to individual items of inventory on the basis of weighted average cosl basis. Costs of purchased inventory are determined afler deducting rebates and discounts. Net realisable value is the estimated sell ng price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary lo make the sale.
(viii) Capital Work in Progress
Expenditure incurred on construction ot assets which are not ready for Iheir intended use are carried at cosl less impairmenl (if any), under Capital work-in-progress. The cost Includes the purchase cost of materials, including import duties and nonrefundable taxes, interest on borrowings used to finance the construction of the asset and any direct’y attributable costs of bringing an assets ready for their intended use.
(ix) Property Plant &. equipments
Fixed assets are valued at original cost of acquisition including taxes, duties, freight and otner incidental expenses relating to acquisition and installation Net Changes on foreign exchanges contracts and adjustments arising from exchange rate variations attributable lo the fixed assests are capitalized.
Transition to Ind AS : On transition to Ind AS the Company has elected to continue with the carrying value of ail of its property, plant and equipment measured as per the previous GAAP, and use that carrying value as the deemed cosl of such property, plant and equipment
Depreciation is calculated on cosl of items of property, plant and equipment less their estimated residua) value using straight line method over the useful lives of assets and in the manner specified in schedule II of the Companies Act. 2013 Pro-rata depreciation is charged on property plant and equipment from/ up lo the dale on which such assets are ready to pul lo use/ are deleted or discarded.
(x) Investment property is property held either to earn rental inccme or for capital appreciation or for both, but not for sate in the ordinary course of business, use in the production cr supply of goods or services or for administrative purposes. Upon initial recognition, ar investment property is measured at cost Subsequent to initial recognition, investment property is measured at cost less accumulated depreciation and accumulated impairment losses, if any
(xi) Foreign Currency
Transactions in foreign currency are accounted for at the prevailing rale on the transaction date. The year end balances in foreign currency are re-stated at the closing rale and Ihe resultanl difference is carried lo Profit & Loss Account.
(xii) Borrowing Cost
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial perioo of time to get ready for intended use. A|‘ other borrowing costs are charged to revenue
(xiii Lease :»
Certain part of the Factory Land was acquired in 1980 fcr a term of 90 years lease and the yearly lease rent charged to statement of profit & less account.
(xivf Research and Development Expenditure
Revenue expenditure on Research and Development is charged out in the year in which it is incurred.Expenditure, whicn results in creation of assets, is includeo m fixed assets and depreciation is provided on such assets are applicable
txv) Intangible Assets :Ý
Expenditure incurred is treated in accordance with the provisions of Accounting Standard-26 “Intangible Assets'' issued by the ICA|.
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