2. Material Accounting Policies
2.1 Statement of Compliance
These financial statements are prepared in accordance with Indian Accounting Standards ("Ind AS") prescribed
under section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, 2015
and relevant amendment rules issued thereafter. The accounting policies are applied consistently to all the
periods presented in the financial statements. The Ind AS are prescribed under Section 133 of the Act read with
Rule 3 of the Companies (Indian Acounting Standards) Rules,2015 and relevant amendment rules issued thereafter.
2.2 Basis of preparation of Financial Statements
The financial statements have been prepared on going concern basis in accordance with accounting principles
generally accepted in India. Further, the financial statements have been prepared on historical cost basis.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
The financial statements are authorized for issue by the Company's Board of Directors on 29,h May 2024.
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:
• 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;
• It is expected to be realised within 12 months after the reporting date; or
• It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at
least 12 months after the reporting date.
• All other assets are classified as non-current.
A liability is classified as current when it satisfies any of the following criteria:
• It is expected to be settled in the Company's normal operating cycle;
• It is held primarily for the purpose of being traded
• It is due to be settled within 12 months after the reporting date; or the Company does not have an
unconditional right to defer settlement 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 settlement by the issue of equity instruments do
not affect its classification.
• All other liabilities are classified as non-current.
2.3 Use of Estimates and Judgements
The preparation of these Financial Statements in conformity with the recognition and measurement principles of
Ind AS requires the management of the Company to make estimates and assumptions that affect the reported
balances of assets and liabilities, disclosures relating to contingent liabilities 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 in the period in which the estimates are revised and future periods are affected.
Information about critical judgments in applying accounting policies, as well as estimates and assumptions that
have the most significant effect to the carrying amounts of assets and liabilities within the next financial year are
included in the following notes.
Valuation of Deferred Tax Liabilities/Assets
The Company reviews the carrying amount of deferred tax liabilities/assets at the end of each reporting period.
Provisions and Contingent Liabilities
A provision is recognised 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 assets are not
recognised in the Financial Statements but are disclosed separately.
Impairment of Investments
The Company reviews its carrying value of investments carried at amortised cost annually, or more frequently
when there is indication for impairment. If the recoverable amount is less than its carrying amount, the
impairment loss is accounted for.
2.4 Revenue Recognition
Revenue is measured at the transaction price that the Company receives or expects to receive as consideration for
goods supplied and services rendered; net of returns and estimates of variable consideration such as discounts to
customers. Revenue from sale of goods excludes goods and services tax which are payable in respect of sale of
goods.
Revenue from the sale of goods and services is recognized when the company performs its obligations to its
customers and the amount of revenue can be measured reliably and recovery of the consideration is probable.
The timing of such recognition in case of sale of goods is when the control over the same is transferred to the
customers which is mainly upon delivery.
a. Sales Income - Income from sale is booked based on agreements / arrangements with the concerned parties
or as and when revenue can be reliably measured. Revenue from the sale of goods is measured at transaction
price received or receivable, net of returns and allowances, trade discounts and volume rebates.
b. Interest Income Interest income from a financial asset is recognised when it is probable that the economic
benefits will flow to the Company and the amount of income can be measured reliably. Interest Income Revenue
is recognized on a time proportion basis with reference to the principal outstanding and at the effective interest
rate applicable
2.5 Property, Plant and Equipment
The initial cost of property, plant and equipment comprises its purchase price, including import duties and non¬
refundable purchase taxes, attributable borrowing cost and any other directly attributable costs of bringing an
asset to working condition and location for its intended use. Expenditure incurred after the property, plant and
equipment have been put into operations, such as repairs and maintenance, are normally charged to Statements
of Profit and Loss in the period in which the costs are incurred
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 recognised net
within other income/other expense in Statement of Profit and Loss.
Borrowing Cost
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part
of cost of such assets. All other borrowing costs are charged to revenue, during the period in which they are
incurred.
Depreciation
Depreciation on Property, Plant and Equipment is calculated using written down value method (WDV) to write
down the cost of property and equipment to their residual values over their estimated useful lives.
Assets in 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
2.6 Intangible Assets
Intangible assets acquired are measured on initial recognition at cost. Following initial recognition, intangible
assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Intangible
Assets with finite lives are amortized on a Written Down Value basis over the estimated useful economic life and
assessed for impairment whenever there is an indication that the intangible asset may be impaired. The estimated
useful life of intangible assets is 6 years.
The amortisation expense on intangible asset is recognised in 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 recognised in Statement of Profit and Loss when the asset is derecognised.
2.7 Financial Instruments
Financial assets and liabilities are recognized when the company becomes a party to the contractual provisions of
the instrument. Financial assets and liabilities are initially measured at fair value.
Financial Assets
Initial Recognition
On initial recognition, a financial asset is recognized at fair value, in case of financial assets which are recognized
at fair value through profit and loss (FVTPL), the transaction costs are recognized in the statement of profit and
loss. In other cases, transaction costs that are directly attributable to the acquisition of financial assets are added
to the fair value measured on initial recognition of financial assets. Trade receivables that do not contain a
significant financing component are measured at transaction price.
Subsequent Measurement
Financial assets are subsequently classified as measurement at:
1. Amortized cost
2. Fair value through profit and loss (FVTPL)
3. Fair value through other comprehensive income (FVTOCI)
Financial Assets at Amortised Cost
A financial asset is subsequently measured at the amortized cost if both the following conditions are met: a) The
asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and b)
Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and
interest (SPPI) on the principal amount outstanding.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that
are an integral part of the EIR. The EIR amortisation is included in finance income in the Statement of Profit and
Loss. The losses arising from impairment are recognised in the Statement of Profit and Loss.
Financial Assets at Fair value through Other Comprehensive Income ("FVTOCI")
Financial assets that are held within the business model whose objective is achieved by both, selling financial
assets and collecting contractual cash flows that are solely payment of principal and interest are subsequently
measured at fair value through other comprehensive income (OCI). Fair value movements are recognized in the
other comprehensive income (OCI). Interest income measured in using the EIR method and impairment loses, if
any are recognized in the Statement of Profit and Loss. On derecognition of the asset, cumulative gain or loss
previously recognised in OCI is reclassified from the equity to Statement of Profit and Loss. Interest earned whilst
holding FVTOCI debt instrument is reported as interest income using the EIR method.
Financial Assets at Fair Value through Profit and Loss ("FVTPL")
A financial asset not classified as either amortized cost or FVOCI, is classified as FVTPL. Such financial assets are
measured at fair value with all changes in fair value, including interest income and dividend income if any,
recognized as other income in the statement of Profit and Loss.
Derecognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial
assets expire, or it transfers the contractual rights to receive the cash flows from the asset.
Financial Liabilities
Recognition and Measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through statement of
profit and loss, loans and borrowings, payables as appropriate.
All Financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables,
net of directly attributable transaction costs.
The Company's financial liabilities include trade and other payables, loans and borrowings including bank
overdrafts.
Derecognition
The Company de-recognizes financial liabilities only when Company's obligations are discharged or cancelled or
have expired. When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is
treated as the derecognition of the original liability and the recognition of a new liability.
The difference between the carrying amount of the financial liability de-recognised and the consideration paid
and payable is recognised in the Statement of Profit and Loss.
2.8 Taxation
Income tax expenses for the year comprises of current tax and deferred tax. It is recognized in the Statement of
Profit and Loss except to the extent it relates to a business combination or to an item which is recognized directly
in equity or in other comprehensive income.
Current Tax
Current tax is the expected tax payable on the taxable income for the year using applicable tax rates at the
Balance Sheet date. Current tax and current tax liabilities are offset when there is a legally enforceable right to set
off the recognised amount and there is an intention to settle the asset and liability on a net basis.
Deferred Tax
A deferred tax liability is recognized based on the expected manner of realization or settlement of carrying
amount of assets and liabilities, using tax rates enacted, or substantively enacted, by the end of the reporting
period. Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be
available against which the assets can be utilized. Deferred tax assets are reviewed at each reporting date and
reduced to the extent that it is no longer probable that the related tax benefits will be realized.
Deferred tax assets and deferred tax liabilities are offset when there is legally enforceable right to set off current
tax assets against current tax liabilities; and the deferred tax assets and the deferred tax liabilities relate to the
income taxes levied by the same taxation authorities.
2.9 Earnings per Share
The Company reports basic and diluted earnings per share in accordance with Ind AS 33 on Earnings per share.
Basic EPS is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after
attributable taxes) by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity
shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects
of all dilutive potential equity shares.
2.10 Cash Flow Statement
Cash flows are reported using indirect method as set out in Ind AS -7 "Statement of Cash Flows", whereby profit /
(loss) before 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.
2.11 Inventories
Inventories are valued at lower of cost or net realizable value. Net Realizable Value represents the estimated
selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary
to make the sale. Cost of inventories comprises of cost of purchase, cost of conversion and other costs including
manufacturing overheads incurred in bringing them to their respective present location and condition.
2.12 Finance Costs
Finance Costs refer to expenses incurred by the company in connection with the borrowing of funds, including
interest expenses, amortization of discounts or premiums related to borrowings, and ancillary costs incurred in
connection with the arrangement of borrowings.
Interest expense includes issue costs that are initially recognised as part of the carrying value of the financial
liability and amortised over the expected life using the effective interest method. These include fees and
commissions payable to advisers and other expenses such as external legal costs, rating fee etc., provided these
are incremental costs that are directly related to the issue of a financial liability.
2.13 Operating Cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets
and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months
for the purpose of classification of its assets and liabilities as current and non-current.
2.14 Employee Benefits
Employee benefits include provident fund, employees state insurance scheme and gratuity fund.
Defined Benefit Plans
For defined benefit plans in the form of gratuity fund, the company makes annual contribution to a Gratuity Fund
administered and managed by a trust through Life Insurance Corporation of India. The net present value of the
obligation towards gratuity is determined using the Projected Unit Credit method.
Defined Contribution Plans
The Company's contribution to provident fund and employee state insurance are considered as defined
contribution plans and are charged as an expense based on the amount of contribution required to be made and
when services are rendered by the employees.
2.15 Events after the Reporting Period
Adjusting events are events that provide further evidence of conditions that existed at the end of the reporting
period. The financial statements are adjusted for such events before authorisation for issue. Non-adjusting events
are events that are indicative of conditions that arose after the end of the reporting period. Non-adjusting events
after the reporting date are not accounted, but disclosed.
2.16 Investments
Investments that are realizable and intended to be held for not more than a year are classified as current
investments. All other Investments are classified as Long term Investments carried at cost. However, Provision for
diminution in value is made to recognize a decline other than temporary in the value of Investments
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