3. Material Accounting Policy Information
The material accounting policies applied by the Company in the preparation of its financial
statements are listed below. Such accounting policies have been applied consistently to all the periods
presented in these financial statements unless otherwise indicated.
3.1.Property, Plant, and Equipment:
Property, plant, and equipment are stated at cost comprising of the purchase price and any initial
directly attributable cost of bringing the asset to its working condition for its intended use, less
accumulated depreciation (other than freehold land), and impairment loss, if any.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as
appropriate, 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. All other repairs and maintenance
costs are charged to the Statement of Profit and Loss during the period in which they are incurred.
Gains or losses arising on retirement or disposal of property, plant, and equipment are recognized in
the Statement of Profit and Loss.
Property, plant, and equipment that are not ready for intended use as of the date of the Balance Sheet
are disclosed as "Capital work-in-progress".
Depreciation is provided on a pro-rata basis on the written-down-value method based on the
estimated useful life prescribed under Schedule II to the Companies Act, 2013. Depreciation is not
recorded on capital work-in-progress until construction and installation are complete and the asset
is ready for its intended use.
The residual values, useful lives, and method of depreciation of property, plant, and equipment are
reviewed at each financial year end and adjusted prospectively, if appropriate.
3.2.Intangible Assets
"Intangible assets purchased are initially measured at cost. Subsequently, intangible assets are
carried at cost less any accumulated amortization and accumulated impairment losses, if any".
"The useful lives of intangible assets are assessed as either finite or indefinite. Finite-life intangible
assets are amortized on a straight-line basis over the period of their estimated useful lives. The
Company has only one class of finite-life intangible asset, viz., Computer Software whose estimated
useful life is 3 years. The amortization period and the amortization method for finite-life intangible
assets is reviewed at each financial year end and adjusted prospectively, if appropriate”.
For indefinite life intangible assets, the assessment of indefinite life is reviewed annually to determine
whether it continues, if not, it is impaired or changed prospectively basis revised estimates.
3.3.Impairment of Non-financial assets - Tangible and intangible assets
Property, plant, equipment, and intangible assets with a finite life are evaluated for recoverability
whenever there is any indication that their carrying amounts may not be recoverable. If any such
indication exists, the recoverable amount (i.e. higher of the fair value less cost to sell and the value-
inuse) is determined on an individual asset basis unless the asset does not generate cash flows that
are largely independent of those from other assets. In such cases, the recoverable amount is
determined for the Cash Generating Unit (CGU) to which the asset belongs.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the
carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is
recognized in the statement of profit and loss.
3.4.Inventories
Inventories are valued at the lower cost and net realizable value. Cost is computed on a weighted
average basis. The cost of finished goods or Stock in Trade includes all costs of purchases and other
costs incurred in bringing the inventories to their present location and condition. The net realizable
value is the estimated selling price in the ordinary course of business less the estimated costs of
completion and estimated costs necessary to make the sale.
3.5.Revenue Recognition
"Revenue from sale of products is recognized when control of products being sold is transferred to
customer and when there are no longer any unfulfilled obligations. The performance obligations in
contracts are considered as fulfilled in accordance with the terms agreed with the respective
customers.
Revenue is measured at fair value of the consideration received or receivable and are accounted for
net of returns, rebates and trade discount. Sales, as disclosed, are exclusive of goods and services tax.
The Company considers the terms of the contract and its customary business practices to determine
the transaction price. The transaction price is the amount of consideration to which the Company
expects to be entitled in exchange for transferring promised goods to a customer,excluding amounts
collected on behalf of third parties (for example taxes collected on behalf of government). The
consideration promised in a contract with a customer may include fixed consideration, variable
consideration (if reversal is less likely in future), or both.
The transaction price is allocated by the Company to each performance obligation in an amount that
depicts the amount of consideration to which it expects to be entitled in exchange for transferring the
promised goods to the customer.
For each performance obligation identified, the Company determines at contract inception whether
it satisfies the performance obligation over time or satisfies the performance obligation a point in
time.
When either party to a contract has performed its obligation, an entity shall present the contract in
the balance sheet as a contract asset or a contract liability, depending on the relationship between
the entity’s performance and the customer’s payment."
Rental income is recognized on a straight-line basis over the terms of the lease, except for contingent
rental income which is recognized when it arises and where a scheduled increase in rent compensates
the lessor for expected inflationary costs.
Interest income is recognized using the effective interest method.
Other incomes have been recognized on an accrual basis in the financial statements, except when
there is uncertainty of collection.
3.6.Cost recognition
"Costs and expenses are recognized when incurred and have been classified accordingto their nature.
The costs of the Company are broadly categorized into the cost of material consumed, employee
benefits expenses, finance cost, depreciation and amortization, and other expenses."
The cost of material consumed comprises of PVC sheets, realized paper, packing materials, etc.
Employee benefits expenses include salaries, wages, bonus, incentives and allowances, directors'
remuneration, contributions to provident and other funds, and staff welfare expenses.
Selling & distribution expenses comprising of sales promotion and advertising expenses, commission
on sales and tour, travel and conveyance and lodging and boarding of sales and marketing team, and
establishment Expenses mainly include legal and professional fees to external consultants, facility
expenses, travel expenses, insurance costs, auditors' remuneration, communication expenses, bad
debts and advances written off, allowances for doubtful trade receivables and advances (net) and
miscellaneous expenses. Miscellaneous expense is an aggregation of costs that are individually not
material such as packing, water and fuel charges, etc.
3.7.Income Taxes
Income tax expense comprises current tax expense and the net change in the deferred tax asset or
liability during the year. Current and deferred taxes are recognized in statements of profit and loss,
except when they relate to items that are recognized in other comprehensive income or directly in
equity, in which case, the current and deferred tax are also recognized in other comprehensive
income or directly in equity, respectively. Interest expenses and penalties, if any, related to income
tax are included in finance costs and other expenses respectively. Interest Income, if any, related to
Income tax is included in Other Income.
Current income taxes
Current income tax is the expected tax payable/receivable on the taxable income/loss for the year
using applicable tax rates for the relevant period, and any adjustment to taxes in respect of previous
years.
Advance taxes and provisions for current income taxes are presented in the balance sheet after off¬
setting advance tax paid and income tax provision arising in the same tax jurisdiction and where there
is an intention to settle the asset and the liability on a net basis.
Deferred income taxes
Deferred tax is recognized in respect of temporary differences between the carrying amount of assets
and liabilities for financial reporting purposes and the corresponding amounts used for taxation
purposes.
A deferred tax liability is recognized based on the expected manner of realization or settlement of the
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 profits will be available against which the asset 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 benefit will be realized.
Deferred tax assets and deferred tax liabilities are offset when there is a 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 income taxes levied by the same taxation authority.
3.8. Leases
Leases in which a substantial portion of the risks and rewards of ownership are retained by the lessor
are classified as operating leases. Payments and receipts under such leases are recognized to the
Statement of Profit and Loss on a straight-line basis over the term of the lease.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the
risks and rewards incidental to ownership to the lessee.
‘‘Ind AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease
adjusted with any option to extend or terminate the lease if the use of such option is reasonably
certain. The Company assesses the expected lease term on a lease-by-lease basis and thereby assesses
whether it is reasonably certain that any options to extend or terminate the contract will be exercised.
Accordingly, it recognizes the Right to use assets as well as Lease obligations considering the lease
agreement"
3.9. Borrowing costs
Borrowing costs that are directly 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 a
substantial period to get ready for its intended use.
Interest income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
All other borrowing costs are charged to the Statement of Profit and Loss for the period for which
they are incurred.
3.10. Foreign Currencies
Foreign currency transactions are translated into functional currency using exchange rates at the date
of the transaction. Foreign exchange gains and losses from the settlement of these transactions are
recognized in the Statement of Profit and Loss. Foreign currency-denominated monetary assets and
liabilities are translated into the functional currency at exchange rates in effect at the balance sheet
date, the gain or loss arising from such translations is recognized in the statement of profit & loss.
3.11. Government Grants
The company recognizes Government Grants only when there is a reasonable assurance that the
conditions attached to them will be complied with, and the grants will be received. Government
Grants received in relation to assets are presented in the Balance Sheet by setting up the Grant as
deferred income. Grants related to Income are shown separately in the statement of profit and loss.
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