2. SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Preparation
The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian
GAAP). The financial statements have been prepared to comply in all material respects with the Accounting Standards notified under the
section 133 of the Companies Act, 2013 read together with rule 7 of the Companies (Accounts) Rules 2014 and Companies (accounting
standards) amendment rules 2016. The financial statements have been prepared on an accrual basis and under the historical cost
convention. The accounting policies have been consistently applied by the company and are consistent with those used in the previous
year.
The Company is a Small and Medium Sized Company (SMC) as defined in the General Instructions in respect of Accounting Standards
notified as per sub-section (1) of section 129 of the Companies Act, 2013. Accordingly, the Company has complied with the Accounting
Standards as applicable to a Small and Medium Sized Company.
All the amounts included in the Financial Statements are presented in Indian Rupees (‘Rupees' or ‘Rs.' Or ‘INR') and are rounded to the
nearest Lakhs, except per share data and unless stated otherwise.
b. Use of Estimates
The preparation of financial statements in conformity with the Indian GAAP requires the management of the Company to make
estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities
as at the date of the financial statements and reported amounts of income and expense during the year. Examples of such estimates
include provisions for doubtful receivables, provision for income taxes, the useful lives of depreciable fixed assets and provision for
impairment. Future results could differ due to changes in these estimates and the difference between the actual result and the
estimates are recognised in the period in which the results are known / materialise.
c. Property, Plant & Equipment
Property, plant and equipment are carried at cost less accumulated depreciation and any accumulated impairment, if any. Property, plant
and equipment is depreciated on a straight-line value basis to its residual value over its estimated useful life.
Cost directly attributable to acquisition are capitalised until the property, plant and equipment are ready for use, as intended by the
management.
Subsequent costs are capitalised on the carrying amount or recognised as a separate asset, as appropriate, only when future economic
benefits associated with the item are probable to flow to the Company and cost of the item can be measured reliably. When significant
parts of property, plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their
specific useful lives. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All repair
and maintenance are charged to statement of profit and loss during the reporting period in which they are incurred.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital
advances under the non-current assets and the cost of assets not ready to use before such date are disclosed under ‘Capital work in
progress'.
The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between
the sales proceeds and the carrying amount of the asset and is recognised in the statement of profit and loss on the date of disposal or
retirement.
d. Intangible assets
Separately acquired intangible assets, such as software are measured initially at cost. Following initial recognition, intangible assets are
carried at cost less accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding
capitalized development costs, are not capitalized and expenditure is reflected in the restated statement of profit and loss in the year in
which the expenditure is incurred. Intangible assets with finite useful lives are carried at cost and are amortised on a written down value
basis over their estimated useful lives and charged to statement of profit and loss.
Software and licenses acquired are amortized at the 5 years on straight line value method.
The amortization period and the amortization method are reviewed at least at each financial year end. Changes in the expected useful
life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation
period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets is
recognised in the restated statement of profit and loss unless such expenditure forms part of carrying value of another asset.
Gains or losses arising from de-recognition 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 the statement of profit and loss when the asset is derecognized.
e. Depreciation and amortization
Depreciation and amortisation are provided using the straight-line value method and charged to statement of profit and loss as per the
useful life prescribed under Schedule II of the Companies Act, 2013.
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.
f. Impairment of assets
An assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses
no longer exist or have decreased. If such indication exists, the Company estimates the asset's recoverable amount. A previously
recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable
amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed
its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss
been recognised for the asset in financial year.
g. Leases
Assets taken on lease by the Company in its capacity as lessee, where the Company has substantially all the risks and rewards of
ownership are classified as finance lease. Such a lease is capitalised at the inception of the lease at lower of the fair value or the present
value of the minimum lease payments and a liability is recognised for an equivalent amount. Each lease rental paid is allocated between
the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor, are recognised
as operating leases. Lease rentals under operating leases are recognised in the statement of profit and loss on a straight-line basis.
h. Investment
i) Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments
are made, are classified as current investments. All other investments are classified as long-term investments.
ii) On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition
charges such as brokerage, fees and duties.
iii) Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment
basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other
than temporary in the value of the investments.
iv) On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
i. Inventories
i) Raw materials, packing materials and stores & spares are valued at lower of cost and net realizable value. Cost of raw materials,
packing materials are determined on First in First out (FIFO) basis and cost of stores & spares are determined on weighted average
cost method.
ii) Work-in-progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour
and a proportion of manufacturing overheads based on normal operating capacity. Cost is determined on FIFO basis.
iii) Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and
estimated costs necessary to make the sale.
j. Cash and cash equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into known amount of cash that are subject
to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash
equivalents.
k. Capital Work-in-progress
Cost and direct expense incurred for construction of assets or assets to be acquired and which are not ready for use are disclosed
under “Capital Work-in-progress”
l. Retirement and other employee benefits
For defined benefit plans, the liability or asset recognised in the statement of assets and liabilities on the basis of actuarial valuation at
each year-end. Separate actuarial valuation is carried out for each plan using the projected unit credit method. Actuarial gains and losses
for both defined benefit plans are recognized in full in the period in which they occur in the statement of profit and loss.
The Company's contributions to defined contribution plans (provident fund) are recognized in statement of profit and loss when the
employee renders related service. The Company has no further obligations under these plans beyond its periodic contributions.
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end
of the period in which the employees render the related service are recognised in respect of employees' services up to the end of the
reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as
salary and wages payable under other current liabilities in the statement of assets and liabilities.
m. Revenue recognition
Revenue is measured based on the consideration specified in a contract with a customer net of variable consideration e.g. discounts,
volume rebates, any payments made to a customer (unless the payment is for a distinct good or service received from the customer) and
excludes amounts collected on behalf of third parties. The Company recognises revenue when it transfers control over a product or
service to a customer. Revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur.
The Company provides incentives to its users in various forms. Incentives which are consideration payable to the customer that are not
in exchange for a distinct good or service are generally recognized as a reduction of revenue.
Where the Company acts as an agent for selling goods or services, only the commission income is included within revenue. The specific
revenue recognition criteria described below must also be met before revenue is recognized. Typically, the Company has a right to
payment before or at the point that services are delivered. Cash received before the services are delivered is recognised as a contract
liability. The amount of consideration does not contain a significant financing component as payment terms are less than one year.
Sale of Goods
Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the
buyer. Sales are presented net of Excise duty collected on behalf of the Government, trade discounts and returns, as applicable.
Sale of services
Revenue from services is recognized when the control in services is transferred as per the terms of the agreement with customer i.e. as
and when services are rendered. Revenues are disclosed net of the Goods and Service tax charged on such services. In terms of the
contract, excess of revenue over the billed at the year-end is carried in the statement of assets and liabilities as unbilled revenue under
other financial assets where the amount is recoverable from the customer without any future performance obligation. Cash received
before the services are delivered is recognised as a contract liability.
Other operating revenue
Where the Company is contractually entitled to receive claims/compensation in case of non-discharge of obligations by customers, such
claims/compensations are measured at amount receivable from such customers and are recognised as other operating revenue when
there is a reasonable certainty that the Company will be able to realize the said amounts.
Interest income
Interest income is recognised on a time proportion basis taking into account the amount outstanding and the applicable interest rate.
Interest income is included under the head “other income” in the statement of profit and loss account.
n. Borrowing Cost
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in
the period in the restated statement of profit and loss in which they occur. Borrowing costs consist of interest and other costs that an
entity incurs in connection with the borrowing of funds.
o. Earnings/ (loss) per share (EPS)
Basic EPS amounts are calculated by dividing the profit/ (loss) for the year attributable to equity holders by the weighted average number
of Equity shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the profit/ (loss) attributable to equity holders by the weighted average number of Equity
shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the
dilutive potential Equity shares into Equity shares.
p. Foreign currency transactions
Functional and presentation currency
Items included in the Restated Financial Information of the Company are measured using the currency of the primary economic
environment in which it operates i.e. the “functional currency”. The Company's restated financial information is presented in INR.
Transactions and balances
Transactions in foreign currencies are initially recorded by the Company's at their respective functional currency at exchange rates
prevailing at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the
reporting date. Exchange differences arising on settlement or translation of monetary items are recognised in statement of profit and loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the
dates of the initial transactions.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value
is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition
of the gain or loss on the change in fair value of the item (i.e. translation differences on items whose fair value gain or loss is recognised
in statement of profit and loss).
q. Taxation
Current tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities.
The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the
India where the Company operates and generates taxable income.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are
subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Company
measures its tax balances either based on the most likely amount or the expected value, depending on which method provides a better
prediction of the resolution of the uncertainty.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary
differences.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax
losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, the carrying amount of deferred
tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting
date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be
recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the
liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current
tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Minimum alternate tax
Credit of MAT is recognised as deferred tax asset only when it is probable that taxable profit will be available against which the credit can
be utilised. In the year in which the MAT credit becomes eligible to be recognised as an asset, the said asset is created by way of a credit
to the restated statement of profit and loss account. The Company reviews the same at each balance sheet date and writes down the
carrying amount of MAT credit entitlement to the extent it is no longer probable that the Company will pay normal income tax during the
specified period."
Taxes paid on acquisition of assets or on incurring expenses
Assets are recognised net of the amount of GST paid, except when the tax incurred on a purchase of assets is not recoverable from the
taxation authority, in which case, the tax paid is recognised as part of the cost of acquisition of the asset.
Expenses are recognised net of the amount of GST paid, except when the tax incurred on a purchase of services is not recoverable from
the taxation authority, in which case, the tax paid is expensed off in statement of profit and loss.
The net amount of tax recoverable from, or payable to, the taxation authority is included as part of other current/ non- current assets or
other current liabilities in the statement of assets and liabilities.
r. Segment accounting
The Company is engaged is one segment only i.e. High-Density Polyethylene Pipe (HDPE)/Linear Low Density Polyethylene Pipe
(LLDPE)/Low Density Polyethylene Pipe (LDPE) and Micro irrigation Systems and hence there are no separate reportable segment.
s. Government grants and subsidies
i) Grants and subsidies from the government are recognized when there is reasonable assurance that (a) the company will comply
with the conditions attached to them, and (b) the grant/subsidy will be received.
ii) Where the grant relates to an asset, it is shown as a reduction from the gross value of the asset concerned in arriving at its book
value. The grant is thus recognised in the statement of profit and loss over the useful life of the asset by way of reduced depreciation
charge.
iii) Where the grant relates to reimbursement of interest on term loan, it is recognised as a reduction from the finance cost of the term
loan concerned.
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