B. Significant Accounting Policies:
1. Basis of preparation of financial Statements:
The financial statements have been prepared in accordance with the Indian Accounting
Standards ("Ind AS") notified under the companies (Indian Accounting Standards) Rules,
2015 and Companies (Indian Accounting Standards) Amendments Rules, 2016 and the
relevant provisions of the Companies Act, 2013. The financial statements have been prepared
on an accrual basis and under the historical cost convention. The accounting policies adopted
in the preparation of financial statements are consistent with those of previous year. All assets
and liabilities have been classified as current or non-current as per the Company's normal
operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based
on the nature of products and the time between the acquisition of assets for processing and
their realization in cash and cash equivalents, the Company has ascertained its operating
cycle as 12 months for the purpose of current - non-current classification of assets and
liabilities.
2. Use of Estimates:
The preparation of financial statements requires the management to make estimates and
assumptions considered in the reported amounts of assets and liabilities (including contingent
liabilities) as on the date of the financial statements and the reported income and expenses
during the reporting period. The estimates and assumptions used in the financial statements
are based upon the Management's evaluation of the relevant facts and circumstances as on
the date of financial statements. Management believes that the estimates used in the
preparation of the financial statements are prudent and reasonable. Future results may vary
from these estimates.
3. Property, Plant & Equipment:
All items of property, plant and equipment are stated at cost less accumulated depreciation
and accumulated impairment losses, if any. Cost of acquisition is inclusive of purchase price,
levies and any directly attributable cost of bringing the assets to its working condition for the
intended use. Subsequent costs are included in the asset's carrying amount or recognised as
separate asset, as appropriate, only when it is probable that the future economic benefits
associated with the item will flow to the company and cost of the item can be measured reliably.
The carrying amount of any component accounted for as a separate asset is derecognized
when replaced. All other repairs and maintenance are charged to Statement of Profit and Loss
during the reporting period in which they are incurred.
Depreciation on Fixed Assets is provided on straight line method at the rates based on the
useful life of the asset in the manner prescribed in Schedule II to the Companies Act, 2013.
Capital work-in-progress comprises cost of fixed assets that are not yet ready for their intended
use at the year end.
4. Impairment of Assets:
The carrying amounts of assets are reviewed at each balance sheet date to ascertain
impairment based on internal / external factors. An impairment loss is recognized when the
carrying amount of an asset exceeds its recoverable amount. The recoverable amount is
higher of the net selling price of the assets and their value in use.
5. Leased Assets:
Operating Leases: Rentals are recognized as an expense with reference to lease terms and
other considerations.
6. Borrowing Costs:
In accordance with the requirements of Indian Accounting Standard 23 (Ind AS 23), “Borrowing
Costs”, borrowing costs attributable to acquisition/construction of a qualifying asset (i.e. an
asset requiring substantial period of time to get ready for intended use or sale) are added to the
cost of those assets, until such time as the assets are substantially ready for their intended use
or sale. Pre-operative expenses incurred during construction period are capitalised, where
appropriate. Interest expenditure has been accounted using effective interest rate method.
7. Financial Assets:
I. Initial recognition and measurement:
All financial assets are recognised initially at fair value plus, in the case of financial assets
not recorded at fair value through profit or loss, transaction costs that are attributable to the
acquisition of the financial asset. Purchase and sale of financial assets are recognised on
the trade date, i.e., the date that the Company commits to purchase or sell the asset.
II. Subsequent measurement:
a) Financial assets carried at a mortised cost (AC):
A financial asset is measured at amortised cost if it is held within a business model
whose objective is to hold the asset 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.
b) Financial assets at fair value through other comprehensive income (FVTOCI):
A financial asset is measured at FVTOCI if it is held within a business model whose
objective is achieved by both collecting contractual cash flows and selling financial
assets 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.
c) Financial assets at fair value through profit or loss (FVTPL):
A financial asset which is not classified in any of the above categories are measured at
FVTPL.
For trade receivables, Company applies 'simplified approach' for recognition of impairment
loss allowance on the trade receivable balances. The application of simplified approach
require the Company to recognizes impairment loss allowance based on lifetime ECLs at
each reporting date, right from its initial recognition. The Company uses historical default
rates to determine impairment loss on the portfolio of trade receivables. At every reporting
date these historical default rates are reviewed and changes in the forward looking
estimates are analysed.
8. Financial Liabilities:
I. Initial recognition and measurement:
All financial liabilities are recognized at fair value and in case of loans, net of directly
attributable transaction costs. Fees of recurring nature are directly recognized in the
Statement of Profit and Loss as finance cost.
II. Subsequent measurement :
Financial liabilities are carried at amortized cost using the effective interest method. For
trade and other payables maturing within one year from the balance sheet date, the
carrying amounts approximate fair value due to the short maturity of these instruments.
9. Derecognition of financial instruments:
A financial asset (or a part of the financial asset) is derecognized from the Company's balance
sheet when the contractual rights to the cash flows from the financial asset expire or it transfers
the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial
liability (or a part of the financial liability) is derecognized from the Company's balance sheet
when the obligation under the liability is discharged or cancelled or expires.
10. Cash and cash equivalents:
Cash and cash equivalents consist of cash at banks and on hand, demand deposits and other
short term deposits that are readily convertible into known amounts of cash, are subject to
insignificant risk of changes in value and have a maturity of three months or less.
11. Inventories:
Inventories consist of raw materials, stores and spares, work-in-progress and finished goods
are measured at the lower of cost and net realisable value after providing for obsolescence.
The cost of all categories of inventories is based on the weighted average method. Cost
includes expenditures incurred in acquiring the inventories, production or conversion costs
and other costs incurred in bringing them to their existing location and condition. In the case of
finished goods and work-in-progress, cost includes an appropriate share of overheads based
on normal operating capacity.Net realisable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and selling expenses.
12. Impairment of non-financial assets:
The carrying amounts of the Company's non-financial assets, other than inventories and
deferred tax assets are reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, then the asset's recoverable amount is
estimated to determine the extent of impairment if any.
The recoverable amount of an asset or cash-generating unit (as defined below) is the greater
of its value in use and its fair value less costs to sell. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the
asset or the cash-generating unit.
The recoverable amount of an asset or cash-generating unit (as defined below) is the greater
of its value in use and its fair value less costs to sell. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the
asset or the cash-generating unit.
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