2. SIGNIFICANT ACCOUNTING POLICIES
2.1 BASIS OF ACCOUNTING:
The financial statements are prepared in accordance with Indian Generally Accepted Accounting
Principles (GAAP) .GAAP Comprises of mandatory accounting standards as prescribed u/s 133 of the
Companies Act ,2013 ('the Act") read with rule 7 of the Companies (Accounts) Rules,2014,the
provisions of the Act ( to the extent notified).Accounting policies have been consistently applied
except where newly issued accounting standard is initially adopted or a revision to a existing
accounting standard requires a change in accounting policy hereto in use.
2.2 USE OF ESTIMATES:
The preparation of the financial statements in conformity with Indian Generally Accepted Accounting
Principles (GAAP) requires the management to make estimates, judgments and assumptions. These
estimates, judgments and assumptions affect the application of accounting policies and the reported
amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses during the period. The
application of accounting policies that require critical accounting estimates involving complex and
subjective judgments and the use of assumptions in these financial statements have been disclosed
in Note forming part of accounts. Accounting estimates could change from period to period. Actual
results could differ from those estimates. Appropriate changes in estimates are made as management
becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are
reflected in the financial statements in the period in which changes are made and, if material, their
effects are disclosed in the notes to the financial statements
2.3 FIXED ASSETS:
Fixed Assets are stated at cost less accumulated depreciation. The cost is inclusive of directly
attributable incidental expenditure, expenditure during construction period (including interest and
depreciation) allocated to the respective fixed assets on completion of construction period and is
adjusted for Cenvat / Input credit available / availed of. W.e.f. 1st April, 2013, exchange difference
arising on translation/settlement of Long Term Foreign Currency Monetary Items relating to acquisition
of depreciable assets are adjusted to cost of the fixed assets and depreciated over the remaining
useful lives of the asset.
2.4 DEPRECIATION:
Depreciation is charged in the accounts on Fixed Assets on written down value method
“WDV”. Depreciation is provided based on useful life of the assets as prescribed in schedule II of
The Companies Act, 2013.
Depreciation on assets added/disposed off during the year is charged on pro-rata basis with reference
to the date of addition/disposal.
2.5 INVENTORIES:
'Inventories of raw materials including stores, spares and consumables, packing materials, work in
progress, semi-finished goods, finished goods and scrap are valued at the lower of the cost and
estimated net realisable value. Cost is determined on weighted average basis.
The cost of work-in-progress, semi finished goods and finished goods include the cost of material,
labour and manufacturing overheads. Net realisable values are determined by management using
technical estimates.
2.6 REVENUE RECOGNITION (SALE OF SERVICES):
Revenue form sales of goods is recognised when significant risks and rewards in respect of ownership
of the goods are transferred to the customers, as per the terms of the respective sales order. Sales are
recorded exclusive of GST as applicable and recoveries in the nature of octroi, freight etc. Sales are
inclusive of income from services, excise duty, export incentives and exchange fluctuations on export
receivables and net of trade discount.
Revenue form services is recognised as per contract terms and does not include recoveries in the
nature of service tax. Estimated effort is a critical estimate to determine revenues from fixed price
contracts and liability for onerous obligations. This estimate has a high inherent uncertainty as it
requires consideration of progress of the contract, efforts incurred till date and efforts required to
complete the remaining contract performance obligations .
Interest income is recognized on 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.
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