NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Statement of Compliance
These financial statements of the Company have been prepared in accordance with Indian Accounting
Standards notified under the Companies (Indian Accounting Standards) Rules, 2015 ("Ind AS").
2.2 Basis of preparation
These financial statements are prepared in accordance with Indian Accounting Standards (Ind AS)
notified under Section 133 of the Companies Act, 2013 ('the Act') read with Rule 3 of the Companies
(Indian Accounting Standards) Rules, 2015, and presentation requirements of Schedule III to the Act
under the historical cost convention on the accrual basis. Accounting policies have been consistently
applied except where a newly issued accounting standard is initially adopted or a revision to an
existing accounting standard requires a change in the accounting policy hitherto in use.
2.3 Critical accounting judgements and key sources of estimation uncertainty
The preparation of the financial statements in conformity with the Ind AS requires management to
make judgements, estimates and assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities and disclosures as at date of the financial statements and
the reported amounts of the revenues and expenses for the years presented. The estimates and
associated assumptions are based on historical experience and other factors that are considered to
be relevant. Actual results may differ from these estimates under different assumptions and
conditions.
2.4 Operating Cycle and Current versus non -current classification
The Company presents assets and liabilities in the balance sheet based on current/ non- current
classification in accordance with Part-I of Division- II of Schedule III of the Companies Act, 2013.
An asset is treated as current when it
(a) Expected to be realised or intended to be sold or consumed in normal operating cycle;
(b) Held primarily for the purpose of trading; or
(c) Expected to be realised within twelve months after the reporting period, or
(d) The asset is cash or cash equivalent unless restricted from being exchanged or used to settle a
liability for at least twelve months after the reporting period. All other assets are classified as non¬
current.
A liability is current when
(a) It is expected to be settled in normal operating cycle; or
(b) It is held primarily for the purpose of trading; or
(c) It is due to be settled within twelve months after the reporting period, or
(d) There is no unconditional right to defer the settlement of the liability for at least twelve months
after the reporting period. Terms of a liability that could, at the option of the counterparty, results in
its settlement by the issue of equity instruments do not affect its classification. The Company classifies
all other liabilities as non -current.
The operating cycle is the time between the acquisition of assets for processing and their realisation
in cash and cash equivalents. The Company has identified twelve months as its normal operating cycle.
2.5 Revenue recognition
Revenue is recognized to the extent that it is probable that economic benefit will flow to the Company
and the revenue can be reliably measured.
Revenue is recognised only when risks and rewards incidental to ownership are transferred to the
customer, it can be reliably measured, and it is reasonable to expect ultimate collection. Revenue from
operations includes sale of goods, services adjusted for discounts net of taxes and goods return.
2.6 Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes
cash on hand, deposits held at call with financial institutions, other short-term, highly liquid
investments with original maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value.
2.7 Inventories
Inventories are valued at lower of cost on FIFO basis and net realisable value after providing for
obsolescence and other losses, where considered necessary. Cost includes all charges in bringing the
goods to their present location and condition, including octroi and other levies, transit insurance and
receiving charges. Work-in-progress and finished goods include appropriate proportion of overheads
and, where applicable, excise duty. Net realisable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and the estimated costs necessary to make
the sale.
2.8 Employee Benefits
Employee benefits consist of salary paid to employees.
2.9 Earnings per share (EPS)
Basic EPS is computed by dividing the profit or loss attributable to the equity shareholders of the
Company by the weighted average number of Ordinary shares outstanding during the year.
|