NOTE: 2 SIGNIFICANT ACCOUNTING POLICIES
2.1:- Basis of Accounting and preparation of accounting statement:
A. Compliance with Accounting Standards
The financial statements are prepared and presented under the historical cost convention, on the accrual basis except wherever otherwise stated, in accordance with the accounting principles generally accepted in India (‘Indian GAAP') and comply with the Accounting Standards prescribed u/s 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014. The Accounting policies have been consistently applied by the Company.
B. Current and non-current classification
The assets and liabilities reported in the balance sheet are classified on a “current/noncurrent basis”, with separate reporting of assets held for sale and corresponding liabilities. Current assets, which include cash and cash equivalents, are assets that are intended to be realized, sold or consumed during the normal operating cycle of the Company. 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.
2.2:- Use of Estimates:
The Preparation of the financial statements in conformity with GAAP requires Management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosure relating to contingent liabilities as at the date of the financial statements and reported amounts of income and expenses during the period. Examples of such estimates include provision for doubtful debts, future obligations under employee retirement benefit plans, income taxes and useful lives of fixed assets intangible assets. Management believes that the estimates used in the preparation of financial statements are prudent and reasonable. Future results could differ from these estimates.
2.3:- Inventory Valuation:
Raw materials, packing material and consumable goods are valued at cost including procurement expenses; finished goods are valued at lower of cost. Costs of Finished goods are determined by taking material, labor, manufacturing and related factory and other overheads excluding depreciation.
Work in Progress are valued are the cost of Conversion of inventories, includes cost directly related to the units of production, such as direct labor. There is stage wise systematic allocation of fixed and variable production overheads that are incurred.
Finished Goods are valued at cost. Valuation of Cost of finished goods includes all the conversion costs directly attributable to product and other Administrative overheads.
The inventories have been certified by the management for both physical verification and valuation.
The inventories are kept at the below mentioned locations by the company for the Closing stock as on March 31st, 2024
a)-Plant/Factory situated at: - 72/5, Muradpura (Orangpura), Dhar Road, Near Kalaria, Indore (M.P.) 2.4: - Cash & Cash Equivalents
Cash and cash equivalents comprises cash on hand and at banks, short-term deposits (with an original maturity of three months or less from the date of acquisition), and which are subject to insignificant risk of changes in value.
For the purpose of statement of cash flows, cash and cash equivalents consist of cash and short term deposits, as defined above, net of outstanding book overdrafts, if any, as they are considered an integral part of the company's cash management.
2.5:- Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
2.6:- Depreciation /Amortization Tangible Assets/Intangible Assets: -
Depreciation on fixed assets acquired / installed has been provided on written Down Value Method and in the manner prescribed in Schedule VI to the Companies Act, 2013. Depreciation on assets capitalized / sold during the year is charged on pro rata basis. Lease Hold land is amortized over the period of lease.
Depreciation on additions/ disposals of the fixed assets during the year is provided on pro-rata basis according to the period during which assets were put to use.
Intangible assets are amortized over their estimated useful life of 4 years as per the management decision. Asset block of Intangible assets has the carrying value of zero for year 19-20 and 20-21. Also there is no addition in the block of assets during the year.
The estimated useful life of the intangible assets and the amortization period are reviewed at the end of each financial year and the amortization method is revised to reflect the changed pattern.
2.7:- Revenue Recognition:
(a) Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are exclusive of Goods and Service Tax and net of discounts, applicable taxes and returns. The company recognizes revenue when the amount of revenue can be reliably measured, when it is probable
that future economic benefits will flow to the entity and when specific criteria have been met for each of the company’s activities, as described below.
(b) Provision for sales returns are estimated on the basis of historical experience, market conditions and specific contractual terms and provided for in the year of sale as reduction from revenue. The methodology and assumptions used to estimate returns are monitored and adjusted regularly in line with contractual and legal obligations, trade practices, historical trends, past experience and projected market conditions.
(c) Other Income:
(i) Interest income is recognized using the time-proportion method, based on rates implicit in the transaction.
(ii) Royalty Income.
2.8:- Fixed Assets
1) Property, Plant & Machinery- All Property, Plant & Equipment are stated at cost of acquisition less accumulated depreciation. Cost comprises of the purchase price and any other direct attributable costs of bringing the assets to its working conditions for its intended use. The cost of the Property, Plant & Equipment, subsequent expenditure relating to property, Plant & Equipment is capitalized only if such expenditure results in an increase in the future benefits from such assets beyond its previously assessed standard of performance.
2) Intangible Assets- Intangible assets are carried at cost less accumulated amortization and impairment losses, if any. The cost of intangible assets comprises its purchase cost and any directly attributable expenditure on making the assets ready for its intended use and net of any trade discounts and rebates. Subsequently expenditure on an intangible assets after its generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the cost of the assets.
3) Capital Work in Progress- If any includes cost of fixed assets that are not ready to use at the balance sheet date. Advance paid for capital assets are not considered as capital work in progress but classified as long Term Advances.
2.9:- Foreign Currency Transaction Initial recognition
Transactions in foreign currencies entered into by the Company and its integral foreign operations are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.
Measurement of foreign currency monetary items at the Balance Sheet date
Foreign currency monetary items (other than derivative contracts) of the Company and its net investment in non-integral foreign operations outstanding at the Balance Sheet date are restated at the year-end rates. In the case of integral operations, assets and liabilities (other than non-monetary items), are translated at the exchange rate prevailing on the Balance Sheet date. Nonmonetary items are carried at historical cost. Revenue and expenses are translated at the average exchange rates prevailing during the year. Exchange differences arising out of these translations are charged to the Statement of Profit and Loss.
Treatment of exchange differences
Exchange differences arising on settlement / restatement of short-term foreign currency monetary assets and liabilities of the Company and its integral foreign operations are recognized as income or expense in the Statement of Profit and Loss.
2.10:- Government grants, subsidies and export incentives
Government grants and subsidies are recognized when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants / subsidy will be received. Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire
capital assets are presented by deducting them from the carrying value of the assets. The grant is recognized as income over the life of a depreciable asset by way of a reduced depreciation charge.
Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same.
2.11:- Investments:
Investments are classified into current and non-current investments. Non-current investments are carried at cost Provision for diminution, if any, is made to recognize a decline other than temporary, in the value of the investments. Current investments are stated at lower of cost and fair value.
2.12:- Employee Benefits:
Short Term Employee Benefits: All Employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages and shortterm compensated absences etc. are recognized in the period in which the employee renders the related services. Post employment benefits: Defined Contribution Plans: The Employee State Insurance Scheme and Contributory Provident Fund administered by Provident Fund Commissioner are defined contribution plans. The company's contribution paid/payable under the schemes is recognized as expense in the statement of profit and Loss during the period in which the employee renders the related service. Retirement Benefits: Provision for Gratuity/ Bonus/ Provident Fund and other benefits is made on accrual basis.
2.13:- Employee share based payment:
Company has not announced any employee stock option scheme during the year.
2.14:- Borrowing Cost:
Borrowing Costs includes interest; amortization of ancillary costs incurred and exchange differences arising from foreign currency borrowing to the extent they are regarded as an adjustment to the interest cost. Cost in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the statement of profit and loss over the tenure of the loan .Borrowing Cost allocated to and utilized for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying assets up to the date of capitalization of such assets is added to the cost of the assets. Capitalization of borrowing costs is suspended and charged to the Statement of profit and loss during extended periods when active development activity on the qualifying assets is interrupted.
2.15:- Earnings Per share:
Basic and diluted earnings per share are computed by dividing the net profit attributable to equity shareholders for the year, by the weighted average number of equity shares outstanding during the year. There is no diluted potential equity share.
2.16:- Taxes on income:
Current Tax being the amount of tax payable on the taxable income for the year is determined in accordance with the provisions of Income Tax Act, 1961. Deferred Tax is recognized between the timing difference by taxable income and accounting income that originate in one period and are capable for reversal in one more subsequent year.
2.17:- Lease:
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lesser are recognized as operating leases. Operating lease payments are recognized as an expense on a straight line basis over the lease term unless the payments are structured to increase in line with the expected general inflation so as to compensate for the leaser’s expected inflationary cost increases.
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