a. Basis of Accounting and preparation
The financial statements of the company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The company has prepared these financial statements to
comply in all material respects with the accounting Standards specified
under Section 133 of the Companies Act, 2013, read with Rule 7 of the
Companies (Accounts) Rules, 2014. 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 consisted with those of previous period.
Use of Estimates
The preparation of financial statements requires the management of the
Company to make judgments, estimates and assumptions that affect the
reported balance of assets and liabilities, revenues and expenses and
disclosures relating to the contingent liabilities and commitments. The
management believes that the estimates used in preparation of the
financial statements are prudent and reasonable. The judgments,
estimates and underlying assumptions are made with the management''s
best knowledge of the business environment and are reviewed on an
ongoing basis. However, future results could differ from these
estimates. Any revision to these accounting estimates is recognised
prospectively in the current and future periods.
b. Tangible fixed assets
Fixed assets are stated at cost of acquisition less accumulated
depreciation. Cost of acquisition of fixed assets is inclusive of
freight, duties and taxes, borrowing costs, if any, on specific
borrowings utilized for financing the assets upto the date of
commissioning, the cost of installation/erection and other incidental
expenses incurred to bring the asset to its present location and
condition but exclusive of duties and taxes that are subsequently
recoverable from taxing authorities.
c. Depreciation and Amortization
Depreciable amount for assets is the cost of the asset, or other amount
substituted for cost, less its estimated residual value. Depreciation
on tangible fixed assets has been provided on the written-down method
as per the useful life prescribed in Schedule II to the Companies Act,
2013
In respect of assets sold or disposed off during the year, depreciation
/ amortization is provided till the month of sale or disposal of the
assets.
d. Borrowing Costs
Borrowing Costs, that are directly attributable to the acquisition or
construction of assets, that necessarily take a substantial period of
time to get ready for its intended use, are capitalized as part of the
cost of qualifying asset when it is possible that they will result in
future economic benefits and the cost can be measured reliably.
Other borrowing costs are recognized as an expense in the period in
which they are incurred.
e. Inventories
Valuation of inventories is made as under:
i) Finished goods are valued at lower of cost or net realizable value.
ii) Raw materials, work-in-progress and stores and spares are valued at
cost, following the FIFO Basis.
iii) Work-in-Progress, raw materials, stores, spares are valued at cost
except where the net realizable value of the finished goods they are
used in is less than the cost of finished goods and in such an event,
if the replacement cost of such materials etc., is less than their
books value, they are valued at replacement cost.
iv) By-products and scrap are valued at net realizable value.
f. Revenue Recognition
i. Sales are accounted for net of discounts and rebates. Export Sales
are initially accounted at the exchange rate prevailing on the date of
documentation/invoicing and the same is adjusted with the difference in
the rate of exchange arising on actual receipt of proceeds in foreign
exchange.
g. Income Taxes
Income tax expense comprises current and deferred taxes.
i) Current tax is the amount of tax payable on the taxable income for
the year as determined in accordance with the provisions of the Income
Tax Act, 1961.
ii) Deferred tax is recognised under the liability method, on timing
differences, being the difference between taxable income and accounting
income that originate in one period and capable of reversal in one or
more subsequent periods, at the rate of tax enacted or substantively
enacted by the balance sheet date.
h. Provisions, Contingent Liabilities and Contingent assets
Provisions are recognised only when there is a present obligation as a
result of past events and when a reliable estimate of the amount of
obligation can be made. Provisions are not discounted to their present
value and are determined based on the best estimate required to settle
the obligation at the reporting date. These estimates are reviewed at
each reporting date and adjusted to reflect the current best estimates.
Contingent liability is disclosed for (i) Possible obligation which
will be confirmed only by future events not wholly within the control
of the Company or (ii) Present obligations arising from past events
where it is not probable that an outflow of resources will be required
to settle the obligation or a reliable estimate of the amount of the
obligation cannot be made. The company does not recognise contingent
liabilities but the same are disclosed in the Notes.
Contingent assets are not recognised in the financial statements since
this may result in the recognition of income that may never be
realized.
i. Earnings per share
Earnings per share is calculated by dividing the net profit or loss for
the year after tax attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period. For the
purpose of calculating diluted earnings per share, the net profit or
loss for the period attributable to equity shareholders and the weighted
average number of shares outstanding during the period are adjusted for
the effects of all dilutive potential equity shares.
j. Foreign Exchange Transactions
i) Transactions in foreign currency are initially accounted at exchange
rate prevailing on the date of transaction, and adjusted appropriately,
with the difference in the rate of exchange arising on actual
receipt/payment during the period under report.
ii) At each Balance Sheet date foreign currency monetary items being
receivables/payables are reported using the rate of exchange on that
date and difference is recognized as income or expense. Foreign
currency non-monetary items are reported using the exchange rate at
which they were initially recognized.
iii) In respect of forward exchange contracts in the nature of hedges.
Premium or discount on the contract is amortized over the term of the
contract. Exchange differences on the contract are recognized as profit
or loss in the period in which they arise.
l. Government Grants:
Grants from government are recognized when there is reasonable
assurance that the grant will be received and all attaching conditions
will be complied with. Government grants relating to assets the company
has opted capital approach method. Accordingly, the grant is deducted
from the gross value of the assets concerned in arriving at their books
value.
Government grants in the nature of export incentives are recognised in
the statement of Profit and Loss in the year in which the licenses was
approved by respective authorities and the same is considered as
reasonable assurance that the enterprise has complied the conditions
attached to them and the benefits have been earned by the enterprise is
reasonably certain and the ultimate collection will be made.
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