1 BASIS OF ACCOUNTING AND PREPARATION OF FINANCIAL STATEMENTS:
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards specified under
Section 133 of the Companies Act, 2013, read with Rule 7 of the
Companies (Accounts) Rules 2014 and the relevant provisions of the
Companies Act, 2013 (the 2013 Act) / Companies Act, 1956 (the 1956
Act), as applicable. The financial statements have been prepared on
accrual basis under the historical cost convention . The accounting
policies adopted in the preparation of the financial statements are
consistent with those followed in the previous year except for change
in the accounting policy for depreciation, as more fully described in
2 USE OF ESTIMATES:
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
a) Finished Goods and work-in-progress are valued at lower of cost and
net realizable value. Cost comprises of materials, labour, and an
appropriate proportion of production overheads and excise duty,
wherever applicable and excludes interest, selling and distribution
expenses. Cost is computed on weighted average basis.
b) Raw materials, stores and spares are valued at lower of cost and net
realizable value. Cost computed on weighted average basis includes
freight ,taxes and duties net of CENVAT / VAT credit, wherever
4 CASH FLOW STATEMENT:
The cash flows from operating, investing and financing activities of
the Company are segregated based on the available information. Cash
flows from operating activities 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.
5 FIXED ASSETS, DEPRECIATION AND AMORTISATION:
''Fixed assets are carried at cost less accumulated depreciation /
amortisation and impairment losses, if any. The cost of fixed assets
comprises its purchase price net of any trade discounts and rebates,
any import duties and other taxes (other than those subsequently
recoverable from the tax authorities), any directly attributable
expenditure on making the asset ready for its intended use, other
incidental expenses and interest on borrowings attributable to
acquisition of qualifying fixed assets up to the date the asset is
ready for its intended use. Machinery spares which can be used only in
connection with an item of fixed asset and whose use is expected to be
irregular are capitalised and depreciated over the useful life of the
principal item of the relevant assets. Subsequent expenditure on fixed
assets after its purchase / completion is capitalised only if such
expenditure results in an increase in the future benefits from such
asset beyond its previously assessed standard of performance.
Fixed assets acquired and put to use for project purpose are
capitalised and depreciation thereon is included in the project cost
till the project is ready for its intended use. Individual assets
costing less than Rs.5,000 each are depreciated in full in the year of
''Fixed assets acquired in full or part exchange for another asset are
recorded at the fair market value or the net book value of the asset
given up, adjusted for any balancing cash consideration. Fair market
value is determined either for the assets acquired or asset given up,
whichever is more clearly evident. Fixed assets acquired in exchange
for securities of the Company are recorded at the fair market value of
the assets or the fair market value of the securities issued, whichever
is more clearly evident.
''Fixed assets retired from active use and held for sale are stated at
the lower of their net book value and net realisable value and are
Projects under which tangible fixed assets are not yet ready for their
intended use are carried at cost, comprising direct cost, related
incidental expenses and attributable interest.
Capital Subsidy relating to projects in backward area is credited to
capital subsidy reserve on receipt and Government grants relating to
specific assets are deducted from the cost of such assets.
Intangible Assets are amortized over a period of 5 years or based on
the period of usage / licence, whichever is lower. The estimated useful
life of intangible assets and the amortisation period are reviewed at
the end of each financial year and the amortisation method is revised
to reflect the changed pattern.
Depreciation and amortisation
Depreciable amount for assets is the cost of an asset, or other amount
substituted for cost, less its estimated residual value.
Depreciation on tangible fixed assets has been provided on the
straight-line method as per the useful life prescribed in Schedule II
to the Companies Act, 2013 except in respect of the used / Second hand
machines & process bath equipments, in whose case the life of the
assets has been assessed as under based on technical advice, taking
into account the nature of the asset, the estimated usage of the asset,
the operating conditions of the asset, past history of replacement,
anticipated technological changes, manufacturers warranties and
maintenance support, etc.
Depreciation on assets added / disposed off during the year is provided
on pro-rata basis from the month of addition or up to the month prior
to the month of disposal, as applicable.
6 REVENUE RECOGNITION:
a) Revenues are recognized and expenses are accounted on their accrual
with necessary provisions for all known liabilities and losses. Revenue
from Sale of goods is recognised on despatch of goods. Sales includes
exicise duty but excludes sales tax / VAT, discounts and returns as
b) Revenue from rendering of services priced on a time and material
basis is recognised on rendering of services as per the terms of
contracts with customers.
c) Export Benefits under Advance licence scheme are recognized on
accrual basis on completion of export obligation.
d) Dividend income on investments is accounted for when the right to
receive the payment is established.
Interest income is recognised on a time proportion basis considering
the underlying interest rate.
7 FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION :
Foreign currency transactions are recorded at the rates of exchange
prevailing on the date of the transactions. Monetary assets and
liabilities outstanding at the year end are translated at the rate of
exchange prevailing at the year end and the gain or loss is recognized
in the Statement of Profit and Loss.
Exchange differences arising on actual payments / realizations and year
end restatements are also recognised in the Statement of Profit and
Investments that are intended to be held for more than a year, from the
date of acquisition, are classified as long-term investments and are
carried at cost. However, provision for diminution is made in the value
of investments, if such diminution is other than of temporary nature .
Current investments are stated at lower of cost or fair value .
9 EMPLOYEE BENEFITS:
SHORT -TERM EMPLOYEE BENEFITS
Short term employee benefits including performance incentive and
compensated absences which are expected to occur within 12 months after
the end of the period in which the employee renders related service are
determined as per Company''s policy and recognized as expense based on
expected obligation on undiscounted basis.
LONG -TERM EMPLOYEE BENEFITS - COMPENSATED ABSENCES
Accumulated Compensated absences which fall due beyond 12 months is
provided for in the books on actuarial valuation basis at the year end
using projected unit credit method.
DEFINED CONTRIBUTION PLANS
Superannuation fund, Provident fund and Pension fund are defined
contribution plans towards which the company makes contribution at
predetermined rates to the Superannuation Trust, and the Regional
Provident Fund Commissioner respectively. The same is debited to the
Statement of Profit and Loss based on the amount of contribution
required to be made and when services are rendered by the employees.
The Company also makes contributions to state plans namely Employee''s
State Insurance Fund and Employee''s Pension Scheme 1995 and has no
further obligation beyond making the payment to them.
DEFINED BENEFIT PLAN
The liability for gratuity to employees as at the Balance sheet date is
determined on the basis of actuarial valuation using Projected Unit
Credit method. The amount is funded to a Gratuity fund administered by
the trustees and managed by Life Insurance Corporation of India. The
liability thereof is paid and absorbed in the statement of profit and
loss at the year end. Actuarial Gains and losses arising during the
year are recognised in the Statement of Profit and Loss immediately.
Termination benefits are recognized as an expense as and when incurred.
10 SEGMENT REPORTING:
The accounting policies adopted for segment reporting are in line with
the accounting policies of the Company
with the following additional policies:
a) Inter-segment revenues for this purpose are reported on the basis of
prices charged to external customers.
b) Revenue and expenses are identified to segments on the basis of
their relationship to the operating activities of the segment. Revenue
and expenses, which relate to the enterprise as a whole and not
allocable to segments on a reasonable basis are included under Other
un-allocable Expenditure net of un- allocable income.
11 EARNINGS / (LOSS) PER SHARE:
The basic earnings/ (loss) per share is 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. The number
of shares used in computing diluted earnings per share comprises the
weighted average shares considered for deriving basic earnings per
share, and also the weighted average number of equity shares that could
have been issued on the conversion of all dilutive potential equity
12 TAXES ON INCOME :
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the applicable tax rates and the
provisions of the Income Tax Act, 1961 and other applicable tax laws.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is highly
probable that future economic benefit associated with it will flow to
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantively enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets are recognised for timing differences of items other than
unabsorbed depreciation and carry forward losses only to the extent
that reasonable certainty exists that sufficient future taxable income
will be available against which these can be realised. However, if
there are unabsorbed depreciation and carry forward of losses and items
relating to capital losses, deferred tax assets are recognised only if
there is virtual certainty supported by convincing evidence that there
will be sufficient future taxable income available to realise the
assets. Deferred tax assets and liabilities are offset if such items
relate to taxes on income levied by the same governing tax laws and the
Company has a legally enforceable right for such set off. Deferred tax
assets are reviewed at each balance sheet date for their realisability.
13 RESEARCH AND DEVELOPMENT:
Revenue expenditure pertaining to research is charged to the Statement
of Profit and Loss. Development costs of products are also charged to
the Statement of Profit and Loss unless a product''s technical
feasibility has been established, in which case such expenditure is
capitalised. The amount capitalised comprises expenditure that can be
directly attributed or allocated on a reasonable and consistent basis
to creating, producing and making the asset ready for its intended use.
Fixed assets utilised for research and development are capitalised and
depreciated in accordance with the policies stated for Fixed Assets.
14 IMPAIRMENT OF ASSETS:
The carrying values of assets / cash generating units at each balance
sheet date are reviewed for impairment if any indication of impairment
exists. The intangible assets are tested for impairment each financial
year even if there is no indication that the asset is impaired.
If the carrying amount of the assets exceed the estimated recoverable
amount, an impairment is recognised for
such excess amount. The impairment loss is recognised as an expense in
the Statement of Profit and Loss, unless the asset is carried at
revalued amount, in which case any impairment loss of the revalued
asset is treated as a revaluation decrease to the extent a revaluation
reserve is available for that asset.
The recoverable amount is the greater of the net selling price and
their value in use. Value in use is arrived at by discounting the
future cash flows to their present value based on an appropriate
When there is indication that an impairment loss recognised for an
asset (other than a revalued asset) in earlier accounting periods no
longer exists or may have decreased, such reversal of impairment loss
is recognised in the Statement of Profit and Loss, to the extent the
amount was previously charged to the Statement of Profit and Loss. In
case of revalued assets such reversal is not recognised.
15 PROVISIONS AND CONTINGENCIES:
A provision is recognized when an enterprise has a present obligation
as a result of past event, that can be estimated reliably and it is
probable that an outflow of resources will be required to settle the
obligation in respect of which a reliable estimate can be made.
Provisions are not discounted to its present value and are determined
based on best estimate required to settle the obligation at the balance
These are reviewed at each balance sheet date and adjusted to reflect
the current best estimates. When no reliable estimate can be made, a
disclosure is made as contingent liability and is disclosed by way of
notes. Contingent assets are not recognised in the financial
16 OPERATING CYCLE:
All assets and liabilities are 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. Normal operating cycle is
based on the time between the acquisition of assets for processing and
their realisation into cash and cash equivalents.