A. Basis of Preparation of Financial Statements:
The financial statements have been prepared under the historical cost
convention on the accrual basis of accounting, in accordance with the
generally accepted accounting principles in India to comply with the
Accounting Standards specified under Section 133 of the Companies Act,
2013(the Act) read with Rule 7 of the Companies (Accounts) Rules,
2014 (as amended) and the relevant provisions of the Act.
The accounting policies adopted in the preparation of the financial
statements are consistent with those of the previous year.
B. Use of Estimates:
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities (including contingent liabilities) on the date of financial
statements and the reported amount of revenues and expenses, during the
reported period. Actual results could differ from those estimates.
C. Fixed Assets:
i. Fixed Assets are recorded at cost of acquisition or construction and
they are stated at historical cost (net of Cenvat and Vat). Interest on
project loans and all direct expenses attributable to acquisition of
Fixed Assets are capitalised, upto the date of installation.
Capitalised hardware/ software costs of Enterprise Resource Planning
(ERP) System include cost of designing software, which provides
significant future economic benefits over an extended period. The cost
comprises of license fee, cost of system integration and initial
customization. The costs are capitalised in the year in which the
relevant system is ready for intended use. The upgradation/enhancements
are also capitalised and assimilated with the initial capitalisation
ii. In compliance with Accounting Standard (AS) 28 - Impairment of
Assets issued by the Institute of Chartered Accountants of India
(ICAI), the Company assesses at each Balance Sheet date whether there
is any indication that any asset may be impaired. If any such
indication exists, the recoverable amount of the asset is estimated.
Impairment loss is recognised wherever carrying amount exceeds the
iii. The depreciation on all assets of the company excluding freehold
land & leasehold land has been charged to write off the cost less
residual value using the straight-line basis over the expected/
estimated useful life in the manner as specified in Schedule II of the
Companies Act 2013. Residual values have been reviewed and considered
by the management. The normal expected/ estimated useful lives of major
categories of Fixed Assets are as follows:
Freehold Land NIL
Leasehold Land Lease term
Site developments 30 years
Buildings & sheds 30 years and 60 years
Plant & Machinery & Electrical Installation 7.5 years to 25 years
Office equipment 3 to 6 years
ERP Hardware & Software 5 years
Vehicles 8 to 10 years
Long-term investments are stated at cost and provision is made when
there is decline, other than temporary, in the value thereof. Current
investments are stated at cost or fair value whichever is lower.
E. Valuation of Inventories:
A. Raw Materials and Packing Materials
At moving weighted average cost, written down to realizable value if
the costs of related finished goods exceed net realisable value.
B. Work in process
At lower of moving weighted average cost or net realisable value.
C. Finished Goods
At lower of moving weighted average cost or net realisable value.
F. Excise Duty:
Excise duty on finished goods manufactured is accounted on clearance of
goods from factory premises and also in respect of year end stocks in
bonded warehouse. CENVAT credit is accounted by adjustment against cost
immediately upon receipt of the relevant input. Input credit not
recoverable is charged to the Statement of Profit and Loss.
G. Foreign Currency Transactions:
i. Transactions in foreign currencies are recorded at the exchange
rates prevailing on the date of transaction. Foreign currency assets
and liabilities are translated at year end exchange rates. Exchange
difference arising on settlement of transactions and translation of
monetary items are recognised as income or expense in the year in which
ii. In respect of forward exchange contracts the difference between the
forward rate and the exchange rate at the inception of contract is
recognised as income or expense over the period of the contract.
iii. Gains or losses on cancellation/settlement of forward exchange
contracts are recognised as income or expense.
H. Research and Development:
Revenue expenditure incurred on Research and Development is charged to
Statement of Profit and Loss for the year. Capital expenditure on
Research and Development is accounted as Fixed Assets.
I. Employee Benefits:
i. Short term employee benefits are recognised as an expense at the
undiscounted amount in the Statement of Profit and Loss of the year in
which the related service is rendered.
ii. Post employment and other long-term employees benefits are
recognised as an expense in the Statement of Profit and Loss for the
year in which the employee has rendered the service. The expense is
recognised at the present value of the amount payable determined using
actuarial valuation techniques. Actuarial gains and losses in respect
of post-employment and other long- term benefits are charged to the
Statement of Profit and Loss for the year.
J. Revenue/Expense Recognition:
i. Revenue from sale of goods is accounted for on the basis of dispatch
of goods. Sales are inclusive of excise duty and net of sales
ii. Revenue in respect of overdue interest, insurance claim, etc is
recognized to the extent the Company is reasonably certain of its
iii. Remission from Excise Duty paid in respect of clearance from Jammu
Plant is recognised as revenue based on legal advice obtained by the
Company [Refer Note No.17].
iv. Expenses are accounted for on accrual basis.
v. Provisions are recognised when a present legal or constructive
obligation exists and the payment is probable and can be reliably
vi. Lease Rentals in respect of assets taken on operating lease are
charged to the Statement of Profit and Loss on straight line basis over
the lease term.
K. Government Grants:
i. Where the grants are of the nature of promoters'' contribution with
reference to total investment in the undertaking or total capital
outlay, they are treated as capital reserve.
ii. Grants related to specific fixed assets are deducted from the book
value of the related asset.
iii. Grants related to revenue are credited to the Statement of Profit
and Loss and presented as income from operations.
L. Borrowing Cost:
Borrowing cost attributable to acquisition of qualifying fixed assets
which takes substantial period of time to get ready for its intended
use is capitalised as part of the cost of such fixed assets. All other
borrowing costs are charged to revenue.
M. Share Issue Expenses:
Expenses incurred in connection with fresh issue of share capital are
adjusted against securities premium reserve in the year in which they
N. Contingent Liabilities:
Liabilities are disclosed by way of Notes appended to the Financial
Statements in case there is an obligation that probably may not require
O. Accounting for Taxes on Income:
Current tax is determined as the amount of tax payable in respect of
taxable income for the period. Deferred tax on timing differences,
being the difference between taxable income and accounting income that
originate in one period and are capable of reversal in one or more
subsequent periods is accounted for using the tax rates and tax laws
enacted or substantively enacted as on the balance sheet date. Deferred
tax assets arising on account of unabsorbed depreciation or carry
forward of tax losses are recognised only to the extent that there is
virtual certainty supported by convincing evidence that sufficient
future taxable income will be available against which such deferred tax
assets can be realised. Other deferred tax assets are recognised only
when there is a reasonable certainty of their realisation.
P. Earnings per share:
The Company reports basic and diluted earnings per share in accordance
with Accounting Standard (AS) 20 on Earning per share issued by the
Institute of Chartered Accountants of India (ICAI). Basic earnings per
equity share is computed by dividing net income by weighted average
number of equity shares outstanding for the period. Diluted earnings
per equity share is computed by dividing net income by the weighted
average number of equity shares outstanding including shares pending