2.2 Significant Accounting Policies:
(a) Current and Non-Current Classification
The Company presents assets and liabilities in the Balance Sheet based on Current/ Non-Current
classification.
An asset is treated as Current when it is -
- Expected to be realised or intended to be sold or consumed in normal operating cycle;
- Held primarily for the purpose of trading;
- Expected to be realised within twelve months after the reporting period, or
- 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:
- It is expected to be settled in normal operating cycle;
- It is held primarily for the purpose of trading;
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months
after the reporting period.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
(b) Property, Plant and Equipment:
Property, Plant and Equipment are stated at cost, net of recoverable taxes, trade discount and
rebates less accumulated depreciation and impairment losses, if any. Such cost includes purchase
price, borrowing cost and any cost directly attributable to bringing the assets to its working
condition for its intended use, net charges on foreign exchange contracts and adjustments arising
from exchange rate variations attributable to the assets. In case of land the Company has availed
fair value as deemed cost on the date of transition to Ind AS.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future economic benefits associated with the item
will flow to the enfity and the cost can be measured reliably.
Property, Plant and Equipment which are significant to the total cost of that item of Property,
Plant and Equipment and having different useful life are accounted separately. Other Indirect
Expenses incurred relating to project, net of income earned during the project development stage
prior to its intended use, are considered as pre-operative expenses and disclosed under Capital
Work-in-Progress. Depreciation on Property, Plant and Equipment is provided using written down
value method on depreciable amount except in case of certain assets of Oil to Chemicals and
Other segment which are depreciated using straight line method.
Depreciation is provided based on useful life of the assets as prescribed in Schedule II to the
Companies Act, 2013.
The residual values, useful lives and methods of depreciation of Property, Plant and Equipment
are reviewed at each financial year end and adjusted prospectively, if appropriate.
Gains or losses arising from derecognition of a Property, Plant and Equipment are measured as
the difference between the net disposal proceeds and the carrying amount of the asset and are
recognised in the Statement of Profit and Loss when the asset is derecognised.
(c) Leases
The Company, as a lessee, recognises a right-of-use asset and a lease liability for its leasing
arrangements, if the contract conveys the right to control the use of an identified asset.
The contract conveys the right to control the use of an identified asset, if it involves the use of an
identified asset and the Company has substantially all of the economic benefits from use of the
asset and has right to direct the use of the identified asset. The cost of the right-of use asset shall
comprise of the amount of the initial measurement of the lease liability adjusted for any lease
payments made at or before the commencement date plus any initial direct costs incurred. The
right-of-use assets is subsequently measured at cost less any accumulated depreciation/
amortisation, accumulated impairment losses, if any and adjusted for any remeasurement of the
lease liability. The right of- use assets is depreciated/ amortised using the straight-line method
from the commencement date over the shorter of lease term or useful life of right-of-use asset.
(d) Cash and Cash Equivalents
Cash and cash equivalents comprise of cash on hand, cash at banks, short-term deposits and
short-term highly liquid investments that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
(e) Inventories
Items of inventories are measured at lower of cost and net realisable value after providing for
obsolescence, if any, except in case of by-products which are valued at net realizable value. Cost
of inventories comprises of cost of purchase, cost of conversion and other costs including
manufacturing overheads net of recoverable taxes incurred in bringing them to their respective
present location and condition.
Cost of finished goods, work-in-progress, raw materials, chemicals, stores and spares, packing
materials, trading and other products are determined on weighted average basis.
(f) Impairment of Non-Financial Assets - Property, Plant and Equipment and Intangible Assets
The Company assesses at each reporting date as to whether there is any indication that any
Property, Plant and Equipment and Intangible Assets may be impaired. If any such indication
exists, the recoverable amount of an asset is estimated to determine the extent of impairment, if
any.
An impairment loss is recognised in the Statement of Profit and Loss to the extent, asset's carrying
amount exceeds its recoverable amount. The recoverable amount is higher of an asset's fair value
less cost of disposal and value in use. Value in use is based on the estimated future cash flows,
discounted to their present value using pre-tax discount rate that reflects current market
assessments of the time value of money and risk specific to the assets. The impairment loss
recognised in prior accounting period is reversed if there has been a change in the estimate of
recoverable amount.
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