3 Significant Accounting Policies
a Current versus 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 Company's 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 Company's normal operating cycle
• held primarily for the purpose of trading
• 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.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash
equivalents. The Company has identified twelve months as its operating cycle.
b Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue
can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the
consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or
duties collected on behalf of the government
Sales revenue is recognised on transfer of the significant risks and rewards of ownership of the goods to the buyer and is
stated at net of trade discount, rebates and return.
Other income and expenditure are accounted for on accrual basis.
c Taxes
Tax expense is the aggregate amount included in determination of profit or loss for the period in respect of current tax &
deferred tax.
Current Tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at
the reporting date. Current tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in
other comprehensive income or in equity).
Deferred Tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes at the reporting date
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits (MAT
Credit Entitlement) and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable
profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and
unused tax losses can be utilised
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become
probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the
reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other
comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in
OCI or directly in equity.
d Property, Plant & Equipment
Property, Plant and Equipment is stated at cost including expenses incurred up to the date of their
installation/commissioning, net of accumulated depreciation and accumulated impairment losses,if any.Capital Work in
Progress is also stated at cost.
Depreciation on property,plant and equipment is provided on depreciable value of assets using straight-line method on the
basis of useful life specified in Schedule II to the Companies Act, 2013.
j Foreign Currency Translation
Foreign currency transactions are recorded on the basis of exchange rate prevailing at the date of the transactions. Any gain
or loss on settlement of monetary items denominated in foreign currencies transactions during the year or at the time of
translation at the year end rates is recognized in the statement of profit & loss.
Exchange difference arising on long term foreign currency monetary items has been accounted in accordance with option
granted vide notification no. GSR 225(E) dated 31.03.2009 issued by the Ministry of Corporate affairs wherein exchange
difference arising on restatement of long term foreign currency monetary items (other than for acquisition of depreciable
capital assets) have been recognized over the shorter of the maturity period of monetary items or 31st March 2011. The
unrecognized amount is reflected as foreign currency translation reserve as part of reserve and surplus.
k Financial Asset
A Financial Instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
At initial recognition, all financial assets are measured at fair value. Such financial assets are subsequently classified under
following three categories according to the purpose for which they are held. The classification is reviewed at the end of each
reporting period
• Financial Assets at Amortised Cost
At the date of initial recognition, are held to collect contractual cash flows of principal and interest on principal amount
outstanding on specified dates. These financial assets are intended to be held until maturity. Therefore, they are
subsequently measured at amortised cost by applying the Effective Interest Rate (EIR) method to the gross carrying amount of
the financial asset. The EIR amortisation is included as interest income in the profit or loss. The losses arising from impairment
are recognised in the profit or loss.
• Financial Assets at Fair value through Other Comprehensive Income
At the date of initial recognition, are held to collect contractual cash flows of principal and interest on principal amount
outstanding on specified dates, as well as held for selling. Therefore, they are subsequently measured at each reporting date
at fair value, with all fair value movements recognised in Other Comprehensive Income (OCI). Interest income calculated
using the effective interest rate (EIR) method, impairment gain or loss and foreign exchange gain or loss are recognised in the
Statement of Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognised in Other
Comprehensive Income is reclassified from the OCI to Statement of Profit and Loss
• Financial Assets at Fair value through Profit or Loss
At the date of initial recognition, Financial assets are held for trading, or which are measured neither at Amortised Cost nor at
Fair Value through OCI. Therefore, they are subsequently measured at each reporting date at fair value, with all fair value
movements recognised in the Statement of Profit and Loss.
Trade Receivables
A Receivable is classified as a 'trade receivable' if it is in respect to the amount due from customers on account of goods sold
or services rendered in the ordinary course of business. Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest method, less provision for impairment
De-recognition
A financial asset (or, where applicable, a part of a financial asset) is primarily derecognised (i.e. removed from the Company's
balance sheet) when the rights to receive cash flows from the asset have expired.
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when
no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the
income statement when the asset is derecognised.
e Borrowing Costs
Borrowing cost that is attributable to the acquisition or construction of qualifying assets is capitalized as part of the cost of
such assets. A qualifying asset is one that necessarily takes substantial period of time to set ready for its intended use. All
other borrowing costs are charged to revenue.
f Leases
Effective April 1, 2019, the Company has applied Ind AS 116 'Leases' which establishes the criteria to determine the contracts
having lease component within them. Ind AS 116 replaces Ind AS 17 'Leases'.
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of lease
requires significant judgement. The company uses significant judgement in assessing the lease term (including anticipated
renewals) and the applicable discount rate.
The company determines the lease term as non-cancellable period of a lease, together with both the periods covered by an
option to extend the lease if the company is reasonably certain to exercise that option; and periods covered by an option to
terminate the lease if the company is certain not to exercise that option. In assessing whether the company is reasonably
certain to exercise an option to terminate a lease, it considers all relevant facts and circumstances that create an economic
incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease.
The company revises the lease term if there is a change in the non-cancellable period of a lease.
g Inventories
Finished Goods (including goods in transit) and work-in-process are valued at cost or net realizable value, whichever is lower.
• Raw material and stores are valued at cost or net realizable value, whichever is lower.
• Cost comprises of all cost of purchase, cost of conversion and other cost incurred in bringing the inventories to their present
location and conditions. Cost formula used is weighted average cost.
• Net realizable value is the estimated selling price in ordinary course of business less estimated cost of completion and
estimated cost necessary to make the sale.
Materials and other items held for use in the production of Inventories are not written down below the costs of the finished
products in which they will be incorporated are expected to be sold at or above cost.
• Provision is made for obsolete and slow moving stocks where necessary.
h Impairment of Non-Financial Assets
An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to
the Statement of Profit & Loss of the year in which an asset is identified as impaired. The impairment loss recognized in prior
accounting periods is adjusted if there has been a change in the estimate of the recoverable amount.
i Retirement and other Benefits
Short Term Employees Benefits:
The undiscounted amount of short term employee benefit expected to be paid in exchange for the services render by the
employee is recognized during the period when the employee render the service. This benefit includes salary, wages, short
term compensation and payment under VRS.
Long Term Employee Benefits:
Defined Contribution Scheme: The benefit includes contribution to provident fund schemes and ESIC (Employee State
Insurance Corporation). The contribution is recognized during the period in which the employee renders service.
Defined Benefit Scheme: For defined benefit scheme the cost of providing benefit is determined using the projected unit
credit method with actuarial valuation being carried out at each balance sheet date. The retirement benefit obligation
recognized in the balance sheet represents value of defined benefit obligation. Actuarial gains and losses are recognized in
Other Comprehensive Income during the period in which they occur.
Other Long Term Benefit: Long term compensated absence is provided for on the basis of actuarial valuation, using the
projected unit credit method as at the date of balance sheet.
l Financial Liabilities
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs. The Company's financial liabilities include trade and other payables, loans and
borrowings including bank overdrafts, and derivative financial instruments.
Subsequent Measurement
The measurement of financial liabilities depends on their classification, as described below:
• Financial Liabilities at Fair Value through Profit or Loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading. The Company has not
designated any financial liabilities upon initial measurement recognition at fair value through profit or loss. Financial liabilities
at fair value through profit or loss are at each reporting date with all the changes recognized in the Statement of Profit and
Loss.
• Financial Liabilities measured at Amortised Cost
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the
effective interest rate method (''EIR'') except for those designated in an effective hedging relationship. The carrying value of
borrowings that are designated as hedged items in fair value hedges that would otherwise be carried at amortised cost are
adjusted to record changes in fair values attributable to the risks that are hedged in effective hedging relationship. Amortised
cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of
the EIR. The EIR amortisation is included in finance costs in the Statement of Profit and Loss.
Loans and Borrowings
After initial recognition, interest-bearing borrowings are subsequently measured at amortised cost using the effective interest
rate method. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in
profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be
drawn down.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the
liability for at least twelve months after the reporting period.
Trade and Other Payables
A payable is classified as 'trade payable' if it is in respect of the amount due on account of goods purchased or services
received in the normal course of business. These amounts represent liabilities for goods and services provided to the
Company prior to the end of financial year which are unpaid. Trade and other payables are presented as current liabilities
unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and
subsequently measured at amortised cost using the effective interest method
De-recognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an
existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original
liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement
of profit and loss
m Earning Per Share
Basic earning per share is calculated by dividing the net profit / Loss for the year attributable to Equity Shareholders by the
weighted average number of equity shares outstanding during the year.
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 equity share.
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