3. Summary of Material accounting policies
A. Property, plant and equipment
Property, plant and equipment are stated at their
cost of acquisition / installation / construction net
of accumulated depreciation, and accumulated
impairment losses, if any, except freehold non-mining
land which is carried at cost less accumulated
impairment losses. The cost of acquisition is the cash
price equivalent paid at the recognition date which
is equivalent to the fair value of an asset acquired.
Subsequent expenditures 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 Company and the cost of the item can
be measured reliably.
When significant parts of plant and equipment are
required to be replaced at intervals, the Company
depreciates them separately based on their specific
useful lives. Likewise, when a major inspection is
performed, its cost is recognised in the carrying
amount of the property, plant and equipment as a
replacement if the recognition criteria are satisfied.
All other repairs and maintenance are charged to
the statement of profit and loss during the reporting
period in which they are incurred.
The present value of the expected cost for the
decommissioning of an asset after its use is included
in the cost of the respective asset if the recognition
criteria for provisions are met.
Spares which meet the definition of property, plant
and equipment are capitalised as on the date of
acquisition. The corresponding old spares are
derecognised on such date with consequent impact
in the statement of profit and loss.
Property, plant and equipment which are not ready
for their intended use as on the balance sheet
date are disclosed as "Capital work-in-progress".
Directly attributable expenditure related to and
incurred during implementation of Capital projects
to get the assets ready for intended use and for a
qualifying assets is included under "Capital work-in¬
progress (including related inventories)”. The same
is allocated to the respective items of Property
Plant and Equipment on completion of construction
(development of projects). Capital work-in-progress
is stated at cost, net of accumulated impairment loss,
if any. Such items are classified to the appropriate
category of property, plant and equipment when
completed and ready for their intended use.
Advances given towards acquisition / construction of
property, plant and equipment outstanding at each
balance sheet date are disclosed as Capital Advances
under "Other non-current assets".
Capital expenses incurred by the Company on
construction/development of certain assets which
are essential for production, supply of goods or for
the access to any existing Assets of the Company
are recognised as enabling Assets under Property,
plant and equipment.
Depreciation on property, plant, and equipment
The Company, based on technical assessment made
by technical expert and management estimate,
depreciates certain items of building, plant and
equipment over estimated useful lives which are
different from the useful life prescribed in Schedule
II to the Companies Act, 2013. The management
believes that these estimated useful lives are realistic
and reflect fair approximation of the period over
which the assets are likely to be used. Depreciation is
calculated using "Written down value method” for
assets related to Captive Power Plant and using
"Straight-line method” for other assets.
The Company identifies and depreciates cost of
each component / part of the asset separately, if the
component / part have a cost, which is significant to
the total cost of the asset and has a useful life that is
materially different from that of the remaining asset.
Depreciation on additions to property, plant and
equipment is provided on a pro-rata basis from the
date of acquisition, or installation, or construction,
when the asset is ready for intended use.
Depreciation on an item of property, plant and
equipment sold, discarded, demolished or scrapped,
is provided up to the date on which the said asset is
sold, discarded, demolished or scrapped.
Capitalised spares are depreciated over their own
estimated useful life or the estimated useful life of
the parent asset whichever is lower.
The Company reviews the residual value, useful lives
and depreciation method on each reporting date and,
if expectations differ from previous estimates, the
change is accounted for as a change in accounting
estimate on a prospective basis. 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.
I n respect of an asset for which impairment loss,
if any, is recognised, depreciation is provided on
the revised carrying amount of the asset over its
remaining useful life.
Property, plant, and equipment, constructed by the
Company, but ownership of which vests with the
Government / Local authorities:
i. Expenditure on Power lines is depreciated over
the period as permitted in the Electricity Supply
Act, 1948 / 2003 as applicable.
ii. Expenditure on Marine structures is depreciated
over the period of the agreement.
iii. Expenditure on roads constructed is depreciated
for the period ranging from 10 to 30 years.
a) it is probable that the future economic
benefit associated with the stripping activity
will be realised.
b) the component of the limestone body for which
access has been improved can be identified; and
c) the costs relating to the stripping activity
associated with the improved access can be
reliably measured.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or
when no future economic benefits are expected
from its use or disposal. Gains or losses arising from
derecognition of an intangible asset, if any, 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.
Contract based Intangibles
The Company recognises contract-based intangible
asset when the economic benefit under the
contract starts flowing to the entity and control
over the intangible asset is established. Till the
time such economic benefits start flowing to entity,
it is disclosed under Other Non-current assets as
"Payment under Long-term supply arrangement”.
The Company reclassifies such balance to intangible
assets once the economic benefit start accruing
to the Company.
Contract based intangibles are initially recognised
at cost. Subsequent to initial recognition,
contract-based intangibles are carried at cost
less accumulated amortisation and accumulated
impairment losses, if any.
The useful life of the contract-based intangibles
for purpose of its amortisation is considered to be
shorter of the period of contractual rights or period
over which entity expects to obtain economic
benefits from the asset. Further, at every reporting
date, the contract-based intangibles are also tested
for impairment in case of an indication that the
contract-based intangibles might be impaired.
Derecognition of property plant and equipment
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 derecognition of the asset (calculated as
the difference between the net disposal proceeds
and the carrying amount of the asset) is recognised
in the Statement of Profit and Loss when the asset
is derecognised.
B. Intangible assets
Intangible assets acquired separately are measured
on initial recognition at cost. Cost comprises the
purchase price (net of tax / duty credits availed
wherever applicable) and any directly attributable
cost of bringing the assets to its working condition
for its intended use. The cost of intangible assets
acquired in a business combination is their fair
value at the date of acquisition. Following initial
recognition, intangible assets are carried at cost
less any accumulated amortisation and accumulated
impairment losses, if any.
The useful lives of intangible assets are assessed as
either finite or indefinite.
Intangible assets with finite lives are amortised over
the useful economic life and assessed for impairment
whenever there is an indication that the intangible
asset may be impaired. The amortisation period and
the amortisation method for an intangible asset
with a finite useful life are reviewed during each
reporting period. Changes in the expected useful
life or the expected pattern of consumption of
future economic benefits embodied in the asset
are considered to modify the amortisation period or
method, as appropriate, and are treated as changes in
accounting estimates. The amortisation expense on
intangible assets with finite lives is recognised in the
statement of profit and loss unless such expenditure
forms part of carrying value of another asset.
Stripping Cost - Stripping costs are allocated and
included as a component of the mine asset when they
represent significantly improved access to limestone,
provided all the following conditions are met:
C. Impairment of non-financial assets
The carrying amounts of other non-financial assets,
other than inventories and deferred tax assets are
reviewed at each balance sheet date if there is any
indication of impairment based on internal / external
factors. An impairment loss, if any, is recognised
in the statement of profit and loss wherever the
carrying amount of an asset exceeds its recoverable
amount. The recoverable amount is the higher
of the asset's fair value less cost of disposal and
value in use. Recoverable amount is determined
for an individual asset, unless the asset does not
generate cash inflows that are largely independent
of those from other assets of or Group of assets.
In assessing value in use, the estimated future cash
flows are discounted to their present value using a
pre-tax discount rate that reflects current market
assessments of the time value of money and risks
specific to the assets. In determining fair value less
costs of disposal, recent market transactions are
taken into account. If no such transactions can be
identified, an appropriate valuation model is used.
A previously recognised impairment loss, if any, is
reversed when there is an indication of reversal,
however, the carrying value after reversal is not
increased beyond the carrying value that would
have prevailed by charging usual depreciation /
amortisation if there was no impairment.
D. Inventories
I nventories are valued at the lower of cost and net
realisable value. Costs incurred in bringing each
product to its present location and condition are
accounted for as follows:
I. Raw materials, stores and spare parts, fuel
and packing material:
Cost incl ud es purchase price, other costs
incurred in bringing the inventories to their
present location and condition, and includes
non-refundable taxes. Materials and other items
held for use in the production of inventories are
not written down below cost if the finished
products in which they will be incorporated are
expected to be sold at or above cost. Cost is
determined on a moving weighted average basis.
The Company conducts regular reviews
of stores and spares inventory ageing to
identify slow-moving and non-moving items.
Inventories with limited movement and low
anticipated future utility are appropriately
provided. The Company applies established
provisioning norms to write down the value of
such inventories, based on the ageing analysis.
II. Work-in-progress, finished goods and stock-in¬
trade:
Cost includes direct materials and labour and a
proportion of manufacturing overheads based
on normal operating capacity but excluding
borrowing costs. Cost of Stock-in-trade includes
cost of purchase and other cost incurred in
bringing the inventories to the present location
and condition. Cost is determined on a moving
weighted average basis.
Net realisable value is the estimated selling
price in the ordinary course of business, less
estimated costs of completion and estimated
costs necessary to make the sale.
E. Investment in subsidiaries, associates and joint
ventures
I nvestments in subsidiaries, associates and joint
ventures are accounted for at cost, net of impairment,
if any. Cost includes transaction cost which is
directly attributable to the cost of acquisition of
the investments.
F. Fair value measurement
The Company measures its financial instruments,
such as derivatives, government securities and
mutual funds at fair value at each balance sheet date.
The fair value measurement is based on the
presumption that the transaction to sell the asset or
transfer the liability takes place either:
a) In the principal market for the asset or liability, or
b) In the absence of a principal market, in the most
advantageous market for the asset or liability.
The principal or the most advantageous market must
be accessible by the Company.
Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. The Company uses valuation
techniques that are appropriate in the circumstances
and for which sufficient data are available to measure
fair value, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is
measured or disclosed in the financial statements
are categorised within the fair value hierarchy, based
on the lowest level input that is significant to the fair
value measurement as a whole.
External valuers are involved for valuation of
significant assets, such as unquoted financial assets
and financial liabilities and derivatives.
For assets and liabilities that are recognised in the
financial statements on a recurring basis, the Company
determines whether transfers have occurred between
levels in the hierarchy by re-assessing categorisation
(based on the lowest level input that is significant to
the fair value measurement as a whole) at the end of
each reporting period.
All assets and liabilities for which fair value is
measured as disclosed in the financial statements
are categorised within the fair value hierarchy
described in Note 54.
G. Financial instruments
Financial assets and financial liabilities are initially
measured at fair value with the exception of trade
receivables that do not contain a significant financing
component or for which the Company has applied the
practical expedient, the Company initially measures
a financial asset at its fair value plus, in the case
of a financial asset not at fair value through profit
or loss, transaction costs Transaction costs that are
directly attributable to the acquisition or issue of
financial assets and financial liabilities (other than
financial assets and financial liabilities at fair value
through the statement of profit and loss) are added
to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on initial
recognition. Transaction costs directly attributable
to the acquisition of financial assets or financial
liabilities at fair value through the statement of profit
and loss are recognised immediately in the statement
of profit and loss.
I. Financial assets
a) Initial recognition and measurement of
financial assets
The Company recognises a financial asset in
its balance sheet when it becomes party to
the contractual provisions of the instrument.
All financial assets are recognised initially at
fair value, plus in the case of financial assets
not recorded at fair value through profit or loss,
transaction costs that are attributable to the
acquisition of the financial asset. All regular
way purchases or sales of financial assets are
recognised and derecognised on a trade date
basis, i.e., the date that the Company commits
to purchase or sell the asset. Regular way
purchases or sales are purchases or sales of
financial assets that require delivery of assets
within the time frame established by regulation
or convention in the marketplace.
The classification of financial assets at initial
recognition depends on the financial asset's
contractual cash flow characteristics and the
Company's business model for managing them.
Trade receivables that do not contain a
significant financing component or for
which the Company has applied the practical
expedient are measured at the transaction
price determined under Ind AS 115. Refer to the
accounting policies in Section (I) Revenue from
contracts with customers.
b) Subsequent measurement of financial assets
All recognised financial assets are subsequently
measured in their entirety at either amortised
cost or fair value, depending on the classification
of the financial assets.
Classification and measurement of
Financial assets
For purposes of subsequent measurement,
financial assets are classified in the
following categories:
Financial assets measured at amortised cost
Financial assets that meet the following
conditions are subsequently measured at
amortised cost using effective interest method
("EIR") (except for debt instruments that are
designated as at fair value through profit or loss
on initial recognition):
Ý the asset is held within a business model
whose objective is to hold assets in order to
collect contractual cash flows; and
Ý Contractual terms of the asset give rise on
specified dates to cash flows that are solely
payments of principal and interest (SPPI)
on the principal amount outstanding.
Amortised cost is calculated by taking
into account any discount or premium on
acquisition and fees or costs that are an integral
part of the EIR.
Financial Assets at Fair Value through Other
Comprehensive Income (FVTOCI)
Financial assets that meet the criteria for initial
recognition at FVTOCI are remeasured at fair
value at the end of each reporting date through
other comprehensive income (OCI).
Financial assets at fair value through profit
or loss (FVTPL)
Financial assets that do not meet the
amortised cost criteria or FVTOCI criteria are
measured at FVTPL.
c) Derecognition of financial assets
A financial asset (or, where applicable, a part of
a financial asset or part of a Company of similar
financial assets) is primarily derecognised when:
i. The rights to receive cash flows from the
asset have expired, or
ii. The Company has transferred its contractual
rights to receive cash flows from the
asset or has assumed an obligation to pay
the received cash flows in full without
material delay to a third party under a
'pass-through' arrangement and either (a)
the Company has transferred substantially
all the risks and rewards of the asset, or
(b) the Company has neither transferred
nor retained substantially all the risks and
rewards of the asset, but has transferred
control of the asset.
On derecognition of a financial asset in
its entirety, the difference between the
asset's carrying amount and the sum of the
consideration received and receivable and
the cumulative gain or loss that had been
recognised in other comprehensive income
and accumulated in equity is recognised
in the statement of profit and loss if such
gain or loss would have otherwise been
recognised in the statement of profit and
loss on disposal of that financial asset.
d) Impairment of financial assets
The Company applies the expected credit
loss model for recognising impairment loss on
financial assets measured at amortised cost,
trade receivables and other contractual rights
to receive cash or other financial asset.
The Company measures the loss allowance for
a Trade Receivables and Contract Assets by
following 'simplified approach' at an amount
equal to the lifetime expected credit losses.
In case of other financial assets 12-month
ECL is used to provide for impairment loss and
where credit risk has increased significantly,
lifetime ECL is used.
The Company considers a financial asset in
default when contractual payments are 90
days past due. However, in certain cases, the
Company may also consider a financial asset
to be in default when internal or external
information indicates that the Company is
unlikely to receive the outstanding contractual
amounts in full before taking into account any
credit enhancements held by the Company.
A financial asset is written off when there is
no reasonable expectation of recovering the
contractual cash flows.
II. Financial liabilities and equity instruments
a) Financial liabilities
i. Initial recognition and measurement
The Company recognises a financial liability
in its balance sheet when it becomes
party to the contractual provisions of
the instrument.The Company's financial
liabilities majorly includes trade payables
and payable towards purchase of Property,
Plant and Equipment.
All financial liabilities are recognised initially
at fair value and, in the case of payables, net
of directly attributable transaction costs.
Financial liabilities are classified, at initial
recognition, as financial liabilities at fair
value through profit or loss or at amortised
cost as appropriate.
ii. Subsequent measurement of financial
liabilities at amortised cost
Financial liabilities that are not held-for-
trading and are not designated as at
FVTPL are measured at amortised cost
at the end of subsequent reporting
periods. The carrying amounts of financial
liabilities that are subsequently measured
at amortised cost are determined based on
the effective interest rate method.
iii. Subsequent measurement of financial
liabilities at fair value through profit
or loss (FVTPL)
Financial liabilities at fair value through
profit or loss include financial liabilities
held for trading and financial liabilities
designated upon initial recognition as at
fair value through profit or loss.
Financial liabilities are classified as held
for trading if they are incurred for the
purpose of repurchasing in the near term.
This category also includes derivative
financial instruments entered into by the
Company that are not designated as hedging
instruments in hedge relationships as
defined by Ind AS 109. Separated embedded
derivatives are also classified as held for
trading unless they are designated as
effective hedging instruments.
Gains or losses on liabilities held for trading
are recognised in the statement of profit
and loss account.
Financial liabilities designated upon initial
recognition at fair value through profit or
loss are designated as such at the initial
date of recognition, and only if the criteria
in Ind AS 109 are satisfied.
iv. Derecognition of financial liabilities
A financial liability is derecognised when the
obligation under the liability is discharged
or cancelled or expired. 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 derecognition 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.
III. Offsetting of financial instruments
Financial assets and financial liabilities are
offset, and the net amount is reported in the
balance sheet if there is a currently enforceable
legal right to offset the recognised amounts and
there is an intention to settle on a net basis,
to realise the assets and settle the liabilities
simultaneously.
|