Note:2 SIGNIFICANTACCOUNTINGPOLICIES
a. Basisof Preparation ofFinancialStatements Compliance with IndAs
These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the'Ind AS') as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act 2013 ('Act') read with of the Companies (Indian Accounting Standards) Rules, 2015 as amended and otherrelevant provisions of the Act.
Functional and presentation currency
These financial statements are presented in Indian Rupees (INR), which is also the Company's functional currency.All financial information presented in Indian rupees have been rounded-off to two decimal places to the nearest lakhs as per the requirement of Schedule III,except share data or as otherwise stated.
The accounting policiesare applied consistently to all the periods presented in the financial statements. Historical Cost Convention
The financial statements have been prepared under the historical cost convention except for the followings assets and liabilities which have been measured at their fair value :-
? Certain financial assets and liabilities that are measured atfair value (refer-Accounting policy regarding financials instruments)
? Defined benefit plans -present value of defined benefit obligationunless otherwise indicated.
b. Useofestimatesandjudgements
The preparation of financial statements in conformity with Ind AS requires the management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Although these estimates are based on the management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities prospectively. Information about critical judgments in applying accounting policies,as well as estimates and assumptions that have the most significant effect to the carrying amounts of assets and liabilities within the next financial year,are included inthefollowing notes:
i. Measurement ofdefined benefit obligations-Note No.36
ii. Measurement and likelihood ofoccurrenceofprovisionsandcontingencies-Note No.16,21A&30
iii. Recognition of deferred tax assets/liabilities-Note No.17B
c. Property,Plant&Equipment&IntangibleAssets:
i. Property,Plant&Equipment
The Company had applied for the one-time transition exemption of considering the carrying cost on the transition date i.e., April 1, 2016 as the deemed cost under Ind AS. Hence regarded thereafter as historicalcost.
An item of Property, plant and equipment is recognized as an asset if it is probable that future economic benefits associated with the item will flow to the Company and its cost can be measured reliably. property, plant and equipment are initially recognized at cost after deducting refundable purchase taxes and including the cost directly attributable to bring the asset to the location and conditions necessary for itto be capable of operating in the manner intended by the management,borrowing cost in accordance with the established accounting policy, cost of restoring and dismantling, if any, initially estimated bythemanagement.
Freehold Land is carried at historical cost. All Other items of Property, Plant & Equipment are stated at historical cost less depreciation.Historical Cost includes expenditure that is directly attributable to the acquisition of the items. After the initial recognition the property, plant and equipment are carried at cost less accumulated depreciation and impairment losses.
Subsequent costs are included in the asset's carrying amount or recognized 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 itscost can be measured reliably.
All other repair and maintenance costs, including regular servicing are charged to the Statement of Profit and Loss during the reporting period in which they areincurred.
In case of self-constructed assets, cost includes the costs of all materials used in construction, direct labour, allocation of overheads,directly attributable borrowing costs.Cost of Self-constructed assets is determined using the same principles as for acquired assets after eliminating the component of internal profits.
Any gain or loss arising on retirement or disposal of property,plant and equipment is recognized in the Statement of Profit and Loss.
Capital work-in-progress assets in the course of construction for production or/and supply of goods or services or administrative purposes, or for purposes not yet determined, are carried at cost, less any recognised impairment loss.At the point when an asset is operating at management's intended use,the cost of construction is transferred to the appropriate category of property,plant and equipment.Costs associated with the commissioning of an asset are capitalised where the asset is available for use but incapable of operating at normal levels until a period of commissioning has been completed.
ii. IntangibleAssets
Intangible Assets are stated at cost of acquisition net of recoverable taxes, trade discount and rebates less accumulated amortization / depletion and impairment loss, if any. Such cost includes purchase price,borrowing costs,and any cost directly attributable to bringing the asset to its working condition for the intended use, net charges on foreign exchange contracts and adjustments arising from exchangerate variationsattributable to the intangible assets.
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 entity and thecost can be measured reliably.
Gains or losses arising from derecognition of an intangible asset 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 theasset is derecognised.
iii. Depreciation/Amortization
Depreciation on all property, plant and equipment are provided for, from the date of put to use for commercial production on a pro-rata basis on the straight-line method based on at the useful life prescribed under Schedule II to the Companies Act,2013.Freehold land isnotdepreciated.
Depreciation commences when the assets are ready for their intended use. Depreciated assets in property and accumulated depreciation accounts are retained fully until they are removed from service.
The residual values, useful lives and method of depreciation of property, plant and equipment is reviewed at each financial year end and adjusted prospectively,if appropriate.
Intangible assets with a finite useful life are amortised in a straight-line basis over their estimated useful life.
d. DisposalofAssets
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between net disposal proceeds and the carrying amount of the asset and is recognised in the Statement ofProfit and Loss.
e. Leases
The Company, as a lessee, recognises a right-of-use asset and a lease liability for its leasing arrangements,ifthecontractconveysthe right tocontrol the use of an identifiedasset.
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 benefit from the use of asset and has rightto directthe use ofthe identified asset.
The cost of right-of-use asset shall comprise of amount ofthe initial measurement ofthe lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs incurred.
Right-of-use assets is subsequently measured atcost,less any accumulated depreciation,accumulated impairmentlosses,ifanyand adjusted for any remeasurement of leaseliabilities.
Right-of-use assets is depreciated using the straight-line method from the commencement date over theshorter of lease term or useful lifeofthe Right-of-use asset.
The Company measures the lease liability at the present value ofthe lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined.If that rate cannot be readily determined,the Company uses incremental borrowing rate.
For short term and low value leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the lease term.
The Company's lease arrangements do not contain an obligation to dismantle and remove the underlying asset, restore the site on which it is located or restore the underlying asset to a specified condition.
f. Impairment
The Company assesses at each reporting date as to whether there is any indication that any property, plant and equipment and intangible assets or group of assets,called cash generating units (CGU) may be impaired. If any such indication exists the recoverable amount of an asset or CGU is estimated to determine the extent of impairment, if any.When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount ofthe CGU to which the asset belongs.
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 valueof money and riskspecific to the assets.
The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate ofrecoverable amount.
g. Research and development expenditure
Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are charged to the Statement of Profit and Loss unless a product's technological and commercial feasibility has been established, in which case such expenditure is capitalised.
h. Borrowing Costs
Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets,which are assets that necessarily takes substantial period oftimetoget ready for their its intended useorsale,are capitalised as part of the cost of such assets,until such time as the assets are substantially ready for theintended useorsale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is recognized in the Statement ofProfit and Loss.
All other borrowing costs are charged to the Statement of Profit and Loss for the period for which they are incurred.
i. Inventories
Inventories are stated at the lower of cost and net realizable value. The cost of finished goods and work in progress includes raw materials, direct labour, other direct costs and related production overheads.
Raw Materials and other materials including packaging, stores and fuels are valued at lower of cost, based on first-in-first- out method arrived at after including freight inward and other expenditure directly attributable to acquisition or net realizable value. Cost of Stores, Spares and fuels are computed on MovingWeighted Average.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
j. FinancialInstruments
I. Financial assets
a. Initial Recognition and Measurement
The Company recognizes financial assets and financial liabilities when the Company becomes a party to the contractual provisions of the instrument.Financial assets and liabilities are recognised at fair value initial recognition except for Trade receivables / payables and where cost of generation or fair value exceeds benefits,which are initially measured at the transaction price.Transaction costs directly related to the acquisition or issue of the financial assets and financial liabilities (other than financial assets and financial liabilities through profit and loss account) are added to or deducted from the cost of financial assets and financial liabilities.Transaction costs directly attributable to the acquisition or issue of the financial assets and financial liabilities at fair value through profit and loss account are recognized immediately in the statement of profit and loss.
b. Classification and Subsequent Measurement
i. Amortisedcost:
A financial asset is measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principalamountoutstanding.
ii. Fairvaluethroughothercomprehensiveincome(FVOCI):
A financial asset is measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest onthe principal amount outstanding.
iii. Fair value through profitand loss (FVTPL):
A financial asset which is not classified in anyof the above categories are measured at FVTPL.
Financial assets are not reclassified subsequent to their recognition, except if and in the period the Company changes its business model for managing financial assets.
iv. Investments in Subsidiaries
Investments in subsidiaries are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries, the difference between net disposal proceeds and the carrying amounts are recognized in the Statement of Profitand Loss.
v. EquityInstruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of directissuecosts.
All equity investments are measured at fair value,with value changes recognised in Statement of Profit and Loss, except for those equity investments for which the Company has elected to present the value changes in'OtherComprehensiveIncome'.
vi. CashandBankBalances
Cash and cash equivalents- which includes cash in hand,deposits at call with banks and other shortterm deposits which are readily convertible into cash and which are subject to an insignificant risk of changes in valueand have maturities ofless than one year from thedate ofsuch deposits.
Other Bank Balances - which includes balances and deposits with banks that are restricted for withdrawal and usage.
vii. TradeReceivablesandLoans
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business and reflects company's unconditional rightto consideration (that is,payment is due only on the passage of time). Trade receivables of the Company, are recognised initially at the transaction price as they do not contain significant financing components.The company holds the trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortised cost using the effectiveinterest method,less loss allowance.
viii. Debt Instruments
Debt instruments are initially measured at amortised cost, fair value through other comprehensive
income ('FVOCI') or fair value through profit or loss ('FVTPL') till derecognition on the basis of (i) the entity's business model for managing the financial assets and (ii) the contractual cash flow characteristics of the financial asset.
C. Impairment ofFinancialAsset
In accordance with Ind AS 109, the Company uses 'Expected Credit Loss' (ECL) model, for evaluating impairment of financial assets other than those measuredat fair value through profitand loss (FVTPL).
For financial assets other than trade receivables, as per Ind AS 109, the Company recognizes 12 month expected credit losses for all originated or acquired financial assets if at the reporting date the credit risk of the financial asset has not increased significantly since its initial recognition.The expected credit losses are measured as lifetime expected credit losses if the credit risk on financial asset increases significantly since its initial recognition.The Company's trade receivables do not contain significant financing component and loss allowance on trade receivables is measured at an amount equal to lifetime expected losses i.e.expected cash shortfall.
The impairment losses and reversals are recognised in Statement of Profit and Loss.
II. FinancialLiabilities
a. Initial Recognition and Measurement
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.Trade and other payable are initially recognized at the fair value of the consideration received less directlyattributable transaction cost.
Financial liabilities are initially measured at the amortised cost unless at initial recognition, they are classified as fair value through profit and loss. In case of trade payables, they are initially recognised at fair value and subsequently, these liabilities are held at amortised cost, using the effective interest method.
b. Classification and Subsequent Measurement
Financial liabilities are subsequently measured at amortised cost using the EIR method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the Statementof Profit and Loss.
III. Derecognitionof Financial Instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Company's BalanceSheet when the obligation specified in the contract is discharged or cancelled or expires.
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