i Property, plant and equipment
Property, Plant and Equipment is carried at cost less accumulated depreciation and accumulated impairment
losses, if any. The cost comprises its purchase price, directly attributable cost of bringing the asset to its working
condition for its intended use and borrowing Costs attributable to construction of qualifying asset, upto the date
assset is ready for its intended use; any trade discounts and rebates are deducted in arriving at the purchase
price.
Transition to Ind AS:
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant
and equipment recognised as at April 1, 2016 measured as per the previous GAAP and use that carrying value as
the deemed cost of the property, plant and equipment.
Subsequent costs
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 company and the
cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during
the reporting period in which they are incurred.
Derecoginition
An item of Property, Plant & Equipment is derecognised upon disposal or when no future economic benefits are
expected from the use. Any gains and losses on disposal of an item of Property, Plant and Equipment are
determined by comparing the proceeds from disposal with the carrying amount of Property, Plant and Equipment
and are recognised net within “Other income/ Other expenses” in the Statement of Profit and Loss.
Depreciation
Depreciation is charged on the assets as per Written Down Value method at rates worked out based on the
useful lives and in the manner prescribed in the Schedule II to the Companies Act, 2013.The depreciation
method, useful lives and residual value are reviewed at each of the reporting date.Depreciation on additions
(disposals) is provided on a pro-rata basis i.e. from (upto) the date on which the asset is ready for use (disposed
off). The residual values and useful life are reviewed, and adjusted if appropriate, at the end of each reporting
period.An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying
amount is greater than its estimated recoverable amount.
ii) Intangible assets
Computer software
Intangible assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment
losses, if any.
Amortisation methods and periods:
The intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis,
commencing from the date the asset is available to the Company for its use. The amortisation period are
reviewed at the end of each financial year and the amortisation method is revised to reflect the changed pattern.
iii) Financial Instruments
a Financial Assets
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Financial assets comprise investments in equity instruments, loans and advances , trade receivables, Cash and
cash equivalents and other eligible assets.
Initial recognition and measurement:
All financial assets are recognised initially at fair value except trade recievables which are initially measured at
transaction price. Transaction costs that are attributable to the acquisition of the financial asset (other than
financial assets recorded at fair value through profit or loss) are included in the fair value of the financial assets.
Purchase or sale of financial assets that require delivery of assets within a time frame established by regulation or
convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the
Company commits to purchase or sell the asset.
Subsequent Measurement:
-Financial Assets measured at amortised cost: Financial assets held within a business model whose objective is
to hold financial assets 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 payment of principal and interest (SPPI) on principal
amount outstanding are measured at amortised cost using effective interest rate (EIR) method.
They are presented as current assets, except for those maturing later than 12 months after the reporting date
which are presented as non-current assets. These financial assets are subsequently carried at amortized cost
using the effective interest method, less any impairment loss. The EIR amortisation is recognised as finance
income in the Statement of Profit and Loss.
- Financial assets at fair value through other comprehensive income (FVTOCI): Financial assets held within
a business model whose objective is achieved by both collecting the contractual cash flows and selling the
financial assets and the contractual terms of the financial assets give rise on specified dates to cash flows that
are solely payment towards principal and interest (SPPI) on principal outstanding are subsequently measured at
FVTOCI. Fair value movements in financial assets at FVTOCI are recognised in other comprehensive income.
However, the Company recognises interest income, impairment losses & reversals and foreign exchange gain
loss in statement of profit and loss. On derecognition of the asset, cumulative gain or loss previously recognised
in OCI is reclassified from equity to profit and loss. Interest earned is recognised under the expected interest rate
(EIR) model.
-Equity instruments other than investment in associates: Equity instruments held for trading are classified at
fair value through Profit or Loss (FVTPL). For other equity instruments the Company classifies the same as at
FVTOCI. The classification is made on initial recognition and is irrevocable. Fair value changes on equity
instruments at FVTOCI, excluding dividends, are recognised in other comprehensive income (OCI).
- Financial assets at fair value through fair value through Profit or Loss (FVTPL): Financial assets are
measured at FVTPL if is does not meet the criteria for classification as measured at amortised cost or at fair value
through other comprehensive income. Fair value changes are recognised in Statement of Profit and Loss.
Derecognition of financial assets:
Financial assets are derecognised when the contractual rights to the cash flows from the financial assets expire
or the financial asset is transferred and the transfer qualified for derecognition. On derecognition of financial asset
in its entirety the difference between the carrying amount (measured at the date of derecognition) and the
consideration received (including any new asset obtained less any new liability assumed) shall be recognised in
Statement of Profit and Loss.
Impairment of financial assets:
Trade receivables, contract assets, receivables under Ind AS 109 are tested for impairment based on the
expected credit losses (ECL) for the respective financial asset. ECL impairment loss allowance (or reversal)
recognised during the period is recognised as income/expense in the Statement of Profit and Loss. The approach
followed by the company for recognising the impairment loss is given below:
1) T rade receivables
An impairment analysis is performed at each reporting date. The expected credit losses over lifetime of the asset
are estimated by adopting the simplified approach using a provision matrix which is based on historical loss rates
reflecting current condition and forecasts of future economic conditions.
2) Other financial assets
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that
whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not
increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased
significantly, lifetime ECL issued. If in subsequent period, credit quality of the instrument improves such that there
is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising
impairment loss allowance based on 12 month ECL.
b Financial liabilities:
Financial liabilities comprise borrowings, trade payables and other eligible liabilities.
Initial recognition and measurement:
Financial liabilities are initially recognised at fair value. Any transaction costs that are attributable to the
acquisition of the financial liabilities (except financial liabilities at fair value through profit or loss) are deducted
from the fair value of financial liabilities.
Subsequent measurement
Financial liabilities at amortised cost: The Company has classified the following under amortised cost:
a) Trade payables
b) Other financial liabilities Amortised cost for financial liabilities represents amount at which financial liability is
measured at initial recognition minus the cumulative amortisation using the effective interest rate (EIR) method of
any difference between that initial amount and the maturity amount.
- 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.
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.
For trade and other payables maturing within one year from the Balance Sheet Date are carried at a value which
is approximately equal to fair value due to the short maturity of these instuments.
Derecognition of financial liabilities
A financial liability shall be derecognised when, and only when, it is extinguished i.e. when the obligation specified
in the contract is discharged or cancelled or expires.
c Offsetting financial instruments
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Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a
legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or
realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on
future events and must be enforceable in the normal course of business and in the event of default, insolvency or
bankruptcy of the Company or the counterparty.
d Reclassification of Financial Assets
The Company determines the classification of financial assets and liabilities on initial recognition. After initial
recognition, no reclassification is made for financial assets which are categorised as equity instruments at
FVTOCI and financial assets or financial liabilities that are specifically designated at FVTPL. For financial assets,
which are debt instruments, a reclassification is made only if there is a change in the business model for
managing those assets. Changes to the business model are expected to be infrequent. The management
determines change in the business model as a result of external or internal changes which are significant to the
Company's operations. A change in the business model occurs when the Company either begins or ceases to
perform an activity that is significant to its operations. If the company reclassifies financial assets, it applies the
reclassification prospectively from the reclassification date which is the first day of immediately next reporting
period following the change in business model. The Company does not restate any previously recognised gains,
losses (including impairment gains or losses) or interest.
iv) Borrowing Costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are
capitalised as part of the cost of that asset. Other borrowing costs are recognized as expenses in the period in
which they are incurred. To the extent the Company borrows funds generally and uses them for the purpose of
obtaining a qualifying asset, the Company determines the amount of borrowings costs eligible for capitalization by
applying a capitalization rate to the expenditure incurred on such asset. The capitalization rate is determined
based on the weighted average of borrowing costs applicable to the borrowings of the Company which are
outstanding during the period, other than borrowings made specifically towards purchase of the qualifying asset.
The amount of borrowing costs that the Company capitalizes during a period does not exceed the amount of
borrowing costs incurred during that period.
v) Impairment of non-financial assets
The carrying amount of the Company's non-financial assets, other than deferred tax assets are reviewed at each
reporting date to determine whether there is any indication of impairment. If any such indication exists, then the
asset's recoverable amount is estimated.
The recoverable amount of an asset or cash generating unit is the greater of its value in use and its fair value less
costs to sell. In assessing value in use, the estimated future cash flows are discounted to present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risk specific to
the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together
into the smallest group of assets that generates cash inflows from the continuing use that are largely independent
of cash inflows of other assets or group of assets (the cash generating unit).
An impairment loss is recognized if the carrying amount of an asset or its cash generating unit exceeds its
estimated recoverable amount. Impairment losses are recognised in the Statement of Profit and Loss. Impairment
losses are recognised in respect of cash generating units are allocated first to reduce the carrying amount of any
goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit or group of
units on a pro rata basis.
Reversal of impairment loss
Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the
loss has decreased or no longer exists.
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had
been recognized directly in other comprehensive income and presented within equity.
vi) Inventories
Inventories are valued at lower of cost and net realizable value. The costs comprise its purchase price and any
directly attributable cost of bringing to its present location and condition. Net realizable value is the estimated
selling price in the ordinary course of business, less the estimated costs of completion and the estimated variable
costs necessary to make the sale.
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