1.2 Material accounting policies:
a. System of accounting
The financial statements of the Company are prepared in accordance with Indian Accounting Standards (Ind AS), under the historical cost
convention on the accrual basis as per the provisions of Companies Act, 2013 ("Act"), except in case of significant uncertainties.
b. Key accounting estimates
The preparation of the financial statements, in conformity with the recognition and measurement principles of Ind AS, requires the
management to make estimates and assumptions in the application of accounting policies that affect the reported amounts of assets,
liabilities, income, expenses and disclosure of contingent liabilities as at the date of financial statements and the results of operation during
the reported period. Although these estimates are based upon management's best knowledge of current events and actions, actual results
could differ from these estimates which are recognised in the period in which they are determined.
The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing
circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are
beyond the control of the Company. Such changes are reflected in the financial statements in the period in which changes are made and,
if material, their effects are disclosed in the notes to the financial statements.
Estimates and judgements are regularly revisited. Estimates are based on historical experience and other factors, including futuristic
reasonable information that may have a financial impact on the Company.
c. Property, plant and equipment, capital work in progress and intangible assets
(i) Property, plant and equipment are stated at historical cost of acquisition including attributable interest and finance costs, if any, till
the date of acquisition/installation of the assets less accumulated depreciation and accumulated impairment losses, if any.
(ii) Subsequent expenditure relating to property, plant and equipment is capitalised 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 costs are charged to the statement of profit and loss as incurred.
(iii) The cost and related accumulated depreciation are eliminated from the financial statements, either on disposal or when retired
from active use and the resultant gain or loss are recognised in the statement of profit and loss.
(iv) The Company depreciates property, plant and equipment on written down value method except for building, plant & machinery,
laboratory equipment and excavators where depreciation is provided on straight line method over the estimated useful life prescribed
in Schedule II of the Act from the date the assets are ready for intended use after considering the residual value.
(v) Capital work-in-progress, representing expenditure incurred in respect of assets under development and not ready for their intended
use, are carried at cost. Cost includes related acquisition expenses, construction cost, related borrowing cost and other direct
expenditure.
(vi) Intangible assets mainly represent implementation cost for software and other application software acquired/developed for in-house
use. These assets are stated at cost. Cost includes related acquisition expenses, related borrowing costs, if any, and other direct
expenditure. Intangible assets are amortized over the estimated useful life.
(vii) Items of stores and spares that meet the definition of property, plant and equipment are capitalized at cost and depreciated over their
useful life. Otherwise, such items are classified as inventories.
(viii) Losses arising from the retirement of and gains or losses arising from disposal of property, plant and equipment which are carried at
cost are recognised in the Statement of Profit and Loss.
(ix) Property, plant and equipment and intangible assets are tested for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value
in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable
cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units).
d. Investments properties
a) Property which is held for long-term rental or for capital appreciation or both is classified as investment property. Investment properties
are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost
less accumulated depreciation and accumulated impairment loss, if any.
b) Investment properties currently comprise of plots of land and buildings.
c) Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use
and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying
amount of the asset is recognised in statement of profit and loss in the period in which the property is derecognised.
e. Investments and financial assets
(i) Investments in subsidiary, joint venture and associate companies
Investments in subsidiary, joint venture and associate companies are recognised at cost and not adjusted to fair value at the end of
each reporting period. Cost represents amount paid for acquisition of the said investments.
The Company assesses at the end of each reporting period, if there is any indication that the said investments may be impaired. If so,
the Company estimates the recoverable value of the investments and provides for impairment, if any, i.e. the deficit in the recoverable
value over cost.
(ii) Other investments and financial assets
Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument.
On initial recognition, a financial asset is recognised at fair value, in case of financial assets which are recognised at fair value
through profit and loss (FVTPL), its transaction costs are recognised in the statement of profit or loss. In other cases, the transaction
costs are attributed to the acquisition value of financial asset. However, trade receivables that do not contain a significant financing
component are measured at transaction price.
Financial assets are subsequently classified measured at -
- amortised cost
- fair value through profit and loss (FVTPL)
- fair value through other comprehensive income (FVOCI).
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.
Financial asset is derecognised only when the Company has transferred the rights to receive cash flows from the financial asset.
Where the entity has transferred the asset, the Company evaluates whether it has transferred substantially all risks and rewards of
ownership of the financial asset. In such cases, financial asset is derecognised.
In accordance with Ind AS 109, the Company applies the expected credit loss ("ECL") model for measurement and recognition
of impairment loss on financial assets and credit risk exposures. The Company follows 'simplified approach' for recognition of
impairment loss allowance on trade receivables. Simplified approach does not require the Company to track changes in credit risk.
Rather, it recognises impairment loss allowance based on lifetime ECL at each reporting date, right from its initial recognition. 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.
f. Inventories
(i) Raw materials and stores and spares are valued at weighted average cost including all charges in bringing the materials to the
present location.
(ii) Finished and semi-finished goods are valued at the cost plus direct expenses and appropriate value of overheads or net realizable
value, whichever is lower.
(iii) Obsolete, slow moving and defective inventories are written off/valued at net realisable value during the year as per policy consistently
followed by the Company.
g. Cash and bank balances
Cash and equivalents:
Cash and cash equivalents in the balance sheet comprises of balance with banks and cash on hand and short term deposits with an original
maturity of three month or less, which are subject to insignificant risks of changes in value.
Other bank balances:
Other bank balances include deposits with maturity less than twelve months but greater than three months and balances and deposits with
banks that are restricted for withdrawal and usage.
h. Trade receivables
A receivable is classified as a trade receivable if it is in respect of the amount due on account of goods sold or services rendered in the
normal course of business. Trade receivables are recognised initially at their transaction price and subsequently measured net of any
expected credit losses.
i. Financial liabilities
(i) Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial
liabilities are initially measured at the amortised cost unless at initial recognition, they are classified as fair value through profit and
loss.
(ii) Financial liabilities are subsequently measured at amortised cost using the Effective Interest Rate (EIR) method. Financial liabilities
carried at fair value through profit and loss are measured at fair value with all changes in fair value recognised in the statement of
profit and loss.
(iii) Financial liabilities are derecognised when the obligation specified in the contract is discharged, cancelled or expires.
j. Trade payables
A payable is classified as a trade payable if it is in respect of the amount due on account of goods purchased in the normal course of
business. These amounts represent liabilities for goods provided to the Company prior to the end of the financial year which are unpaid.
These amounts are unsecured and are usually settled as per the payment terms. Trade and other payables are presented as current
liabilities unless payment is not due within 12 months after the reporting period.
k. Revenue recognition
(i) Revenue shall be recognised to depict the transfer of promised goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those goods and services.
(ii) Revenue is measured based on transaction price, which is the fair value of the consideration received or receivable, stated net of
discounts, return and goods & service tax. Transaction price is recognised based on the price specified in the contract, net of the
estimated sales incentives/discounts.
(iii) Accumulated experience is used to estimate and provide for the discounts/rights of return, using the expected value method.
(iv) The Company recognises as an asset, the incremental costs of obtaining a contract with a customer, if the Company expects to recover
those costs. The said asset is amortised on a systematic basis consistent with the transfer of goods or services to the customers.
(v) Export incentives are accounted for on export of goods if the entitlements can be estimated with reasonable accuracy and conditions
precedent to claim are reasonably expected to be fulfilled.
(vi) Revenue in respect of other income is recognised on accrual basis. However, where the ultimate collection of the same lacks
reasonable certainty, revenue recognition is postponed to the extent of uncertainty.
l. Mining expenses
Expenses incurred on mining including removal of overburden of mines are charged to the statement of profit & loss as mining cost on the
basis of quantity of minerals mined during the year, overburden of removal and mining being carried out concurrently and relatively within
a short period of time. Mining restoration expenses are annually reviewed and provided for.
m. Research and development expenses and receipts
Revenue expenditure on research and development is charged against the profit for the year in which it is incurred. Capital expenditure on
research and development is shown as an addition to the fixed assets and is depreciated on the same basis as other fixed assets. Receipts
of research & development centre of the Company are accounted for as revenue receipts.
n. Foreign currency transactions
(i) Items included in the financial statements are measured using the currency of primary economic environment in which the company
operates ("the functional currency"). The financial statements are presented in Indian Rupee (INR), which is the company's functional
and presentation currency.
(ii) Foreign currency transactions are initially recorded in the reporting currency at foreign exchange rate on the date of the transaction.
(iii) Monetary items of current assets and current liabilities denominated in foreign currencies are reported using the closing rate at the
reporting date. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported
using the exchange rate at the date of the transaction.
(iv) The gain or loss on decrease/increase in reporting currency due to fluctuations in foreign exchange rates are recognised in the
statement of profit or loss.
o. Employee benefit expenses
(i) Contributions to defined contribution schemes such as provident fund, employees' state insurance, labour welfare fund etc. are
charged as an expense based on the amount of contribution required to be made as and when services are rendered by the
employees. These benefits are classified as defined contribution schemes as the Company has no further obligations beyond the
monthly contributions.
(ii) The Company provides for gratuity which is a defined benefit plan, the liabilities of which are determined based on valuations, as at
the reporting date, made by an independent actuary using the projected unit credit method. Re-measurement comprising of actuarial
gains and losses, in respect of gratuity are recognised in the other comprehensive income in the period in which they occur. The
classification of the Company's obligation into current and non-current is as per the actuarial valuation report.
(iii) The employees are entitled to accumulate leave subject to certain limits, for future encashment and availment, as per the policy of the
Company. The liability towards such unutilised leave as at the end of each balance sheet date is determined based on independent
actuarial valuation and recognised in the statement of profit and loss.
p. Leases
Company as lessee
The Company applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases
that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease
of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term
leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
Company as lessor
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified
as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms. Initial direct costs incurred in
negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on
the same basis as rental income.
q. Borrowing costs
Borrowing costs consist of interest and other costs that the Company incurs in connection with the borrowing of funds. Also, the effective
interest rate amortisation is included in finance costs. Borrowing costs relating to acquisition, construction or production of a qualifying
asset which takes substantial period of time to get ready for its intended use are added to the cost of such asset to the extent they relate
to the period till such assets are ready to be put to use. All other borrowing costs are expensed in the statement of profit and loss in the
period in which they occur.
r. Impairment of non financial assets
As at each reporting date, the Company assesses whether there is an indication that a non-financial asset may be impaired and also
whether there is an indication of reversal of impairment loss recognised in the previous periods. If any indication exists, or when annual
impairment testing for an asset is required, the Company determines the recoverable amount and impairment loss is recognised when the
carrying amount of an asset exceeds its recoverable amount. If the amount of impairment loss subsequently decreases and the decrease
can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is
reversed through the statement of profit and loss.
s. Taxes on income
Income tax expense comprises current tax expense and the deferred tax during the year. Current and deferred taxes are recognised in the
statement of profit and loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in
which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity, respectively.
Current income tax is recognised based on the estimated tax liability computed after taking credit for allowances and exemptions in
accordance with the Income Tax Act, 1961. Current income 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.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and
the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are recognized for unused tax
losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available
against which they can be used. In case of uncertainty of reversal of the deferred tax assets or when it is no longer probable that sufficient
taxable profits will be available in the foreseeable future, deferred tax assets, as a matter of prudence, are not recognised.
The carrying amount of deferred tax is reviewed at each reporting date and measured at the tax rates that are expected to be applied
to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date. The measurement of
deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to
recover or settle the carrying amount of its assets and liabilities.
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