2. Material Accounting Policy Information
All accounting policies followed by the company are in accordance with the Indian Accounting Standards
(Ind AS) notified u/s 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards)
Rules, 2015 and conform to Schedule III to the Companies Act, 2013 as applicable.
Specific disclosure of material accounting policy infomation where Ind AS permits options is made hereunder:
The company has assessed the materiality of the accounting policy information, which involves exercising
judgement and considering both quantitative and qualitative factors by taking into account not only the size
and nature of the item or condition but also the characteristics of the transactions, events or conditions that
could make the information more likely to impact the decisions of the users of the financial statements.
a) Basis of preparation
(i) Compliance with Ind AS
These Financial Statement have been prepared in accordance with the Companies (Indian Accounting
Standards)Rules, 2015 as a going concern on an accrual basis.
(ii) Historical cost convention
The Financial Statements have been prepared on a historical cost basis, except for the following:
• Equity Investments in entities are measured at fair value;
•Certain financial assets & liabilities are measured at fair value;
•Defined Benefit Plans - plan assets are measured at fair value.
(iii) Use of estimates
In preparing the Financial Statements in conformity with accounting principles generally accepted in India,
management is required to make estimates and assumptions that affect reported amounts of assets and
liabilities and the disclosure of contingent liabilities as at the date of Financial Statements and the amounts of
revenue and expenses during the reported period. Actual results could differ from those estimates. Any
revision to such estimates is recognized in the period the same is determined.
b) 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 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 normal operating cycle
• It is held primarily for the purpose of trading
• It is 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 realization in cash
and cash equivalents.
c) Fair value measurement
The Company measures financial instruments, at fair value at each balance sheet date. 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 fair value measurement is based on the presumption that the
transaction to sell the asset or transfer the liability takes place either:
• In the principal market for the asset or liability, or
• 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. The fair value of an asset
or a liability is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant
that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the
use of un-observable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorized within the fair value hierarchy, described as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:
• Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
• Level 2 —Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable
• Level 3 —Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as
explained above. This note summarizes accounting policy for a fair value. Other fair value related disclosures
are given in the relevant notes.
d) Revenue recognition
The Company earns revenue primarily from sale of products and sale of services.
Sale of Products and Services
Revenues are recognized when the Company satisfies the performance obligation by transferring a promised
product or service to a customer. A product is transferred when the customer obtains control of that product.
To recognize revenues, company applies the following five step approach: (1) identify the contract with a
customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4)
allocate the transaction price to the performance obligations in the contract, and (5) recognize revenues when
a performance obligation is satisfied. Revenues from the sale of goods is measured at the fair value of the
consideration received ore receivable, net of returns and allowances, trade discounts and volume rebates.
Job work Charges
When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue
associated with the transaction shall be recognized by reference to the stage of completion of the transaction
at the end of reporting period.
Engineering Services
When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue
associated with the transaction shall be recognized by reference to the stage of completion of the transaction
at the end of reporting period
Commission Income
Commission Income is recognized as revenue when the Company fulfills its specific performance obligation
under contract and the right to receive commission is ascertained and established.
Government Grants:
Government grants in the form of subsidy from the Maharashtra State Government are recognized in the
financial statements when they are admitted as due by the appropriate authority concerned and there is
reasonable assurance that the entity will comply with the conditions attached to the grant and the grant will
be received.
Consutancy Service
Income from consultancy service is recognized upon the completion of specific milestones or deliverables
Rental Income
Rental income from the property leased under the leave and license agreement is recognized as income on a
straight-line basis over the period of contractual lease terms. The respective leased assets are included in the
balance sheet based on their nature.
Interest Income
Revenue from interest is recognized on accrual basis and determined by contractual rate of interest.
Dividend Income
Dividend income is stated at gross and is recognized when right to receive payment is established.
Revenue is recognized 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. Revenue is
measured net of indirect taxes, returns and discounts.
e) Transactions in Foreign Currency
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency
amount the exchange rate between the reporting currency and the foreign currency at the date of the
transaction. Premium on forward cover contracts, if any, in respect of imports is charged to profit & loss
account over the period of contract. All monetary assets and liabilities as at the Balance sheet date, not covered
by forward contracts are restated at the applicable exchange rates prevailing on that date. All exchange
differences arising on transactions, not covered by forward contracts, are charged to Profit & Loss Account.
f) Lease
As a Lessee
The Company’s lease asset classes primarily consist of leases for buildings. The Company assesses whether
a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in exchange for consideration. To assess
whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
(i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic
benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the
use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use asset (“ROU”) and a
corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term
of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases,
the Company recognizes the lease payments as an operating expense on a straight-line basis over the term
of the lease.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease
term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be
exercised.
The right-of-use assets (“ROU”) are initially recognized at cost, which comprises the initial amount of the
lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus
any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated
depreciation and impairment losses.
Modification of the lease terms relating to period of lease and lease payments are recognized in accordance
with Paragraphs 42 to 46B of Indian AS 116 and appropriate adjustments are made to ROU and Lease
liability during the year of modification of lease.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of
the lease term and useful life of the underlying asset. Right of use assets are evaluated for recoverability
whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.
For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to
sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash
flows that are largely independent of those from other assets. In such cases, the recoverable amount is
determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments.
The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable,
using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are
remeasured with a corresponding adjustment to the related right of use asset if the Company changes its
assessment if whether it will exercise an extension or a termination option.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have
been classified as financing cash flows.
Land under non-perpetual lease is treated as operating lease. Operating lease payments for land are
recognised as prepayments and amortised on a straight-line basis over the term of the lease.
As a lessor
Lease income from operating leases where the Company is a lessor is recognised in income on a straight¬
line basis over the lease term unless the receipts are structured to increase in line with expected general
inflation to compensate for the expected inflationary cost increases. The respective leased assets are included
in the balance sheet based on their nature.
The weighted average incremental borrowing rate applied to lease liabilities is 6.75%.
g) Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash in
hand, cash at bank and other short-term, highly liquid investments with original maturities of three months or
less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value.
h) Trade receivables
Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the
effective interest method, less provision for impairment.
i) Inventories
Inventories are valued at the lower of cost and net realizable value. Costs incurred in bringing each product
to its present location and condition are accounted for as follows:
• Raw materials: cost includes cost of purchase and other costs incurred in bringing the inventories to their
present location and condition.
• Finished goods: cost includes cost of direct materials and labour and a proportion of manufacturing
overheads based on the normal operating capacity.
• Traded goods: cost includes cost of purchase and other costs incurred in bringing the inventories to their
present location and condition.
• Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs
of completion and the estimated costs necessary to make the sale.
j) Property, Plant and Equipment
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at
historical cost less depreciation. Historical Cost represents direct expenses incurred on acquisition or
construction of the assets and the share of indirect expenses relating to construction allocated in proportion to
the direct cost involved.
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. The carrying amount of any component accounted for as a
separate asset is derecognized when replaced. All other repairs and maintenance are charged to profit or loss
during the reporting period in which they are incurred.
Capital work-in-progress comprises the cost of plant and equipment that are not yet ready for their intended
use on the reporting date.
Assets in the course of construction are capitalized in the assets under Capital work in progress. At the time
point when an asset is operating at managements intended use, the cost of construction is transferred to the
appropriate category of property, plant and equipment and depreciation commences. Costs associated with
the commissioning of an asset and any obligatory decommissioning costs are capitalized where the assets is
available for use but incapable of operating at normal levels until a year of commissioning has been
completed.
Depreciation methods, estimated useful lives and residual value
Depreciation on property, plant and equipment other than freehold, is provided on ‘Straight Line Method’
based on useful life as prescribed under Schedule II of the Companies Act 2013.
An item of property, plant and equipment is derecognized 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 the sales proceeds and
the carrying amount of the asset and is recognized in the Statement of Profit and Loss
k) Intangible Assets
Intangible Assets are stated at cost less accumulated amortization and net of impairments, if any. An intangible
asset is recognised if it is probable that the expected future economic benefits that are attributable to the asset
will flow to the Company and its cost can be measured reliably.
Intangible assets are amortized on straight line basis over their estimated useful lives.An intangible asset is
derecognized on disposal, or when no future economic benefits are expected to arise from continued use of
the asset. Gains or losses arising from derecognition of an intangible asset, measured as the difference between
the net disposal proceeds and the carrying amount of the asset, and are recognized in the Statement of Profit
and Loss when the asset is derecognized.
l) Investment Properties
Investment properties consist of commercial offices not required presently for own use or administrative
purposes and which are leased to others to earn rentals and/or for capital appreciation. Investment properties
are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment
properties are stated at cost less accumulated depreciation and impairment losses, if any.
The Company, based on technical assessment made by management, depreciates the building over estimated
useful lives of 60 years. 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.
Though the Company measures investment property using cost-based measurement, the fair value of
investment property is disclosed in notes. Fair value is determined based on ready reckoner rate prescribed by
the Government of Maharashtra for the purpose of levy of stamp duty.
m) Financial instruments
Financial assets
Initial recognition and measurement
Financial assets are recognised when, and only when, the Company becomes a party to the contractual
provisions of the financial instrument. The Company determines the classification of its financial assets at
initial recognition.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial
assets not at fair value through profit or loss directly attributable transaction costs. Transaction costs of
financial assets carried at fair value through profit or loss are expensed in the Statement of Profit and Loss.
Classification
• Cash and Cash equivalents
Cash and cash equivalents comprises cash on hand, demand deposits with banks and are short-term balances
(with an original maturity of three months or less from the date of acquisition).
• Debt Instruments
The Company classifies its debt instruments as subsequently measured at amortised cost, fair value through
Other Comprehensive Income or fair value through profit or loss based on its business model for managing
the financial assets and the contractual cash flow characteristics of the financial asset.
(i) Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held for collection
of contractual cash flows where those cash flows represent solely payments of principal and interest. Interest
income from these financial assets is included as a part of the Company’s income in the Statement of Profit
and Loss using the effective interest rate method.
(ii) Financial assets at fair value through Other Comprehensive Income (FVOCI)
Financial assets are subsequently measured at fair value through Other Comprehensive Income if these
financial assets are held for collection of contractual cash flows and for selling the financial assets, where the
assets’ cash flows represent solely payments of principal and interest. Movements in the carrying value are
taken through Other Comprehensive Income, except for the recognition of impairment gains or losses, interest
revenue and foreign exchange gains or losses which are recognised in the Statement of Profit and Loss. When
the financial asset is derecognised, the cumulative gain or loss previously recognised in Other Comprehensive
Income is reclassified from Other Comprehensive Income to the Statement of Profit and Loss. Interest income
on such financial assets is included as a part of the Company’s income in the Statement of Profit and Loss
using the effective interest rate method.
(iii) Financial assets at fair value through profit or loss (FVTPL)
Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or
loss. A gain or loss on such debt instrument that is subsequently measured at FVTPL as well as interest income
is recognised in the Statement of Profit and Loss.
Equity Instruments
The Company subsequently measures all equity investments (other than the investment in subsidiaries which
are measured at cost) at fair value. Dividends from such investments are recognised in the Statement of Profit
and Loss as other income when the Company’s right to receive payment is established.
Derecognition
A financial asset is derecognised only when the Company has transferred the rights to receive cash flows from
the financial asset. Where the Company has transferred an asset, the Company evaluates whether it has
transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial
asset is derecognised. Where the Company has not transferred substantially all risks and rewards of ownership
of the financial asset, the financial asset is not derecognised. Where the Company retains control of the
financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial
asset.
Financial Liabilities
Initial recognition and measurement
Financial liabilities are recognised when, and only when, the Company becomes a party to the contractual
provisions of the financial instrument. The Company determines the classification of its financial liabilities at
initial recognition.
All financial liabilities are recognised initially at fair value, plus, in the case of financial liabilities not at fair
value through profit or loss directly attributable transaction costs.
Subsequent measurement
After initial recognition, financial liabilities that are not carried at fair value through profit or loss are
subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised
in the Statement of Profit and Loss when the liabilities are derecognised, and through the amortisation process.
Derecognition
A financial liability is de-recognised 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 a de-recognition of the original liability and the recognition of a new liability, and
the difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
Impairment of financial assets
The Company assesses, at each reporting date, whether a financial asset or a group of financial assets is
impaired. Ind AS-109 on Financial Instruments, requires expected credit losses to be measured through a loss
allowance. For trade receivables only, the Company recognises expected lifetime losses using the simplified
approach permitted by Ind AS-109, from initial recognition of the receivables. For other financial assets (not
being equity instruments or debt instruments measured subsequently at FVTPL) the expected credit losses are
measured at the 12 month expected credit losses or an amount equal to the lifetime expected credit losses if
there has been a significant increase in credit risk since initial recognition.
n) Trade and Other Payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of
financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of
recognition. 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 amortized cost using the effective interest method.
o) Borrowing costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset are capitalized as part of the cost of respective assets during the period of
time that is required to complete and prepare the asset for its intended use. Qualifying assets are assets that
necessarily take a substantial period of time to get ready for their intended use or sale. Other borrowing costs
are expensed in the period in which they are incurred.
p) Employee Benefits
(i) Short-term obligations
The costs of all short-term employee benefits (that are expected to be settled wholly within 12 months after
the end of the period in which the employees render the related service) are recognised during the period in
which the employee renders the related services. The accruals for employee entitlements of benefits such as
salaries, bonuses and annual leave represent the amount which the Company has a present obligation to pay
as a result of the employees' services and the obligation can be measured reliably. The accruals have been
calculated at undiscounted amounts based on current salary levels at the Balance Sheet date.
(ii) Post-employment obligations
The Company operates the following post-employment schemes:
Gratuity Fund -
The Company makes annual contributions to gratuity funds administered by the Life Insurance Corporation
of India. The gratuity plan provides for lump sum payment to vested employees on retirement, death or
termination of employment of an amount based on the respective employee’s last drawn salary and tenure of
employment. The Company accounts for the net present value of its obligations for gratuity benefits, based
on an independent actuarial valuation, determined on the basis of the projected unit credit method, carried out
as at the Balance Sheet date. The obligation determined as aforesaid less the fair value of the plan assets is
reported as a liability or assets as of the reporting date. Actuarial gains and losses are recognised immediately
in the Other Comprehensive Income and reflected in retained earnings and will not be reclassified to the
Statement of Profit and Loss.
Provident Fund -
The Company pays provident fund contributions to a fund administered by Government Provident Fund
Authority. The Company has no further payment obligations once the contributions have been paid. The
contributions are accounted for as defined contribution plans and the contributions are recognised as employee
benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash
refund or a reduction in the future payments is available.
q) Tax expenses
(i) Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from ‘profit before tax’
as reported in the statement of profit and loss because of items of income or expense that are taxable or
deductible in other years and items that are never taxable or deductible. The Company’s current tax is
calculated using tax rates that have been enacted or substantively enacted, by the end of the reporting period.
(ii) Deferred Tax
Deferred Income tax is provided in full, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the separate Financial Statements.
Deferred tax assets are recognized for all deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilize those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and
tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on
a net basis, or to realize the asset and settle the liability simultaneously.
Current and Deferred tax is recognized in profit or loss, except to the extent that it relates to items recognized
in other Comprehensive Income or directly in equity. In this case, the tax is also recognized in other
comprehensive income or directly in equity, respectively.
Minimum Alternate Tax is accounted for in accordance with tax laws which give rise to future economic
benefits in the form of tax credit against which future income tax liability is adjusted and is recognized as
deferred tax asset in the balance sheet.
r) Earnings per share
Basic earnings per share is computed by dividing the profit or loss after tax by the weighted average number
of equity shares outstanding during the year including potential equity shares on compulsory convertible
debentures. Diluted earnings per share is computed by dividing the profit / (loss) after tax as adjusted for
dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive
potential equity shares, by the weighted average number of equity shares considered for deriving basic
earnings per share.
s) Impairment of assets
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s
carrying amount exceeds its recoverable amount. Assets that suffered impairment are reviewed for possible
reversal of the impairment at the end of each reporting period. In case of such reversal, the carrying amount
of the asset is increased so as not to exceed the carrying amount that would have been determined had there
been no impairment loss.
i) Segment Reporting
Segments are identified based on the manner in which the Chief Operating Decision Maker (‘CODM’)
decides about resource allocation and reviews performance.
Segment results that are reported to the CODM include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis. Segment capital expenditure is the total cost incurred during
the period to acquire property and equipment and intangible assets including goodwill.
j) Events after the reporting period
Adjusting events are events that provide further evidence of conditions that existed at the end of the reporting
period. The financial statements are adjusted for such events before authorisation for issue.
Non-adjusting events are events that are indicative of conditions that arose after the end of the reporting
period. Non-adjusting events after the reporting date are not accounted, but disclosed if material.
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