C SIGNIFICANT ACCOUNTING POLICIES
(a) Property, Plant and Equipment:
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at their cost of acquisition. The cost
comprises purchase price, borrowing cost if capitalisation criteria are met and directly attributable cost of bringing the asset to its working
condition forthe intended use. Capital expenditure incurred on rented properties is classified as ‘Leasehold improvements ’ under property, plant
and equipment.
Subsequent costs are included in the asset’s carrying amount orrecognised as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the Company. All other repair and maintenance costs are recognised in statement of
profit and loss as incurred.
Subsequent measurement (depreciation and useful lives)
Depreciation on property, plant and equipment is provided on written-down value, computed on the basis of useful lives (as set out below)
prescribed in Schedule II the Act:
The amortisation period and the amortisation method for finite-life intangible assets is reviewed at each financial year end and adjusted
prospectively, if appropriate.
An itemofproperty, plant and equipment and any significant part initially recognised is derecognized upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain orloss arising on de-recognition of the asset (calculated as the difference between the
net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognized.
(b) Impairment of non-financial assets
At each reporting date, the Company assesses whether there is any indication based on internal/external factors, that an asset may be impaired. If
any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the
recoverable amount ofthe cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its
recoverable amount and the reduction is treated as an impairment loss and is recognised in the statement of profit and loss. All assets are
subsequently reassessed forindications that an impairment loss previously recognised may no longerexist. An impairment loss is reversed if the
asset’s or cash-generating unit’s recoverable amount exceeds its carrying amount.
(c) Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the financial
instrument and are measured initially at fair value adjusted for transaction costs.
Subsequent measurement
i. Financial instruments at amortized cost - the financial instrument is measured at the amortized cost if both the following conditions are met:
• The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows
• 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.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. All
the debt instruments of the Company are measured at amortized cost.
ii. Mutual funds - All mutual funds in scope of Ind AS 109 are measured at fair value through profit and loss (FVTPL).
De-recognition of financial assets
A financial asset is primarily de-recognised when the rights to receive cash flows from the asset have expired orthe Company has transferred its
rights to receive cash flows from the asset.
Financial liabilities
Initial recognition and measurement
All financial liabilities are recognised initially at fair value and transaction cost that is attributable to the acquisition of the financial liabilities is
also adjusted. These liabilities are classified as amortized cost.
Subsequent measurement
Subsequent to initial recognition, these liabilities are measured at amortized cost using the effective interest method. These liabilities include
borrowings.
De-recognition of financial liabilities
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled orexpires. When an existing financial
liability is replaced by another fromthe same lender on substantially different terms, or the terms of an existing liability are substantially modified,
such an exchange ormodification is treated as the de- recognition ofthe originalliability and the recognition of a new liability. The difference in
the respective carrying amounts is recognised in the statement of profit and loss.
(d) Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition ofimpairment loss for
financial assets.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that
the Company expects to receive. When estimating the cash flows, the Company is required to consider -
• All contractual terms of the financial assets (including prepayment and extension) over the expected life of the assets.
• Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms
Trade receivables
The Company applies approach permitted by Ind AS 109, financial instruments, which requires expected lifetime losses to be recognised from
initial recognition of receivables.
Other financial as s ets
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant
increase in the credit risk since initial recognition and if credit risk has increased significantly, impairment loss is provided.
(e) Inventories
Raw Material: Lower of cost or net realisable value. Cost is determined on first in first out (‘FIFO’) basis.
Work in progress: At cost determined on FIFO basis upto estimated stage of completion
Finished goods: Lower of cost or net realisable value. Cost is determined on FIFO basis, includes direct material and labour expenses and
appropriate proportion of manufacturing overheads based on the normal capacity for manufactured goods.
Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs of
necessary to make the sale.
(f) Income taxes
Taxexpense recognised in statement ofprofit and loss comprises the sumof deferred tax and current taxnot recognised in Other Comprehensive
Income (‘OCT) or directly in equity.
Current income-taxis measured at the amount expected to be paid to the taxauthorities in accordance with the Indian Income-taxAct. Current
income-taxrelating to items recognised outside statement ofprofit and loss is recognised outside statement of profit and loss (either in OCI orin
equity).
Deferred income-taxis calculated using the liability method. Deferred tax liabilities are generally recognised in full for all taxable temporary
differences. Deferred tax assets are recognised to the extent that it is probable that the underlying tax loss, unused taxcredits or deductible
temporary difference willbe utilized against future taxable income. This is assessed based on the Company’s forecast offuture operating results,
adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit. Deferred tax assets or
liability arising during taxholiday period is not recognised to the extent it reverses out within the taxholiday period. Unrecognized deferred tax
assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the
deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the taxrates that are ejected to apply in the yearwhen the asset is realised orthe liability is
settled, based on taxrates (and taxlaws) that have been enacted or substantively enacted at the reporting date. Deferred taxrelating to items
recognised outside statement of profit and loss is recognised outside statement of profit and loss (either in OCI or in equity).
(g) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, demand deposits with banks/corporations and short-termhighly liquid investments (original
maturity less than 3 months) that are readily convertible into known amount of cash and are subject to an insignificant risk of change in value.
(h) Post-employment, long term and short term employee benefits
Defined contribution plans
Provident fund benefit is a defined contribution plan under which the Company pays fixed contributions into funds established under the
Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. The Company has no legal or constructive obligations to pay further
contributions after payment of the fixed contribution.
Defined benefit plans
Gratuity is a post-employment benefit defined under The Payment of Gratuity Act, 1972 and is in the nature of a defined benefit plan. The liability
recognised in the financial statements in respect of gratuity is the present value ofthe defined benefit obligation at the reporting date, together
with adjustments for unrecognized actuarial gains or losses and past service costs. The defined benefit/obligation is calculated at or near the
reporting date by an independent actuary using the projected unit credit method
Actuarial gains and losses arising frompast experience and changes in actuarial assumptions are credited or charged to the statement of OCI in
the year in which s uch gains or los s es are determined.
Other long-term employee benefits
Liability in respect of compensated absences is estimated on the basis of an actuarial valuation performed by an independent actuary using the
projected unit credit method.
Actuarial gains and losses arising frompast experience and changes in actuarialassumptions are charged tostatement ofprofit and loss in the
year in which such gains or losses are determined
Short-term employee benefits
Expense in respect ofother short termbenefits is recognised on the basis of the amount paid or payable for the period during which services are
rendered by the employee.
(i) Operating expenses
Operating expenses are recognised in profit or loss upon utilization of the service or as incurred.
(j) Borrowing costs
Borrowing costs directly attributable to the acquisitions, construction orproduction ofa qualifying asset are capitalized during the period oftime
that is necessary to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed in the period in which they
are incurred and reported in finance costs.
(k) Fair value measurement
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date.
Fairvalue 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 fairvalue measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes
place either:
• ln the principal market for the asset or liability, or
• ln 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.
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