A. MATERIAL ACCOUNTING POLICIES.
29.2 Basis for preparation of Accounts
The Financial Statements have been prepared in accordance with IND AS and Disclosures thereon comply
with requirements of IND AS, stipulations contained in Schedule- III (revised) as applicable under Section
133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules 2014, Companies
(Indian Accounting Standards) Rules 2015 as amended form time to time, other pronouncement of ICAI,
provisions of the Companies Act and Rules and guidelines issued by SEBI as applicable.
29.3 Use of Estimates
Ind AS enjoins management to make estimates and assumptions related to financial statements that affect
reported amount of assets, liabilities, revenue, expenses and contingent liabilities pertaining to the year.
Actual result may differ from such estimates. Any revision in accounting estimates is recognized prospectively
in the period of change and material revision, including its impact on financial statements, is reported in the
notes to accounts in the year of incorporation of revision.
29.4 Recognition of Income and Expenses
a) The Company derives revenues primarily from sale of traded goods and related services.
Under Ind AS 115, the Company recognized revenue when (or as) a performance obligation was satisfied, i.e.
when 'control' of the goods underlying the particular performance obligation were transferred to the customer.
Further, revenue from sale of goods is recognized based on a 5-Step Methodology which is as follows:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligation in contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
Revenue is measured based on transaction price, which is the value of the consideration received or
receivable, stated net of discounts, returns and Goods & Service Taxes. Transaction price is recognised based
on the price specified in the contact, net of the estimated sales incentives/ discounts. Accumulated
experience is used to estimate, and provide for the discounts/right of return, using the expected value
method.
b) Revenue from services are recognized in proportion to the stage of completion of transaction at the end
of reporting period, and cost incurred in the transaction including same to complete the transaction and
revenue (representing economic benefit associated with the transaction) can be measured reliably.
c) Interest income from a financial asset has been recognised using effective interest rate method.
d) Other incomes have been recognized on accrual basis in financial statements except for cash flow
information.
29.5 Financial instruments
(i) Financial Assets
Initial Recognition and Measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded
at fair value through Statement of profit or loss, transaction costs that are attributable to the acquisition
of the financial asset. Financial assets are classified, at initial recognition, as financial assets measured
at fair value or as financial assets measured at amortized cost.
Subsequent Measurement
For purpose of subsequent measurement financial assets are classified in two broad categories: -
• Financial Assets at fair value
• Financial assets at amortized cost
Where assets are measured at fair value, gains and losses are either recognized entirely in the statement
of Profit and loss, or recognized in other comprehensive income.
A financial asset that meets the following two conditions is measured at amortized cost.
• Business Model Test: The objective of the company's business model is to hold the financial Asset
to collect the contractual cash flows.
• Cash flow characteristics test: The contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payment of principal and interest on the principal amount outstanding.
A financial asset that meets the following two conditions is measured at fair value through
OCI:-
• Business Model Test: The financial asset is held within a business model whose objective is
achieved by both collecting contractual cash flows and selling financial assets.
• Cash flow characteristics test: The contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payment of principal and interest on the principal amount
outstanding.
All other financial assets are measured at fair value through Statement of profit and loss.
All equity investments are measured at fair value in the balance sheet, with value changes recognized in the
statement of profit and loss, except for those equity investments for which the entity has elected irrevocable
option to present value changes in OCI.
Investment in associates, joint venture and subsidiaries
The company has accounted for its investment in subsidiaries, associates and joint venture at cost.
Impairment of financial assets
The company assesses impairment based on expected credit losses (ECL) model at an amount equal to:-
• 12 months expected credit losses, or
• Lifetime expected credit losses
Depending upon whether there has been a significant increase in credit risk since initial recognition.
However, for trade receivables, the company does not track the changes in credit risk. Rather, it recognizes
impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
(ii) Financial Liabilities
All financial liabilities are initially recognized at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs.
Financial liabilities are classified as measured at amortized cost or fair value through Statement of profit and
loss (FVTPL). A financial liability is classified as FVTPL if it is classified as held for trading, or it is a derivative
or is designated as such on initial recognition. Financial Liabilities at FVTPL are measured at fair value and
net gain or losses, including any interest expense, are recognized in statement of profit and loss. Other
financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest
expense and foreign exchange gains and losses are recognized in statement of profit and loss. Any gain or
loss on de-recognition is also recognized in statement of profit and loss.
29.6 Fair Value Measurement
The Company measures financial instruments, such as, derivatives 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 Group 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 unobservable 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 assets and liabilities that are recognized in the financial statements on a recurring basis, the Group
determines Whether transfers have occurred between levels in the hierarchy by re-assessing categorization
(based on the lowest level input that is significant to the fair value measurement as a whole) at the end of
each reporting period.
The Group's Valuation Committee determines the policies and procedures for both recurring fair value
measurement, such as derivative instruments and unquoted financial assets measured at fair value, and for
non-recurring measurement, such as assets held for distribution in discontinued operations.
29.7 Employee Benefits
Liabilities in respect of employee benefits to employees are provided for as follows:
Post Separation Employee Benefit Plan
i) Defined Benefit Plan
• Gratuity Liability on the basis of actuarial valuation as per IND AS-19. Liability recognised in the
balance sheet in respect of gratuity is the present value of the defined benefit obligation at the end of each
reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by
actuaries using the projected unit credit method. The present value of defined benefit is determined by
discounting the estimated future cash outflows by reference to market yield at the end of each reporting
period on government bonds
that have terms approximate to the terms of the related obligation. The net interest cost is
Calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair
value of plan assets. This cost is included in employee benefits expense in the statement of profit and loss.
• Actuarial gain / loss and other components of re-measurement of net defined benefit liability (asset)
are accounted for as OCI. All remaining components of costs are accounted for in statement of profit & loss.
29.8 Income Tax and Deferred Tax
The liability of company on account of Income Tax is computed considering the provisions of the Income Tax
Act, 1961.
Deferred tax is provided using balance sheet approach on temporary differences at the reporting date as
difference between the tax base and the carrying amount of assets and liabilities. Deferred tax is recognized
subject to the probability that taxable profit will be available against which the temporary differences can be
reversed.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when
the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in
other Comprehensive income or in equity).
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the
same taxation authority.
Deferred tax liabilities are not recognised for temporary differences between the carrying amount and tax
bases of Investments in subsidiaries and interest in joint arrangements where the Company is able to control
the timing of the reversal of the temporary differences and it is probable that the differences will not reverse
in the foreseeable future.
Deferred tax assets are not recognised for temporary differences between the carrying amount and tax bases
of investments in subsidiaries, and interest in joint arrangements where it is not probable that the differences
will reverse in the foreseeable future and taxable profit will not be available against which the temporary
difference can be utilized.
|