2.2 Summary of significant accounting policies
a) Current Vs 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:
? Expected to be settled in normal operating cycle
? Held primarily for the purpose of trading
? Due to be settled within twelve months after the reporting
period, or
? The re 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.
The operating cycle is the time between the acquisition of
assets for processing and their realisation in cash and cash
equivalent. The Company has identified twelve months as its
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:
* Expected to be settled in normal operating cycle
* Held primarily for the purpose of trading
* 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 classified all
other liabilities as non¬
current.
b) Fair Value
Measurements
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.
c) Property, plant &
equipment
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 such property, plant and equipment.
Property, plant & equipment and capital work in progress are stated at cost, net of accumulated
depreciation and accumulated impairment losses, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs
relating to acquisition of fixed assets which takes substantial period of time to get ready for its
intended use are also included to the extent they relate to the period till such assets are ready to be
put to use.
The Company identifies and determines cost of each component/ part of the asset separately, if the
component/ part has a cost which is significant to the total cost of the asset and has useful life that
is materially different from that of the remaining asset.
The residual values, useful lives and methods of depreciation of Property, plant and equipment are
reviewed at each financial year end and adjusted prospectively, if appropriate.
d) Depreciation on Property, plant & equipment
Depreciation on Property, plant & equipment is provided on
straight line method at the rates based on the estimated
useful life of the assets
e) Inventories
Inventories are valued at the lower of cost or net realisable
value. Net realizable value is the estimated selling price in the
ordinary course of business, less estimated costs of
completion and estimated costs necessary to make the sale.
f) Revenue Recognition
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.
g) Foreign Currency
Transactions
The Company's financial statements are presented in INR, as
Company do not have any foreign currency transaction.
h) Borrowing Cost
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily
takes a substantial period of time to get ready for its
intended use or sale are capitalised as part of the cost of
the asset. All other borrowing costs are expensed in the
period in which they occur. Borrowing costs consist of
interest and other costs that an entity incurs in
connection with the borrowing of funds.
I) Income
Taxes
Current Income Tax:
Current income tax is measured at the amount expected
to be paid to the tax authorities in accordance with the
Income Tax Act, 1961 enacted in India.
Current income tax relating to items recognised outside
profit or loss is recognised outside profit or loss (either
in other comprehensive income or in equity). Current
tax items are recognised in correlation to the underlying
transaction either in OCI or directly in equity.
Management periodically evaluates positions taken in
the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation
and establishes provisions where appropriate.
Current tax assets and liabilities are offset only if there is a legally enforceable right to set off the
recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or
simultaneously.
Deferred Tax:
Deferred tax is provided using the liability method on temporary differences between the tax
bases of assets and
liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences.
Deferred tax is provided using the liability method on temporary differences between the tax
bases of assets and liabilities and their carrying amounts for financial reporting purposes at the
reporting date. Deferred tax liabilities are recognised for all taxable temporary differences.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of
unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that
it is probable that taxable profit will be available against which the deductible temporary
differences, and the carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred tax asset to be utilised. Unrecognised 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 tax rates that are expected to apply in the year
when the asset is realised 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 assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realised 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 items are recognised in correlation to the
underlying transaction either in OCI or directly 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.
j) Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset
may be impaired. If any indication exists, or when annual impairment testing for an asset is
required, the Company estimates the asset's recoverable amount.
Impairment losses if any, are recognised in the statement of profit and loss.
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