SIGNIFICANT ACCOUNTING POLICIES:
1. Basis of Preparation of Financial Statements:
These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as
the ’Ind AS’) as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 (‘the Act’) read
with Rule 4 of the Companies (Indian Accounting Standards) Rules, 2015 and other related provisions of the Act.
The financial statements of the Company are prepared on the accrual basis of accounting and Historical cost convention except
for the following material items that have been measured at fair value as required by the relevant Ind AS:
(i) Certain financial assets and liabilities are measured at Fair value (Refer note no. 31.6)
(ii) Defined benefit employee plan (Refer note no. 31.12)
All assets and liabilities have been classified as current or non current as per the Company’s normal operating cycle and other
criteria set out in the Schedule III to the Companies Act, 2013.
2. Use of Estimates and judgments:
The preparation of the financial statements requires the Management to make, judgments, estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statements
and the reported amounts of revenue and expenses during the reporting period. The recognition, measurement, classification or
disclosure of an item or information in the financial statements is made relying on these estimates. The estimates and
judgements used in the preparation of the financial statements are continuously evaluated by the management and are based on
historical experience and various other assumptions and factors (including expectations of future events) that the management
believes to be reasonable under the existing circumstances. Actual results may differ from those estimates. Any revision to
accounting estimates is recognised prospectively in current and future periods.
Critical accounting judgements and key source of estimation uncertainty
The Company is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that
are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and
other factors that are considered to be relevant. The estimates and underlying assumptions are reviewed on an on-going basis.
(a) Recognition and measurement of defined benefit obligations, key actuarial assumptions - Note no 33.
(b) Estimation of current tax expenses and payable - Refer note no 34.
3. Property, plant and equipment (PPE):
Property, plant and equipment (PPE) are capitalized on the day they are ready for use and are stated at cost less accumalated
depreciation. The Company had applied for the one time transition exemption of considering the carrying cost on the transition
date i.e. April 1, 2016 as the deemed cost under IND AS. Hence, regarded thereafter as historical cost.
Freehold land is carried at cost and is not depreciated. The cost of an item of property, plant and equipment comprises its
purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any
directly attributable costs of bringing the asset to its working condition for its ready intended use and estimated costs of
dismantling and removing the item and restoring the item and restoring the site on which it is located.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate
items (major components) of property, plant and equipment. Subsequent costs are included in the assets carrying amount or
recognized as a separate asset, as appropriate only if it is probable that the future economic benefits associated with the item will
flow to the Company and that the cost of the item can be reliably measured.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Statement
of Profit and Loss.
Assets which are not ready for their intended use are disclosed under Capital Work-in-Progress.
4. Intangible assets:
Intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if any.
5. Depreciation and Amortization:
(a) Property plant and equipment (PPE):
Depreciation is provided on a pro-rata basis on the straight line method based on estimated useful life prescribed under Schedule
II of the Act.
The residual values, useful lives and method of depreciation of property, plant and equipment is reviewed at each financial year
end and adjusted prospectively, if appropriate.
(b) Intangible assets
- Software is amortized over a period of 3 years
6. Financial Instruments:
Financial assets - Initial recognition:
Financial assets are recognised when the Company becomes a party to the contractual provisions of the instruments. 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 cost are recognised in the statement of profit and loss. In other cases, the transaction cost
are attributed to the acquisition value of the financial asset.
Subsequent measurement:
Financial assets are subsequently classified as measured at:
- amortised cost
- fair value through profit & loss (FVTPL)
- fair value through other comprehensive income (FVTOCI)
The above classification is being determined considering the:
(a) the entity’s business model for managing the financial assets and
(b) the contractual cash flow characteristics of the financial assets.
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.
(i) Measured at amortised cost:
Financial assets are subsequently measured at amortised cost, if these financial assets are held within a business model whose
objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise
on specified date to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(ii) Measured at fair value through other comprehensive income (FVTOCI):
Financial assets are measured at FVTOCI, if these financial assets are held within a business model whose objective is achieved
by both collecting contractual cash flows that give rise on specified dates to solely payments of principal and interest on the
principal amount outstanding and by selling financial assets. Fair value movements are recognized in the other comprehensive
income (OCI). Interest income measured using the EIR method and impairment losses, if any are recognised in the Statement of
Profit and Loss. On derecognition, cumulative gain or loss previously recognised in OCI is reclassified from the equity to ‘other
income’ in the Statement of Profit and Loss.
(iii) Measured at fair value through profit or loss (FVTPL):
Financial assets other than equity instrument are measured at FVTPL unless it is measured at amortised cost or at FVTOCI on
initial recognition. Such financial assets are measured at fair value with all changes in fair value, including interest income and
dividend income if any, recognised in the Statement of Profit and Loss.
Impairment:
The Company recognises a loss allowance for Expected Credit Losses (ECL) on financial assets that are measured at amortised
cost and at FVOCI. The credit loss is difference between all contractual cash flows that are due to an entity in accordance with the
contract and all the cash flows that the entity expects to receive (i.e. all cash shortfalls), discounted at the original effective interest
rate. This is assessed on an individual or collective basis after considering all reasonable and supportable including that which is
forward looking.
The Company’s trade receivables or contract revenue receivables do not contain significant financing component and loss
allowance on trade receivables is measured at an amount equal to life time expected losses i.e. expected cash shortfall, being
simplified approach for recognition of impairment loss allowance.
Under simplified approach, the Company does not track changes in credit risk, rather it recognizes impairment loss allowance
based on the lifetime ECL at each reporting date right from its initial recognition. The Company uses a provision matrix to
determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically
observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. At every
reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
For financial assets other than trade receivables, the Company recognises 12-months expected credit losses for all originated or
acquired financial assets if at the reporting date the credit risk of the financial asset has not increased significantly since its initial
recognition. The expected credit losses are measured as lifetime expected credit losses if the credit risk on financial asset
increases significantly since its initial recognition. If, in a subsequent period, credit quality of the instrument improves such that
there is no longer significant increase in credit risks since initial recognition, then the Company reverts to recognizing
impairment loss allowance based on 12 months ECL. The impairment losses and reversals are recognised in Statement of Profit
and Loss. For financial assets measured at FVTPL, there is no requirement of impairment testing.
Derecognition:
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expires, or it
transfers rights to receive cash flows from an asset, it evaluates if and to what extent it has retained the risks and rewards of
ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred
control of the asset, the Company continues to recognise the transferred asset to the extent of the Company’s continuing
involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability
are measured on a basis that reflects the rights and obligations that the Company has retained.
Financial Liabilities:
Initial Recognition and measurement
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial liabilities are initially recognised at fair value net of transaction costs for all financial liabilities not carried at fair value
through profit or loss.
The Company’s financial liabilities includes trade and other payables, loans and borrowings including bank overdrafts.
Subsequent measurement:
Financial liabilities measured at amortised cost are subsequently measured at using EIR method. Financial liabilities carried at fair
value through profit or loss are measured at fair value with all changes in fair value recognised in the Statement of Profit and
Loss.
Loans & Borrowings:
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using EIR method.
Gains and losses are recognized in profit & loss when the liabilities are derecognized as well as through EIR amortization process.
Financial Guarantee Contracts:
Financial guarantee contracts issued by the Company are those contracts that requires a payment to be made or to reimburse the
holder for a loss it incurs because the specified debtors fails to make payment when due in accordance with the term of a debt
instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are
directly attributable to the issuance of the guarantee.
De-recognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. 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 the derecognition of the original liability and the
recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.
Derivative financial instruments:
The Company uses derivative financial instruments, such as forward foreign exchange contracts, to hedge its foreign currency
risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is
entered into and are subsequently remeasured at fair value, with changes in fair value recognised in Statement of Profit and Loss.
Offsetting of financial instruments:
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet if there is a currently
enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and
settle the liabilities simultaneously.
7. Fair Value Measurement:
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, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised 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 recognised in the financial statements on a recurring basis, the Company determines whether
transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is
significant to the fair value measurement as a whole) at the end of each reporting period.
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
8. Inventory:
Inventories includes Raw Material, Work-in-Progress, Finished goods, Traded goods, Stores & Spares, Packing Materials, Real
Estate Development (Stock in Trade) and are valued at the lower of the cost and net realisable value.
Raw Materials and Packing Materials:
Raw Materials - Cost include cost of purchases and other costs incurred in bringing the inventories to their present location and
condition. Cost of raw materials is determined on specific identification basis. Cost of stores, spares, packing materials and fuel is
determined on weighted average basis.
Work-in-Progress and Finished Goods:
Cost includes cost of direct material, labour, other direct cost and a proportion of fixed manufacturing overheads allocated based
on the normal operating capacity but excluding borrowing costs.
9. Cash and Cash Equivalents:
Cash and Cash equivalents include cash and cheque in hand, bank balances, demand deposits with banks and other short-term
highly liquid investments that are readily convertible to known amounts of cash & which are subject to an insignificant risk of
changes in value where original maturity is three months or less.
10. Foreign Currency Transactions:
a) Initial Recognition
Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the transaction. Exchange
differences arising on foreign exchange transactions settled during the year are recognized in the Statement of Profit and Loss of
the year.
b) Measurement of Foreign Currency Items at the Balance Sheet Date
Foreign currency monetary items of the Company are restated at the closing exchange rates. Non monetary items are recorded
at the exchange rate prevailing on the date of the transaction. Exchange differences arising out of these transactions are
charged to the Statement of Profit and Loss.
11. Sale of Goods:
Revenue is recognized on satisfaction of performance obligation upon transfer of control of promised products or services to
customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or
services.
Interest
Revenue is recognised on a time proportion basis taking into account the amount outstanding and the interest rate applicable
and based on Effective interest rate method.
Dividend
Dividend Income is recognized when right to receive the same is established.
12. Employee Benefits:
The Company has provided following post-employment plans:
(a) Defined benefit plans such a gratuity and
(b) Defined contribution plans such as Provident fund and Superannuation fund
a) Defined-benefit plan:
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plan is the present value of defined
benefit obligations at the end of the reporting period less fair value of plan assets. The defined benefit obligations is calculated
annually by actuaries through actuarial valuation using the projected unit credit method.
The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and
loss:
(a) Service costs comprising current service costs, past-service costs, gains and losses on curtailment and non-routine
settlements; and
(b) Net interest expense or income
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and fair value
of plan assets. This cost is included in employee benefit expenses in the statement of the profit & loss.
Re-measurement comprising of actuarial gains and losses arising from
(a) Re-measurement of Actuarial(gains)/losses
(b) Return on plan assets, excluding amount recognized in effect of asset ceiling
(c) Re-measurement arising because of change in effect of asset ceiling
are recognised in the period in which they occur directly in Other comprehensive income. Re-measurement are not reclassified
to profit or loss in subsequent periods.
Ind AS 19 requires the exercise of judgment in relation to various assumptions including future pay rises, inflation and discount
rates and employee and pensioner demographics. The Company determines the assumptions in conjunction with its actuaries,
and belives these assumptions to be line with best practice, but the application of different assumptions could have a significant
effect on the amounts reflected in the income statement, other comprehensive income and balance sheet. There may be also
interdependency between some of the assumptions.
b) Defined-contribution plan:
Under defined contribution plans, provident fund, the Company pays pre-defined amounts to separate funds and does not have
any legal or informal obligation to pay additional sums. Defined Contribution plan comprise of contributions to the employees’
provident fund with the government, superannuation fund and certain state plans. The Company’s payments to the defined
contribution plans are recognised as expenses during the period in which the employees perform the services that the payment
covers.
c) Other employee benefits:
(a) Compensated absences which are not expected to occur within twelve months after the end of the period in which
the employee renders the related services are recognised as a liability at the present value of the obligation as at the Balance
sheet date determined based on an actuarial valuation.
(b) Undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by
employees are recognised during the period when the employee renders the related services.
13. Taxes on Income:
Income tax comprises current and deferred tax. Income tax expense is recognized in the statement of profit and loss except to
the extent it relates to items directly recognized in equity or in other comprehensive income.
Current tax is based on taxable profit for the year. Taxable profit is different from accounting profit due to temporary differences
between accounting and tax treatments, and due to items that are never taxable or tax deductible. Tax provisions are included in
current liabilities. Interest and penalties on tax liabilities are provided for in the tax charge. The Company offsets, the current tax
assets and liabilities (on a year on year basis) where it has a legally enforceable right and where it intends to settle such assets and
liabilities on a net basis or to realise the assets and liabilities on net basis.
Deferred income tax is recognized using the balance sheet approach. Deferred income tax assets and liabilities are recognized
for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount in
financial statements. Deferred income tax asset are recognized 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
utilized. Deferred tax assets are not recognised where it is more likely than not that the assets will not be realised in the future.
The carrying amount of deferred income 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 income tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period 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 items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Minimum Alternative Tax (‘MAT’) credit is recognised as an asset only when and to the extent there is convincing evidence that
the Company will pay normal income-tax during the specified period. The Company reviews the same at each balance sheet
date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal income-tax during the specified period.
14. Segment Reporting:
The Company has identified its Managing Director as the Chief Operating Decision Maker. Operating segments are reported in
a manner consistent with the internal reporting provided to managing director of the Company. The Managing Director
evaluates the Company’s performance and allocates resources as a whole.
15. Borrowing Cost:
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of qualifying
assets are capitalized as a part of Cost of that assets, during the period till all the activities necessary to prepare the Qualifying
assets for its intended use or sale are complete during the period of time that is required to complete and prepare the assets for its
intended use or sale. 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 recognized as an expense in the period in which they are incurred.
16. Earnings Per Share:
Basic earnings per shares are calculated by dividing the net profit or loss after tax for the period attributable to equity
shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating
a
diluted earnings per share, the net profit or loss for the period attributable to the equity shareholders and the weighted average
number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
17. Leases:
As a Lessee :
The Company’s lease asset classes primarily consist of leases for land, buildings and vehicles. 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.
The right-of-use assets 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.
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.
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.
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.
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