Significant Accounting policies
2.1 Basis of preparation
The financial statements of the Company have been prepared in
accordance with Indian Accounting Standards (Ind AS) notified
pursuant to section 133 of the Companies Act 2013 read with
Rule 3 of the Companies (Indian Accounting Standards) Rules,
2015 and Companies (Indian Accounting Standards) Amendment
Rules, 2016(as amended from time to time) and presentation
requirements of Division II of Schedule III to the Companies Act,
2013, (Ind AS compliant Schedule III), as applicable to the Financial
statements ('Standalone INDAS Financial Statements').
The financial statements have been prepared on the historical cost
basis except for certain financial instruments that are measured at
fair values at the end of each reporting period, as explained in the
accounting policies below.
• Derivative financial instruments
• Certain financial assets and liabilities measured at fair value
(refer accounting policy regarding financial instruments)
• Defined benefit planned - plan assets measured at fair value
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, regardless of whether that
price is directly observable or estimated using another valuation
technique. In estimating the fair value of an asset or a liability,
the Company takes into account the characteristics of the asset
or liability if market participants would take those characteristics
into account when pricing the asset or liability at the measurement
date.
The fair value measurement is based on the presumption that the
trsansaction 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 Group.
Fair value for measurement and/or disclosure purposes in these
financial statements is determined on such a basis, except for
share-based payment transactions that are within the scope of Ind
AS 102, leasing transactions that are within the scope of Ind AS 17
'Leases' ("Ind AS 17") and in the scope of Ind AS 116 'Leases' ("Ind
AS 116") from 01 April, 2019, and that have some similarities to fair
value but are not fair value, such as net realisable value in Ind AS 2
'Inventories' ("Ind AS 2") or value in use in Ind AS 36 'Impairment of
Assets' ("Ind AS 36").
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
The principal accounting policies are set out below.
The financial statements are presented in RS., which is the
functional currency and all values are rounded up to two decimal
points to the nearest lakh (Rs. 00,000), except when otherwise
indicated.
2.2 Basis of measurement
The standalone Ind AS Financial Statements have been prepared
on a going concern basis using historical cost convention and on an
accrual method of accounting, except for certain financial assets
and liabilities which are measured at fair value as explained in the
accounting policies below.
2.3 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 realisation in cash and cash equivalents.
The Company has identified twelve months as its operating cycle.
2.4 Business combinations
Business combinations are accounted for using the acquisition
method. The consideration transferred in a business combination
is measured at fair value, which is calculated as the sum of the
acquisition-date fair values of the assets transferred by the
Company, liabilities incurred by the Company to the former owners
of the acquiree and the equity interests issued by the Company in
exchange for control of the acquiree. Acquisition-related costs are
generally recognised in statement of profit and loss as incurred.
The Company determines that it has acquired a business when
the acquired set of activities and assets include an input and a
substantive process that together significantly contribute to
the ability to create outputs. The acquired process is considered
substantive if it is critical to the ability to continue producing
outputs, and the inputs acquired include an organised workforce
with the necessary skills, knowledge, or experience to perform
that process or it significantly contributes to the ability to continue
producing outputs and is considered unique or scarce or cannot be
replaced without significant cost, effort, or delay in the ability to
continue producing outputs.
At the acquisition date, the identifiable assets acquired, and the
liabilities assumed are recognised at their acquisition date fair
values. For this purpose, the liabilities assumed include contingent
liabilities representing present obligation and they are measured
at their acquisition fair values irrespective of the fact that outflow
of resources embodying economic benefits is not probable.
However, the following assets and liabilities acquired in a business
combination are measured at the basis indicated below:
• Deferred tax assets or liabilities, and the liabilities or assets
related to employee benefit arrangements are recognised
and measured in accordance with Ind AS 12 Income Tax and
Ind AS 19 Employee Benefits respectively.
• Potential tax effects of temporary differences and carry
forwards of an acquiree that exist at the acquisition date or
arise as a result of the acquisition are accounted in accordance
with Ind AS 12.
• Liabilities or equity instruments related to share based
payment arrangements of the acquiree or share-based
payments arrangements of the Group entered into to
replace share-based payment arrangements of the acquiree
are measured in accordance with Ind AS 102 Share-based
Payments at the acquisition date.
• Assets (or disposal groups) that are classified as held for
sale in accordance with Ind AS 105 Non-current Assets
Held for Sale and Discontinued Operations are measured in
accordance with that Standard.
• Reacquired rights are measured at a value determined on
the basis of the remaining contractual term of the related
contract. Such valuation does not consider potential renewal
of the reacquired right.
Goodwill is measured as the excess of the sum of the consideration
transferred, the amount of any non-controlling interests in the
acquiree, and the fair value of the acquirer's previously held equity
interest in the acquiree (if any) over the net of the acquisition-
date amounts of the identifiable assets acquired and the liabilities
assumed.
In case of a bargain purchase, before recognizing a gain in respect
thereof, the Company determines where there exists clear evidence
of the underlying reasons for classifying the business combination
as a bargain purchase. Thereafter, the Company reassesses
whether it has correctly identified all of the assets acquired and all
of the liabilities assumed and recognises any additional assets or
liabilities that are identified in that reassessment. The Company
then reviews the procedures used to measure the amounts
that Ind AS requires for the purposes of calculating the bargain
purchase. If the gain remains after this reassessment and review,
the Company recognizes it in other comprehensive income ("OCI")
and accumulates the same in equity as capital reserve. If there does
not exist clear evidence of the underlying reasons for classifying
the business combination as a bargain purchase, the Company
recognizes the gain, after reassessing and reviewing (as described
above), directly in equity as capital reserve.
When a business combination is achieved in stages, the Company's
previously held equity interest in the acquiree is remeasured to its
acquisition-date fair value and the resulting gain or loss, if any, is
recognised in statement of profit or loss or OCI, as appropriate
. Amounts arising from interests in the acquiree prior to the
acquisition date that have previously been recognised in other
comprehensive income are reclassified to statement of profit and
loss where such treatment would be appropriate if that interest
were disposed off.
Contingent liabilities acquired in a business combination are
initially measured at fair value at the acquisition date. At the end
of subsequent reporting periods, such contingent liabilities are
measured at the higher of the amount that would be recognised
in accordance with Ind AS 37 'Provisions, Contingent Liabilities
and Contingent Assets' ("Ind AS 37") and the amount initially
recognised less cumulative amortisation recognised in accordance
with Ind AS 115 'Revenue from contract with customers' ("Ind AS
115").
2.5 Goodwill and impairment of goodwill
Goodwill arising on acquisition of a business is carried at cost as
established at date of acquisition of the business less accumulated
impairment losses, if any.
For the purpose of impairment testing, goodwill is allocated to
each of the Company's cash generating units (or groups of cash¬
generating units, "CGU") that are expected to benefit from the
combination, irrespective of whether other assets or liabilities of
the acquiree are assigned to those units.
A CGU to which goodwill has been allocated is tested for
impairment annually, or more frequently when there is an indication
that the unit may be impaired. The date of annual impairment
assessment of goodwill considered by the Company is March 31,
2023. If the recoverable amount of the cash generating unit is
less than its carrying amount, the impairment loss is allocated
first to reduce the carrying amount of any goodwill allocated to
the unit and then to the other assets of the unit pro rata based
on the carrying amount of each asset in the unit. Any impairment
loss for goodwill is recognised directly in statement of profit and
loss. An impairment loss recognised for goodwill is not reversed in
subsequent periods.
On disposal of the relevant CGU, the attributable amount of
goodwill is included in the determination of the profit or loss on
disposal.
2.6 Revenue from contract with customers
Revenues from contracts with customers are recognised when
control has been transferred at an amount that reflects the
consideration to which the Company expects to be entitled in
exchange for those goods. The Company acts as the principal in all
of its revenue arrangements since it is the primary obligor in all the
revenue arrangements as it has pricing latitude and is also exposed
to inventory and credit risks.
An entity collects Goods and Services Tax ("GST") on behalf of the
government and not on its own account. Hence, it is excluded from
revenue i.e. revenue is net of GST
Following are major sources of revenue:
• Sale of consumer product
• Other operating revenue
Sale of consumer product
The Company sells fast moving consumer goods ("FMCG"), Food
and Processed Food Products.
The Company recognizes revenue on the sale of goods, net of
discounts, sales incentives, estimated customer returns and
rebates granted, if any, when control of the goods is transferred to
the customer.
Nature, timing of satisfaction of performance obligation and
transaction price (Fixed and variable)
The Company recognises revenue when it transfers control of a
product or service to a customer.
The control of goods is transferred to the customer depending
upon the terms or as agreed with customer or delivery basis (i.e. at
the point in time when goods are delivered to the customer or when
the customer purchases the goods from the Company warehouse).
Control is considered to be transferred to customer when customer
has ability to direct the use of such goods and obtain substantially
all the benefits from it such as following delivery, the customer has
full discretion over the manner of distribution and price to sell the
goods, has the primary responsibility when onselling the goods and
bears the risks of obsolescence and loss in relation to the goods.
At inception of the contract, Company assesses the goods or
services promised in a contract with a customer and identifies each
promise to transfer to the customer as a performance obligation
which is either:
(a) a good or service that is distinct; or
(b) a series of distinct goods or services that are substantially
the same and that have the same pattern of transfer to the
customer.
Based on the terms of the contract and as per business practice,
the Company determines the transaction price considering the
amount it expects to be entitled in exchange of transferring
promised goods or services to the customer. It excluded amount
collected on behalf of third parties such as taxes.
The Company provides volume discount and rebate schemes, to its
customers on certain goods purchased by the customer once the
quantity of goods purchased during the period exceeds a threshold
specified in the contract. Volume discount and rebate schemes
give rise to variable consideration. To estimate the variable
consideration to which it will be entitled, the Company considers
that either the expected value method or the most likely amount
method, depending on which of them better predicts the amount
of variable consideration for the particular type of contract.
In case where the customer gives non-cash consideration for
the goods and services transferred or where customer provides
the Company certain materials, equipment, etc. for carrying out
the scope of work and the Company obtains control of those
contributed goods or service, the fair value of such non-cash
consideration given /materials supplied by customer is considered
as part of the transaction price.
For allocating the transaction price, the Company has measured
the revenue in respect of each performance obligation of a contract
at its relative standalone selling price. The price that is regularly
charged for an item when sold separately is the best evidence of its
standalone selling price.
Rendering of services
Revenue from rendering of services is recognised over time
considering the time elapsed. The transaction price of these
services is recognised as a contract liability upon receipt of advance
from the customer, if any, and is released on a straight line basis
over the period of service (monthly basis)
Contract assets, contract liabilities and trade receivables
Revenues in excess of invoicing are classified as contract assets
(which we refer as unbilled revenue) while invoicing in excess of
revenues (which we refer to as unearned revenues) and advance
from customers are classified as contract liabilities. A receivable
is recognised by the Company when the control over the goods is
transferred to the customer such as when goods are delivered as
this represents the point in time at which the right to consideration
becomes unconditional, as only the passage of time is required
before payment is due. The average credit period on sale of goods
is 7 to 90 days.
Dividend and Interest income
Dividend income from investments is recognised when the
Company's right to receive payment has been established
(provided that it is probable that the economic benefits will flow to
the Company and the amount of income can be measured reliably).
Interest income from a financial asset is recognised when it is
probable that the economic benefits will flow to the Company and
the amount of income can be measured reliably. Interest income is
accrued on a time basis, by reference to the principal outstanding
and at the effective interest rate applicable, which is the rate that
exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset's net carrying
amount on initial recognition.
2.7 Leasing
The Company assesses at contract inception whether a contract
is, or contains, a lease. That is, if the contract conveys the right
to control the use of an identified asset for a period of time in
exchange for consideration.
a) Leases
Company as a lessee
The Company applies a single recognition and measurement
approach for all leases, except for short-term leases and leases of
low-value assets. The Group recognises lease liabilities to make
lease payments and right-of-use assets representing the right to
use the underlying assets.
i) Right-of-use assets
The Company recognises right-of-use assets at the
commencement date of the lease (i.e., the date the underlying
asset is available for use). Right-of-use assets are measured at
cost, less any accumulated depreciation and impairment losses,
and adjusted for any remeasurement of lease liabilities. The cost
of right-of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease payments made
at or before the commencement date less any lease incentives
received. Right-of-use assets are depreciated on a straight-line
basis over the shorter of the lease term and the estimated useful
lives of the assets, as follows:
• Building 3 to 30 years
• Plant and machinery 3 to 15 years
• Vehicles 3 to 5 years
If ownership of the leased asset transfers to the Company at the
end of the lease term or the cost reflects the exercise of a purchase
option, depreciation is calculated using the estimated useful life of
the asset.
The right-of-use assets are also subject to impairment. Refer to
the accounting policies in section 2.15 Impairment of non-financial
assets.
ii) Lease liabilities
At the commencement date of the lease, the Company recognises
lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed
payments (including in-substance fixed payments) less any lease
incentives receivable, variable lease payments that depend on an
index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise
price of a purchase option reasonably certain to be exercised by
the Company and payments of penalties for terminating the lease,
if the lease term reflects the Company exercising the option to
terminate. Variable lease payments that do not depend on an index
or a rate are recognised as expenses (unless they are incurred to
produce inventories) in the period in which the event or condition
that triggers the payment occurs.
In calculating the present value of lease payments, the Company
uses its incremental borrowing rate at the lease commencement
date because the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of
lease liabilities is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there is a modification,
a change in the lease term, a change in the lease payments (e.g.,
changes to future payments resulting from a change in an index
or rate used to determine such lease payments) or a change in the
assessment of an option to purchase the underlying asset.
The Company lease liabilities are disclosed on the face of Balance
sheet under Financial Liabilities.
iii) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption
to its short-term leases of machinery and equipment (i.e., those
leases that have a lease term of 12 months or less from the
commencement date and do not contain a purchase option). It
also applies the lease of low-value assets recognition exemption
to leases of office equipment that are considered to be low value.
Lease payments on short-term leases and leases of low-value
assets are recognised as expense on a straight-line basis over the
lease term.
Company as a lessor
Leases in which the Company does not transfer substantially all the
risks and rewards incidental to ownership of an asset are classified
as operating leases. Rental income arising is accounted for on a
straight-line basis over the lease terms. Initial direct costs incurred
in negotiating and arranging an operating lease are added to the
carrying amount of the leased asset and recognised over the lease
term on the same basis as rental income. Contingent rents are
recognised as revenue in the period in which they are earned.
2.8 Foreign Currency Transactions and Translation
The management of the Company has determined Indian rupee
("RS.") as the functional currency of the Company. In preparing the
financial statements of the Company, transactions in currencies
other than the Company's functional currency ("foreign currencies")
are recognised at the rates of exchange prevailing at the dates of
the transactions. At the end of each reporting period, monetary
items denominated in foreign currencies are retranslated at the
rates prevailing at that date. Non-monetary items carried at fair
value that are denominated in foreign currencies are retranslated at
the rates prevailing at the date when the fair value was determined.
Non-monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rates at the
dates of the initial transactions.
Exchange differences on monetary items are recognised in
statement of profit and loss in the period in which they arise except
for:
• exchange differences on foreign currency borrowings relating
to assets under construction for future productive use,
which are included in the cost of those assets when they are
regarded as an adjustment to interest costs on those foreign
currency borrowings; and
• exchange differences for long term foreign currency
monetary items recognized in the financial statements for the
year ended 31 March, 2016 prepared under previous GAAP,
the exchange difference arising on settlement / restatement
of long term foreign currency monetary items are capitalised
as part of depreciable property, plant and equipment to
which the monetary items relates and depreciated over the
remaining useful life of such assets.
2.9 Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready for
their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their
intended use or sale. Interest income earned on the temporary
investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for
capitalisation.
All other borrowing costs are recognised in the statement of profit
and loss in the period in which they are incurred.
The Company may incur borrowing costs during an extended
period in which it suspends the activities necessary to prepare an
asset for its intended use or sale. Such costs are costs of holding
partially completed assets and do not qualify for capitalisation.
However, an entity does not normally suspend capitalising
borrowing costs during a period when it carries out substantial
technical and administrative work. The Company also does not
suspend capitalising borrowing costs when a temporary delay is
a necessary part of the process of getting an asset ready for its
intended use or sale.
The Company shall cease capitalising borrowing costs when
substantially all the activities necessary to prepare the qualifying
asset for its intended use or sale are complete.
2.10 Employee benefits
Post-employment benefits
• Payments to defined contribution benefit plans are recognised
as an expense when employees have rendered service
entitling them to the contributions. If the contribution payable
to the scheme for service received before the balance sheet
date exceeds the contribution already paid, the deficit payable
to the scheme is recognized as a liability after deducting the
contribution already paid. If the contribution already paid
exceeds the contribution due for services received before the
balance sheet date, then excess is recognized as an asset to
the extent that the pre-payment will lead to, for example, a
reduction in future payment or a cash refund.
• For defined benefit retirement plans, the cost of providing
benefits is determined using the projected unit credit
method, with actuarial valuations being carried out at the end
of each annual reporting period. Remeasurement, comprising
actuarial gains and losses, the effect ofthe changes to the asset
ceiling (if applicable) and the return on plan assets (excluding
net interest), is reflected immediately in the balance sheet
with a charge or credit recognised in other comprehensive
income in the period in which they occur. Remeasurement
is immediately recognised in other comprehensive income
in Other Equity and is not reclassified to statement of profit
and loss. Past service cost is recognised in statement of profit
and loss in the period of a plan amendment. Net interest
is calculated by applying the discount rate at the end of the
period to the net defined benefit liability or asset. Defined
benefit costs are categorised as follows:
> Service cost (including current service cost, past service cost,
as well as gains and losses on curtailments and settlements);
> Net interest expense or income; and
> Re-measurement.
The Company presents the first two components of defined
benefit costs in statement of profit and loss in the line item
"Employee benefits expense", and the last component in Other
Comprehensive Income which is immediately reflected in Other
Equity and is not reflected in statement of profit and loss account.
Curtailment gains and losses are accounted for as past service
costs.
The retirement benefit obligation recognised in the balance sheet
represents the actual deficit or surplus in the Company's defined
benefit plans. Any surplus resulting from this calculation is limited
to the present value of any economic benefits available in the form
of refunds from the plans or reductions in future contributions to
the plans.
Terminal benefits
A liability for a termination benefit is recognised at the earlier of
when the entity can no longer withdraw the offer of the termination
benefit and when the entity recognises any related restructuring
costs.
Short-term and other long-term employee benefits
A liability is recognised for benefits accruing to employees in
respect of wages and salaries, performance incentives and similar
benefits other than compensated absences in the period the
related service is rendered at the undiscounted amount of the
benefits expected to be paid in exchange for that service.
The obligations are presented as current liabilities in the balance
sheet if the entity does not have an unconditional right to defer
settlement for at least twelve months after the reporting period,
regardless of when the actual settlement is expected to occur.
Accumulated leaves, which are expected to be utilised within the
next 12 months, are treated as current employee benefit. The
Company treats the entire leave as current liability in the balance
sheet, since it does not have an unconditional right to defer its
settlement for 12 months after the reporting date. It is measured
based on an actuarial valuation done by an independent actuary
on the projected unit credit method at the end of each financial
year.Liabilities recognised in respect of other long-term employee
benefits are measured at the present value of the estimated future
cash outflows expected to be made by the Company in respect of
services provided by employees up to the reporting date.
2.11 Earnings per share
Basic earnings per share is calculated by dividing the profit/
loss attributable to the owners of the Company by the weighted
average number of equity shares outstanding during the financial
year (net of treasury shares).
Diluted earnings per share adjusts the figure used in determination
of basic earnings per share to take into account the after income
tax effect of interest and other financing costs associated with
dilutive potential equity shares, and the weighted average number
of additional equity shares that would have been outstanding
assuming the conversion of all dilutive potential equity shares.
2.12 Share-based payment arrangements
Employees (including senior executives) of the Company receive
remuneration in the form of share-based payment, whereby
employees render services as consideration for equity instruments
(equity-settled transactions).
Equity-settled transactions
Equity-settled share-based payments to employees and others
providing similar services are measured at the fair value of the
equity instruments at the grant date.
The fair value determined at the grant date of the equity-settled
share-based payments is expensed over the vesting period,
based on the Company's estimate of equity instruments that will
eventually vest, with a corresponding increase in equity. At the end
of each reporting period, the Company revises its estimate of the
number of equity instruments expected to vest. The impact of the
revision of the original estimates, if any, is recognised in statement
of profit and loss such that the cumulative expense reflects the
revised estimate, with a corresponding adjustment to the share -
based payment (SBP)reserve in equity.
Share-based payment transactions among group entities
The cost of equity-settled transactions pertaining to group entities
is recognised as debit to investment in those group companies,
together with a corresponding increase in equity (SBP reserve) over
the vesting period. The cumulative amount recognised for equity-
settled transactions at each reporting date until the vesting date
reflects the extent to which the vesting period has expired and the
Company's best estimate of the number of equity instruments
that will ultimately vest. Company does not recover the cost of
employee stock options from its subsidiaries.
2.13 Taxation
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 by the end of the
reporting period.
Deferred tax
Deferred tax is recognised on temporary differences between
the carrying amounts of assets and liabilities in the Ind AS
financial statements and the corresponding tax bases used in the
computation of taxable profit. While preparing standalone Ind AS
financial statements, temporary differences are calculated using
the carrying amount as per standalone Ind AS financial statements
and tax bases as determined by reference to the method of tax
computation.
Deferred tax liabilities are recognised for all taxable temporary
differences, except:
• When the deferred tax liability arises from the initial
recognition of goodwill or an asset or liability in a transaction
that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable
profit or loss
• In respect of taxable temporary differences associated with
investments in subsidiaries, associates and interests in joint
ventures, when the timing of the reversal of the temporary
differences can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable
future
Deferred tax assets are generally recognised for all deductible
temporary differences, the carry forward of unused tax credits and
unused tax losses to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
and the carry forward of unused tax losses can be utilised.
Such deferred tax assets and liabilities are not recognised if the
temporary difference arises from the initial recognition (other than
in a business combination) of assets and liabilities in a transaction
that affects neither the taxable profit nor the accounting profit. In
addition, deferred tax liabilities are not recognised if the temporary
difference arises from the initial recognition of goodwill.
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 liabilities and assets are measured at the tax rates that
are expected to apply in the period in which the liability is settled
or the asset realised, based on tax rates (and tax laws) that have
been enacted or substantively enacted by the end of the reporting
period.
The measurement of deferred tax liabilities and assets reflects the
tax consequences that would follow from the manner in which the
Company expects, at the end of the reporting period, to recover or
settle the carrying amount of its assets and liabilities.
Current and deferred tax for the year
Current and deferred tax are recognised in statement of profit
and loss, except when they relate to items that are recognised
in other comprehensive income or directly in equity, in which
case, the current and deferred tax are also recognised in other
comprehensive income or directly in equity respectively. Where
current tax or deferred tax arises from the initial accounting for a
business combination, the tax effect is included in the accounting
for the business combination.
2.14 Property, plant and equipment
Land and buildings held for use in the production or supply of goods
or services, for rental to others or for administrative purposes, are
stated in the standalone balance sheet at cost less accumulated
depreciation and accumulated impairment losses. Freehold land is
not depreciated, however, it is subject to impairment.
Properties in the course of construction for production, supply or
administrative purposes are carried at cost, less any recognised
impairment loss. Cost includes professional fees and, for qualifying
assets, borrowing costs capitalised in accordance with the
Company's accounting policy. Such properties are classified to
the appropriate categories of property, plant and equipment when
completed and ready for intended use.
Likewise, when a major inspection is performed, its cost is
recognised in the carrying amount of the plant and equipment as
a replacement if the recognition criteria are satisfied. The carrying
amount of any component accounted for as a separate asset is
derecognised when replaced. All other repairs and maintenance are
charged to statement of profit and loss during the reporting period
in which they are incurred.
An item of property, plant and equipment is derecognised 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 recognised in statement of
profit and loss.
Depreciation of these assets, on the same basis as other property
assets, commences when the assets are ready for their intended
use. An asset is normally ready for its intended use or sale when the
physical construction of the asset is complete even though routine
administrative work might still continue.
Fixtures and equipment are stated at cost less accumulated
depreciation and accumulated impairment losses, if any.
Depreciation is recognised so as to write off the cost of assets
(other than freehold land) less their residual values over their
useful lives, using the straight-line method. The estimated useful
lives, residual values and depreciation method are reviewed at
the end of each reporting period, with the effect of any changes
in estimate accounted for on a prospective basis. Depreciation
on tangible property, plant and equipment has been provided on
straight line method as per the useful life prescribed in Schedule
II of the Company's Act, 2013, except in case of vehicle, leasehold
improvements and moulds.
Deemed cost on transition to Ind AS
While measuring the property, plant and equipment in accordance
with Ind AS, the Company has selected to measure certain items of
property, plant and equipment at the date of transition to Ind AS at
their fair values and used those fair values as their deemed costs at
transition date.
2.15 Intangible assets
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately
are carried at cost less accumulated amortisation and accumulated
impairment losses. Amortisation is recognised on a straight-line
basis over their estimated useful lives. The amortisation period
and amortisation method are reviewed at the end of each reporting
period, with the effect of any changes in estimate being accounted
for on a prospective basis.
Intangible assets with indefinite useful lives are not amortised,
but are tested for impairment annually, either individually or at
the cash-generating unit level. The assessment of indefinite
life is reviewed annually to determine whether the indefinite life
continues to be supportable. If not, the change in useful life from
indefinite to finite is made on a prospective basis.
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and
recognised separately from goodwill are initially recognised at their
fair value at the acquisition date (which is regarded as their cost).
Subsequent to initial recognition, intangible assets acquired in a
business combination are reported on the same basis as intangible
assets that are acquired separately.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future
economic benefits are expected from use or disposal. Any gain or
loss arising from derecognition of an intangible asset, measured as
the difference between the net disposal proceeds and the carrying
amount of the asset are recognised in statement of profit and loss
when the asset is derecognised.
Deemed cost on transition to Ind AS
The Company has elected to continue with the carrying value
of all of its intangible assets recognised as of the transition date
measured as per the previous GAAP and used that carrying value
as its deemed cost as of the transition date.
2.16 Impairment of non-financial assets
At the end of each reporting period, the Company reviews the
carrying amounts of its Property, Plant and Equipment and
intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated
in order to determine the extent of the impairment loss, if any.
When it is not possible to estimate the recoverable amount of an
individual asset, the Company estimates the recoverable amount
of the cash-generating unit to which the asset belongs. When a
reasonable and consistent basis of allocation can be identified,
corporate assets are also allocated to individual cash-generating
units, or otherwise they are allocated to the smallest group of cash¬
generating units for which a reasonable and consistent allocation
basis can be identified.
Intangible assets with indefinite useful lives and intangible assets
not yet available for use are tested for impairment at least annually,
and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal
and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset for which the
estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is
estimated to be less than its carrying amount, the carrying amount
of the asset (or cash-generating unit) is reduced to its recoverable
amount. An impairment loss is recognised immediately in
statement of profit and loss.
When an impairment loss subsequently reverses, the carrying
amount of the asset (or a cash-generating unit) is increased to
the revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss been
recognised for the asset (or cash-generating unit) in prior years.
A reversal of an impairment loss is recognised immediately in
statement of profit and loss.
2.17 Inventories
Finished goods and traded goods are stated at the lower of cost
and net realisable value. Raw material goods are stated at cost.
Net realisable value represents the estimated selling price for
inventories less all estimated costs of completion and costs
necessary to make the sale.
Costs incurred in bringing each product to its present location and
condition are accounted for as follows:
• Raw materials and Packing materials: cost includes cost of
purchase and other costs incurred in bringing the inventories
to their present location and condition. Cost is determined on
weighted average basis.
• Finished goods and work in progress: cost includes cost of
direct materials and labour and a proportion of manufacturing
overheads based on the normal operating capacity, but
excluding borrowing costs. Cost is determined on weighted
average basis.
• Traded goods: cost includes cost of purchase and other costs
incurred in bringing the inventories to their present location
and condition. Cost is determined on weighted average basis.
2.18 Provisions
Provisions are recognised when the Company has a present
obligation (legal or constructive) as a result of a past event, it is
probable that the Company will be required to settle the obligation,
and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the end of
the reporting period, taking into account the risks and uncertainties
surrounding the obligation. When a provision is measured using the
cash flows estimated to settle the present obligation, its carrying
amount is the present value of those cash flows (when the effect of
the time value of money is material). When discounting is used, the
increase in the provision due to the passage of time is recognised
as a finance cost.
When some or all of the economic benefits required to settle
a provision are expected to be recovered from a third party, a
receivable is recognised as an asset if it is virtually certain that
reimbursement will be received and the amount of the receivable
can be measured reliably.
2.19 Financial instruments
A financial instrument is any contract that gives rise to a financial
asset of one entity and a financial liability or equity instrument of
another entity.
Financial assets and financial liabilities are recognised when the
Company becomes a party to the contractual provisions of the
instruments.
Financial assets and financial liabilities are initially measured at
fair value. Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities (other
than financial assets and financial liabilities at fair value through
profit or loss ("FVTPL")) are added to or deducted from the fair
value of the financial assets or financial liabilities, as appropriate,
on initial recognition. Transaction costs directly attributable to
the acquisition of financial assets or financial liabilities at fair value
through profit or loss are recognised immediately in statement of
profit and loss.
2.20 Financial assets
All regular way purchases or sales of financial assets are recognised
and derecognised on a trade date basis. Regular way purchases
or sales are purchases or sales of financial assets that require
delivery of assets within the time frame established by regulation
or convention in the marketplace.
All recognised financial assets are subsequently measured in their
entirety at either amortised cost or fair value, depending on the
classification of the financial assets
Classification of financial assets
Debt instruments that meet the following conditions are
subsequently measured at amortised cost (except for debt
investments that are designated as at fair value through profit or
loss on initial recognition):
• The asset is held within a business model whose objective is
to hold assets for collecting contractual cash flows; and
• 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.
Debt instruments that meet the following conditions are
subsequently measured at fair value through other comprehensive
income (except for debt investments that are designated as at fair
value through profit or loss on initial recognition):
• The objective of the business model is achieved both by
collecting contractual cash flows and selling the financial
assets, andThe asset's contractual cash flows represent
SPPI..
Interest income is recognised in statement of profit and loss for
fair value through other comprehensive income ("FVTOCI") debt
instruments. For the purposes of recognising foreign exchange
revaluation and impairment losses or reversals, FVTOCI debt
instruments are treated as financial assets measured at amortised
cost. Thus, the exchange differences on the amortised cost are
recognised in statement of profit and loss and other changes in
the fair value of FVTOCI financial assets are recognised in other
comprehensive income and accumulated under the heading of
'Reserve for debt instruments through other comprehensive
income'. When the investment is disposed of, the cumulative gain
or loss previously accumulated in this reserve is reclassified to
statement of profit and loss.
All other financial assets are subsequently measured at fair value.
Effective interest method
The effective interest method is a method of calculating the
amortised cost of a debt instrument and of allocating interest
income over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash receipts
(including all fees paid or received that form an integral part of the
effective interest rate, transaction costs and other premiums or
discounts) through the expected life of the debt instrument, or,
where appropriate, a shorter period, to the net carrying amount on
initial recognition.
Income is recognised on an effective interest basis for debt
instruments other than those financial assets classified as at
FVTPL. Interest income is recognised in statement of profit and
loss and is included in the "Other Income" line item.
Investments in equity instruments at FVTOCI
On initial recognition, the Company can make an irrevocable
election (on an instrument-by-instrument basis) to present
the subsequent changes in fair value in other comprehensive
income for investments in equity instruments. This election is
not permitted if the equity investment is held for trading. These
elected investments are initially measured at fair value plus
transaction costs. Subsequently, they are measured at fair value
with gains and losses arising from changes in fair value recognised
in other comprehensive income and accumulated in the 'Reserve
for equity instruments through other comprehensive income'. The
cumulative gain or loss is not reclassified to statement of profit and
loss on disposal of the investments.
A financial asset is held for trading if:
• it has been acquired principally for the purpose of selling it in
the near term; or
• on initial recognition it is part of a portfolio of identified
financial instruments that the Company manages together
and has a recent actual pattern of short-term profit-taking; or
• it is a derivative that is not designated and effective as a
hedging instrument or a financial guarantee.
Financial assets at fair value through profit or loss (FVTPL)
Investments in equity instruments are classified as at FVTPL,
unless the Company irrevocably elects on initial recognition to
present subsequent changes in fair value in other comprehensive
income for investments in equity instruments which are not held
for trading (see note above).
Debt instruments that do not meet the amortised cost criteria or
FVTOCI criteria (see above) are measured at FVTPL.
A financial asset that meets the amortised cost criteria or debt
instruments that meet the FVTOCI criteria may be designated as
at FVTPL upon initial recognition if such designation eliminates or
significantly reduces a measurement or recognition inconsistency
that would arise from measuring assets or liabilities or recognising
the gains and losses on them on different bases. The Company has
not designated any debt instrument as at FVTPL.
Financial assets at FVTPL are measured at fair value at the end
of each reporting period, with any gains or losses arising on
remeasurement recognised in statement of profit and loss. The net
gain or loss recognised in statement of profit and loss incorporates
any dividend or interest earned on the financial asset and is included
in the 'Other income' line item.
Investments in subsidiaries, associates and joint ventures
The Company has elected to account for its equity investments
in subsidiaries, associates and joint ventures under Ind AS 27
on Separate Financials Statements, at cost except Investment
in Preference shares which is measured at FVTPL. At the end of
each reporting period the Company assesses whether there are
indicators of diminution in the value of its investments and provides
for impairment loss, where necessary.
Impairment of financial assets
The Company applies the expected credit loss model for
recognising impairment loss on financial assets measured at
amortised cost, trade receivables and other contractual rights to
receive cash or other financial asset, and financial guarantees not
designated as at FVTPL.
Expected credit losses are the weighted average of credit losses
with the respective risks of default occurring as the weights.
Credit loss 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 (i.e. all cash
shortfalls), discounted at the original effective interest rate.
In accordance with Ind AS 109, the Company assesses on a forward¬
looking basis the expected credit loss associated with its assets
carried at amortised cost and FVTOCI debt instruments. ECLs
are based on the difference between the contractual cash flows
due in accordance with the contract and all the cash flows that
the Company expects to receive, discounted at an approximation
of the original effective interest rate. The expected cash flows will
include cash flows from the sale of collateral held or other credit
enhancements that are integral to the contractual terms.
For trade receivables, the Company applies a simplified approach in
calculating ECLs. Therefore, the Company does not track changes
in credit risk, but instead recognises a loss allowance based on
lifetime ECLs at each reporting date.
ECLs are recognised in two stages. For credit exposures for which
there has not been a significant increase in credit risk since initial
recognition, ECLs are provided for credit losses that result from
default events that are possible within the next 12-months (a
12-month ECL). For those credit exposures for which there has
been a significant increase in credit risk since initial recognition,
a loss allowance is required for credit losses expected over the
remaining life of the exposure, irrespective of the timing of the
default (a lifetime ECL).
The Company considers that there has been a significant increase
in credit risk when contractual payments are more than 30 days
past due.
The Company considers a financial asset in default when
contractual payments are 90 days past due. However, in certain
cases, the Company may also consider a financial asset to be
in default when internal or external information indicates that
the Company is unlikely to receive the outstanding contractual
amounts in full before taking into account any credit enhancements
held by the Company. A financial asset is written off when there
is no reasonable expectation of recovering the contractual cash
flows.
Derecognition of financial assets
The Company derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or when it transfers
the financial asset and substantially all the risks and rewards of
ownership of the asset to another party. If the Company neither
transfers nor retains substantially all the risks and rewards of
ownership and continues to control the transferred asset, the
Company recognises its retained interest in the asset and an
associated liability for amounts it may have to pay. If the Company
retains substantially all the risks and rewards of ownership of a
transferred financial asset, the Company continues to recognise
the financial asset and also recognises a collateralised borrowing
for the proceeds received.
Foreign exchange gains and losses
The fair value of financial assets denominated in a foreign currency
is determined in that foreign currency and translated at the spot
rate at the end of each reporting period.
For foreign currency denominated financial assets measured
at amortised cost and FVTPL, the exchange differences are
recognised in statement of profit and loss.
For the purposes of recognising foreign exchange gains and
losses, FVTOCI debt instruments are treated as financial assets
measured at amortised cost. Thus, the exchange differences on
the amortised cost are recognised in statement of profit and loss
and other changes in the fair value of FVTOCI financial assets are
recognised in other comprehensive income.
Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash
at banks and on hand and short-term deposits with an original
maturity of three months or less, that are readily convertible to
a known amount of cash and subject to an insignificant risk of
changes in value.
Classification as debt or equity
Debt and equity instruments issued by the Company are classified
as either financial liabilities or as equity in accordance with the
substance of the contractual arrangements and the definitions of
a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its liabilities.
Equity instruments issued by the Company are recognised at the
proceeds received, net of direct issue costs.
Repurchase of the Company's own equity instruments is
recognised and deducted directly in equity. No gain or loss is
recognised in statement of profit and loss on the purchase, sale,
issue or cancellation of the Company's own equity instruments.
Compound instruments
The component parts of compound instruments (convertible
debentures) issued by the Company are classified separately as
financial liabilities and equity in accordance with the substance
of the contractual arrangements and the definitions of a financial
liability and an equity instrument. A conversion option that will
be settled by the exchange of a fixed amount of cash or another
financial asset for a fixed number of the Company's own equity
instruments is an equity instrument.
At the date of issue, the fair value of the liability component is
estimated using the prevailing market interest rate for similar non¬
convertible instruments. This amount is recorded as a liability on
an amortised cost basis using the effective interest method until
extinguished upon conversion or at the instrument's maturity date.
The conversion option classified as equity is determined by
deducting the amount of the liability component from the fair value
of the compound instrument as a whole. This is recognised and
included in equity, net of income tax effects, and is not subsequently
remeasured. In addition, the conversion option classified as equity
will remain in equity until the conversion option is exercised, in
which case, the balance recognised in equity will be transferred to
other component of equity. When the conversion option remains
unexercised at the maturity date of the convertible instrument,
the balance recognised in equity will be transferred to retained
earnings. No gain or loss is recognised in statement of profit and
loss upon conversion or expiration of the conversion option.
Transaction costs that relate to the issue of the convertible
instruments are allocated to the liability and equity components
in proportion to the allocation of the gross proceeds. Transaction
costs relating to the equity component are recognised directly in
equity. Transaction costs relating to the liability component are
included in the carrying amount of the liability component and are
amortised over the lives of the convertible instrument using the
effective interest method.
All financial liabilities are subsequently measured at amortised cost
using the effective interest method. However, financial guarantee
contracts issued by the Company are measured in accordance with
the specific accounting policies set out below.
Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not held-for-trading and are not
designated as at FVTPL are measured at amortised cost at the
end of subsequent accounting periods. The carrying amounts of
financial liabilities that are subsequently measured at amortised
cost are determined based on the effective interest method.
Interest expense are included in the 'Finance costs' line item.
The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash payments
(including all fees and points paid or received that form an integral
part of the effective interest rate, transaction costs and other
premiums or discounts) through the expected life of the financial
liability, or (where appropriate) a shorter period, to the net carrying
amount on initial recognition.
Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer
to make specified payments to reimburse the holder for a loss it
incurs because a specified debtor fails to make payments when due
in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by the Company are initially
measured at their fair values and are subsequently measured at the
higher of:
• the amount of loss allowance determined in accordance with
impairment requirements of Ind AS 109; and
• the amount initially recognised less, when appropriate, the
cumulative amount of income recognised in accordance with
the principles of Ind AS 115.
When guarantee in relation to loans or other payables of subsidiaries
are provided for no compensation, the fair values are accounted for
as contributions and recognised as cost of investment.
Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency
and are measured at amortised cost at the end of each reporting
period, the foreign exchange gains and losses are determined
based on the amortised cost of the instruments and are recognised
in 'Other income'/'Other expenses'.
The Company derecognises financial liabilities when, and only
when, the Company's obligations are discharged, cancelled or have
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 recognised in the statement of
profit and loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net
amount is reported in the consolidated 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.
2.22 Derivative financial instruments
Derivatives are initially recognised at fair value at the date the
derivative contracts are entered into and are subsequently re¬
measured to their fair value at the end of each reporting period.
The resulting gain or loss is recognised in statement of profit and
loss immediately. The Company does not designate the derivative
instrument as a hedging instrument.
2.23 Treasury Shares
The Company has created an Employee Benefit Trust (EBT) for
providing share-based payment to its employees. The Company
uses EBT as a vehicle for distributing shares to employees under
the employee remuneration schemes. The EBT buys shares of the
Company from the market, for giving shares to employees. The
Company treats EBT as its extension and shares held by EBT are
treated as treasury shares.
Own equity instruments that are reacquired (treasury shares)
are recognised at cost and deducted from equity. No gain or
loss is recognised in profit or loss on the purchase, sale, issue
or cancellation of the Company's own equity instruments. Any
difference between the carrying amount and the consideration, if
reissued, is recognised in capital reserve. Share options exercised
during the reporting period are satisfied with treasury shares.
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