2. SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of the significant accounting policies adopted in the preparation of these
inancial statements. These policies have been consistently applied to all the years presented
unless otherwise stated
(a) Basis of preparation
The financial statements of the Company have been prepared in accordance with the Generally
Accepted Accounting Principles in India (Indian GAAP) to comply with the Indian Accounting
Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the
Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the
Act'). The financial statements have been prepared on accrual basis under the historical cost
convention. The accounting policies adopted in the preparation of the financial statements are
consistent with those followed in the previous year.
(b) Use of estimates and critical accounting judgments
In preparation of the financial statements, the Company makes judgments, estimates and
assumptions about the carrying values of assets and liabilities that are not readily apparent from
other sources. The estimates and the associated assumptions are based on historical experience
and other factors that are considered to be relevant. Actual results may differ from these
estimates.
(c) Property, plant and equipment
AS ueL,'Nu AS;16f3n itSm °f pr0perty' plant and equipment is recognized as an asset if it is
probable that the future economic benefits associated with the item will flow to the Company and
its cost can be measured reliably. This recognition principle is applied to the costs incurred initially
o acquire an item of property, plant and equipment and also to costs incurred subsequently to
add to, replace part of, or service it. All other repair and maintenance costs, including regular
servicing, are recognized in the statement of profit and loss as incurred.
Property, plant and equipment are stated at cost, less accumulated depreciation and impairment
Cost includes all direct costs and expenditures incurred to bring the asset to its working condition
and location for its intended use. Trial run expenses (net of revenue) are capitalized. Borrowing
costs incurred during the period of construction is capitalized aspart of cost of the qualifying
assets. The gain or loss arising on disposal of an asset is determined as the difference between the
sale proceeds and the carrying value of the asset, and is recognized in the statement of profit and
(d) Depreciation and amortization of property, plant and equipment
Depreciation or amortization is provided so as to write off, on a straight line basis, the cost of
property, plant and equipment to their residual value. These charges are commenced from the
ates the assets are available for their intended use and are spread over their estimated useful
economic lives. The estimated useful lives of assets and residual values are reviewed regularly
and, when necessary, revised. No further charge is provided in respect of assets that are fully
written down but are still in use. Depreciation on assets under construction commences only
when the assets are ready for their intended use.
The estimated useful lives for the main categories of property, plant and equipment are:
(e) Impairment
At each balance sheet date, the Company reviews the carrying values of its property, plant and
equipment to determine whether there is any indication that the carrying value of those assets
may not be recoverable through continuing use. If any such indication exists, the recoverable
amount of the asset is reviewed in order to determine the extent of impairment loss (if any).
(f) Inventories
As per IND AS-2 Inventories are stated at the lower of cost and net realizable value. Costs comprise
direct materials and, where applicable, direct labor costs and those overheads that have been
incurred in bringing the inventories to their present location and condition. Net realizable value is
the price at wh.ch the inventories can be realized in the normal course of business after allowing
for the cost of conversion from their existing state to a finished condition and for the cost of
marketing, selling and distribution.
Stores and spare parts are carried at lower of cost and net realizable value. Provisions are made
to cover slow moving and obsolete items based on historical experience of utilization on a product
category basis, which involves individual businesses considering their product lines and market
conditions.
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