Note 2: Significant accounting policies
The significant accounting policies applied by the Company in the preparation of its financial
statements are listed below. Such accounting policies have been applied consistently to all the
periods presented in these financial statements, unless otherwise indicated.
Basis of preparation and presentation:
The financial statements have been prepared in accordance with the Indian Accounting
Standards (referred to as "Ind AS") prescribed under section 133 of the Companies Act, 2013
read with Companies (Indian Accounting Standards) Rules, as amended from time to time and
other relevant provisions of the Act.
The financial statements have been prepared under the historical cost convention with the
exception of certain assets and liabilities that are required to be carried at fair value by Ind AS.
a) Use of estimates and judgments
In the preparation of financial statements, the Company makes judgments in the application of
accounting policies; and estimates and assumptions which affects the carrying values 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. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimate is revised and future
periods affected.
In particular, information about significant areas of estimation uncertainty and critical
judgments in applying accounting policies that have the most significant effect on the amounts
recognized in the financial statements are included in the following notes:
i) Note 3.1 - Property, plant and equipment - useful life and impairment
ii) Note 5.1 - Recoverability/recognition of deferred tax assets
iii) Note 5.2 - Assets and obligations relating to employee benefits
iv) Note 5.8 - Provisions and contingent liabilities
b) Current / Non-Current Classification
The Company presents assets and liabilities in the balance sheet based on current and non¬
current classification.
An asset is treated as current when it is:
a) expected to be realized or intended to be sold or consumed in normal operating cycle;
b) held primarily for the purpose of trading;
c) expected to be realized within twelve months after the reporting period; or
d) 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 treated as current when it is:
a) expected to be settled in normal operating cycle;
b) held primarily for the purpose of trading;
c) due to be settled within twelve months after the reporting period; or
d) there is no unconditional right to defer the settlement of the liability for at least twelve
months after the reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
c) Property, Plant and Equipment
All the items of property, plant and equipment are stated at cost, or deemed cost applied on
transition to Ind AS, less accumulated depreciation and accumulated impairment losses, if
any.
Such cost includes purchase price, borrowing cost and any cost directly attributable to bringing
the assets to its working condition for its intended use, net charges on foreign exchange
contracts and adjustments arising from exchange rate variations attributable to the assets.
Subsequent costs are included in the asset's carrying amount or recognized as a separate asset,
as appropriate, only when it is probable that future economic benefits associated with the
item will flow to the entity and the cost can be measured reliably.
All other expenses on existing fixed assets, including day-to-day repair and maintenance
expenditure and cost of replacing parts, are charged to the statement of profit and loss for the
period during which such expenses are incurred.
Property, Plant and Equipment which are significant to the total cost of that item of
Property, Plant and Equipment and having different useful life are accounted separately.
Depreciation on Property, Plant and Equipment is provided on the straight-line method over
the useful lives of the assets estimated by the management. Depreciation is provided based
on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013. Useful lives
and residual values of assets are reviewed periodically.
The residual values, useful lives and methods of depreciation of property, plant and equipment
are reviewed at each financial year end and adjusted prospectively, if appropriate.
An item of property, plant and equipment and any significant part is derecognized upon
disposal or when no future economic benefits are expected from its use or disposal. Gains or
losses arising from derecognition of a Property, Plant and Equipment are measured as the
difference between the net disposal proceeds and the carrying amount of the asset and are
recognized in the Statement of Profit and Loss when the asset is derecognized.
d) Impairment
At each balance sheet date, the Company reviews the carrying value 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.
Where the asset does not generate cash flows that are independent from other assets, the
Company estimates the recoverable amount of the cash generating unit to which the asset
belongs.
Recoverable amount is the higher of fair value less costs to sell 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.
An impairment loss is recognized in the statement of profit and loss as and when the
carrying value of an asset exceeds its recoverable amount.
Where an impairment loss subsequently reverses, the carrying value of the asset (or cash
generating unit) is increased to the revised estimate of its recoverable amount so that the
increased carrying value does not exceed the carrying value that would have been determined
had no impairment loss been recognized for the asset (or cash generating unit) in prior years.
A reversal of an impairment loss is recognized in the statement of profit and loss immediately.
e) Cash and Cash Equivalents
Cash and cash equivalents comprise of cash on hand, cash at banks, short-term deposits and
short- term, highly liquid investments that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of changes in value.
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