2C MATERIAL ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of
these Standalone Ind AS Financial Statements are set out below.
These policies have been consistently applied to all the years
presented, unless otherwise stated.
(a) Current and Non-Current classification
Based on the time involved between the acquisition of assets
for processing and their realization in cash and cash equivalents,
the Company has identified twelve months as its operating
cycle for determining current and non-current classification of
assets and liabilities in the balance sheet.
(b) Revenue Recognition
Revenue is measured at fair value of the consideration received
or receivable. Revenue is recognised when the Company satisfies
the performance obligation by transferring the promised goods
or service to a customer.
(i) Sales
The Company derives revenue primarily from sale of Zinc
based products.
Revenue from sale of goods is recognized when control of
the products being sold is transferred to the customer and
when there are no longer any unfulfilled obligations. The
performance obligations are fulfilled at the time of dispatch,
delivery or upon formal customer acceptance depending
on terms of contract with customers.The Company
engages in variable price contracts with its customers.
No element of significant financing is deemed present as
the sales are made with a credit term, which is consistent
with market practice. Revenue excludes any taxes and
duties collected on behalf of the government.
(ii) Export Incentives
Export incentives are accounted for in accordance with
the applicable government schemes and recognized
when there is reasonable assurance that the company has
complied with all conditions attached to the scheme and
that the incentive will be received.
(c) Recognition of interest income, dividend income and
income from investment
(i) Interest Income
Interest income from a financial asset is recognised when
it is probable that the economic benefit will flow to the
Company and the amount of income can be measured
reliably. Interest income is accrued on a timely basis, by
reference to the principal outstanding and at the effective
interest rate. Interest income is included in the other
income in the Standalone Statement of Profit and Loss.
(ii) Dividend Income
Dividend income on Investments is recognised in the
Statement of Profit and Loss when the Company's right to
receive the dividend has been established and it is certain
that the economic benefits associated with the dividend
will flow to the company and the amount of income can
be measured reliably.
(iii) Income from Investments
Profit / (loss) earned from sale of securities is recognised
on the trade date. It is included in the Other Income in
Statement of Profit and Loss.
(iv) All other income is accounted for on accrual basis when
right to receive is established unless otherwise specified.
(d) PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
(i) Property, Plant And Equipment
Recognition and Measurement
Property, plant and equipment held for use in the
production or/and supply of goods or services, or for
administrative purposes, are stated in the balance sheet
at historical cost less accumulated depreciation and
accumulated impairment losses (if any). Historical cost
includes expenditure that is directly attributable to the
acquisition of the items.
Property, plant and equipment which are not ready for
intended use as on the date of Standalone Balance Sheet
are disclosed as Capital work-in-progress.
Subsequent Measurement
Subsequent costs are included in the asset's carrying
amount, only when it is probable that future economic
benefits associated with the cost incurred will flow to the
Company and the cost of the item can be measured reliably.
The carrying amount of any component accounted for as
a separate asset is derecognized when replaced.
Depreciation and Amortization
Depreciation on Property, Plant & Equipment is provided
under Written Down Method at rates determined based
on the useful life of the respective assets and the residual
values in accordance with Schedule II of the Companies
Act, 2013 or as reassessed by the Company based on the
technical evaluation. The estimated useful lives of assets
for the current period are as follows:
Depreciation on additions/ disposals during the year is
provided on a pro-rata basis i.e., from/ up to the date on
which asset is put to use/ disposed of.
Depreciation method, useful lives and residual values
are reviewed at each financial year-end and adjusted, if
appropriate.
Disposal of Assets
An item of property, plant and equipment is derecognized
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 net disposal proceeds and the
carrying amount of the asset and is recognized in the
standalone statement of profit and loss.
(ii) Capital Work in Progress
Capital work-in-progress is stated at cost which includes
expenses incurred during construction period, interest
on amount borrowed for acquisition of qualifying assets
and other expenses incurred in connection with project
implementation in so far as such expenses relate to the
period prior to the commencement of commercial
production/ use.
(iii) Intangible Assets
Intangible assets are stated at cost of acquisition,
comprising of purchase price less accumulated
amortization and impairment losses, if any. Depreciable
amount of such assets, are allocated on systematic basis
on the best estimates on straight line method.
Cost of software including directly attributable cost, if any,
acquired for internal use, is allocated / amortized over the
useful life of asset as under:
(iv) Impairment
At each balance sheet date, the Company reviews the
carrying value of its property, plant and equipment and
intangible assets 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 an asset's 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. An
impairment loss is recognised in the standalone 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 recognised for the asset (or cash
generating unit) in prior years. A reversal of an impairment
loss is recognised in the standalone statement of profit
and loss immediately.
e) Leases
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 defined period of time in exchange for consideration.
(f) Financial Instruments
(i) Initial Recognition
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
instrument. Financial assets and 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) are
added to or deducted from the fair value measured on
initial recognition of financial asset or financial liability. The
transaction costs directly attributable to the acquisition
of financial assets and financial liabilities at fair value
through profit and loss are immediately recognised in the
Standalone Statement of Profit and Loss.
(ii) Effective interest method
The effective interest method is a method of calculating
the amortised cost of a financial instrument and of
allocating interest income or expense over the relevant
period. The effective interest rate is the rate that exactly
discounts future cash receipts or payments through
the expected life of the financial instrument, or where
appropriate, a shorter period.
(iii) Classification and subsequent measurement
For purposes of subsequent measurement, financial assets
are classified in three categories:
a) Financial assets measured at Amortized Cost:
A Financial Asset is measured at Amortised Cost if
it is held within a business model whose objective
is to hold the asset in order to collect contractual
cash flows and the contractual terms of the Financial
Asset give rise on specified dates to cash flows that
are solely payments of principal and interest on the
principal amount outstanding.
b) Financial assets measured at Fair Value Through
Other Comprehensive Income (FVTOCI):
A Financial Asset is measured at FVTOCI if it is held
within a business model whose objective is achieved
by both collecting contractual cash flows and selling
Financial Assets and the contractual terms of the
Financial Asset give rise on specified dates to cash
flows that are solely payments of principal and
interest on the principal amount outstanding.
c) Financial assets at Fair Value Through Profit or
Loss (FVTPL):
A Financial Asset which is not classified in any
of the above categories is measured at FVTPL.
Financial assets are reclassified subsequent to
their recognition, if the Company changes its
business model for managing those financial
assets. Changes in business model are made and
applied prospectively from the reclassification date
which is the first day of immediately next reporting
period following the changes in business model in
accordance with principles laid down under Ind AS
109 - Financial Instruments.
(iv) Investment in Subsidiary
The Company has accounted for its investment in
subsidiary at cost.
(v) Other Equity Investments:
All other equity investments are measured at fair value,
with value changes recognised in Standalone Statement
of Profit and Loss, except for those equity investments
for which the Company has elected to present the value
changes in 'Other Comprehensive Income'. However
dividend on such Equity Investment are recognised in
the Standalone Statement of Profit and Loss when the
Company has rights to receive is established.
(vi) Impairment of Financial Assets
Loss allowance for expected credit losses is recognised
for financial assets measured at amortised cost.
For financial assets whose credit risk has not significantly
increased since initial recognition, loss allowance equal to
twelve months' expected credit losses is recognised. Loss
allowance equal to the lifetime expected credit losses is
recognised if the credit risk on the financial instruments
has significantly increased since initial recognition.
(vii) Financial Liabilities
Financial liabilities are measured at amortised
cost using the effective interest rate method.
Borrowings are classified as current liabilities unless the
Company has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting period.
For trade and other payables maturing within one
year from the balance sheet date, the carrying amount
approximates fair value to short-term maturity of these
instruments.
(viii) Derecognition of Financial Instruments:
The company derecognises a Financial Asset when the
contractual rights to the cash flows from the Financial Asset
expire or it transfers the Financial Asset and the transfer
qualifies for derecognition under Ind AS 109. A Financial
Liability (or a part of a financial liability) is derecognized
from the company's Standalone Balance Sheet when
the obligation specified in the contract is discharged or
cancelled or expires.
(ix) Offsetting
Financial Assets and Financial Liabilities are offset and the
net amount is presented in the balance sheet when, and
only when, the Company has a legally enforceable right
to set off the amount and it intends, either to settle them
on a net basis or to realise the asset and settle the liability
simultaneously.
(g) Derivative Instruments
Commodity Contracts
Initial recognition and subsequent measurement
The Company enters into derivative instruments such as
commodity future contract to manage its exposure to risk
associated with commodity prices fluctuations. The counter¬
party for those contracts are global commodity exchanges.
The Company uses of these instruments is intended to mitigate
exposure to market variables. The Company also enters into
certain derivative contracts on Multi Commodity Exchange of
India (MCX) to hedge risks which are not designated as hedges.
All derivative contracts are initially recognised at fair value
through profit or loss and subsequently re-measured at fair
value. The changes in fair value of commodity derivatives are
recognised in Standalone Statement of Profit or Loss.
(h) Inventory
Finished Goods are valued at lower of the cost or net realizable
value. Cost of inventories is ascertained on 'FIFO' basis. Materials
and other supplies held for use in the production of inventories
are not written down below cost if the finished products in
which they will be incorporated are expected to be sold at
or above cost.
Cost in respect of raw materials and stores and spares includes
expenditure incurred in acquiring the inventories, production
or conversion cost and other cost incurred in bringing them to
their present location and condition. Cost in respect of finished
goods represents prime cost, and includes appropriate portion
of overheads.
Net realizable value is determined based on estimated selling
price, less further costs expected to be incurred on completion
and disposal.
(i) Cash and Cash Equivalents
The Company's cash and cash equivalents includes cash at
banks and on hand, and short-term money market deposits
with original maturities of less than or upto three months that
are readily convertible to known amounts of cash and which are
subject to an insignificant risk of change in value.
(j) Foreign Currency Transaction
Transactions in foreign currencies are translated into the
functional currency at the exchange rates prevailing on the
date of the transactions. Foreign currency monetary assets
and liabilities at the year-end are translated at the year-end
exchange rates. Non-monetary items which are carried in
terms of historical cost denominated in a foreign currency, are
reported using the exchange rate at the date of transaction.
The loss or gain thereon and also on the exchange differences
on settlement of the foreign currency transactions during the
year are recognized as income or expense in the standalone
statement of Profit and Loss account.
(k) Accounting for Taxes on Income
Income Tax expense or credit for the period is the tax payable
on the current period taxable income based on the applicable
Income tax rate adjusted by changes in deferred tax assets
and liabilities attributable to temporary differences and to
unused tax losses.
(i) Current Tax
Current tax is measured on the basis of estimated taxable
income for the current accounting period in accordance
with the applicable tax rates and the provisions of the
Income Tax Act, 1961.
(ii) Deferred Tax
Deferred Tax assets and liabilities are measured at the tax
rates that are expected to apply to 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 by the end of the reporting period.
Deferred tax is recognized in respect of temporary
differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the
corresponding amounts used for taxation purposes (i.e.,
tax base). Deferred tax is also recognized for carry forward
of unused tax losses and unused tax credits.
Deferred tax assets are recognized to the extent 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.
The carrying amount of deferred tax assets is reviewed at
the end of each reporting period. The Company reduces
the carrying amount of a deferred tax asset to the extent
that it is no longer probable that sufficient taxable profit
will be available to allow the benefit of part or that entire
deferred tax asset to be utilized. Any such reduction is
reversed to the extent that it becomes probable that
sufficient taxable profit will be available.
Deferred tax relating to items recognized outside the
Statement of Profit and Loss is recognized either in other
comprehensive income or in equity.
Deferred tax assets and liabilities are offset when there
is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to
income taxes levied by the same taxation authority and
the Company intends to settle its current tax assets and
liabilities on a net basis.
(l) Employee Benefits
(i) Short-Term Employee Benefits
Employee benefits payable wholly within twelve months
of receiving employee services are classified as short term
employee benefits. The undiscounted amount of short
term employee benefits such as salaries, wages, etc to
be paid in exchange of employee services is recognised
as an expense as the related service is rendered by
the employee.
(ii) Post-Employment Benefit includes:
Defined Benefit Plans
For defined benefit schemes in the form of gratuity fund,
the cost of providing benefits is actuarially determined
using the projected unit credit method, with actuarial
valuations being carried out at each Balance Sheet date.
The retirement benefit obligation recognised in the
Standalone Balance Sheet represents the present value of
the defined benefit obligation as reduced by the fair value
of scheme assets.
The present value of the said obligation is determined
by discounting the estimated future cash outflows, using
market yields of government bonds of equivalent term
and currency to the liability.
The interest income / (expense) are calculated by applying
the discount rate to the net defined benefit liability or
asset. The net interest income / (expense) on the net
defined benefit liability is recognised in the Statement of
Profit and Loss.
Remeasurements, comprising of actuarial gains
and losses, the effect of the asset ceiling (if any), are
recognised immediately in the Standalone Balance
Sheet with a corresponding charge or credit to retained
earnings through OCI in the period in which they occur.
Remeasurements are not reclassified to the Standalone
Statement of Profit and Loss in subsequent periods.
Changes in the present value of the defined benefit
obligation resulting from plan amendments or curtailments
are recognised immediately in the Standalone Statement
of Profit and Loss as past service cost.
Defined Contribution Plans
The Company recognises contribution payable to the
provident fund scheme as an expense in the Standalone
Statement of Profit and Loss, when an employee renders
the related service. 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 recognised as a liability. If the
contribution already paid exceeds the contribution due
for services received before the balance sheet date, then
excess is recognised as an asset to the extent that the pre¬
payment will lead to, for example, a reduction in future
payment or refund.
Under a defined contribution plan, the Company's sole
obligation is to pay a fixed amount with no obligation
to pay further contributions if the fund does not hold
sufficient assets to pay all employee benefits. The
related actuarial and investment risks are borne by the
employee. The expenditure for defined contribution plans
is recognised as an expense during the period when the
employee provides service.
(m) Dividend
Final dividends on shares are recorded as a liability, on the
date of approval by the shareholders and interim dividends
are recorded as a liability on the date of declaration by the
Company's Board of Directors.
(n) Research and Development Expenses
Research and development expenses (other than those in the
nature of capital expenditure) are charged to the Standalone
Statement of Profit and Loss as expenses in the year in which
they are incurred, .
(o) Earnings per Share
Basic Earnings per share (EPS) amounts are calculated by dividing
the profit for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding during
the year. For the purpose of calculating diluted earnings per
share, the net profit or loss for the year attributable to equity
shareholders and the weighted average number of shares
outstanding during the year are adjusted for the effects of all
dilutive potential equity shares.
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