When an item of property, plant and equipment is
scrapped or otherwise disposed of, the carrying amount
and related accumulated depreciation are removed from
the books of account and resultant profit or loss, if any, is
reflected in statement of Profit & Loss.
Company depreciates property, plant and equipment over
the estimated useful life as prescribed in schedule II of
the Companies Act 2013 on the straight-line method on
pro rata basis from the date the assets are ready for
intended use.
In respect of following assets, different useful life is taken
other than those prescribed in schedule II:
2.3 Material accounting policy:
(A) Property, plant and equipment (PPE)
Property, plant and equipment is stated at acquisition cost
less accumulated depreciation and accumulated
impairment losses, if any.
Cost of property, plant and equipment comprises its
purchase price, including import duties and non¬
refundable purchase taxes, attributable borrowing cost
and any other directly attributable costs of bringing an
asset to working condition and location for its intended
use. It also includes the present value of the expected
cost for the decommissioning and removing of an asset
and restoring the site after its use, if the recognition
criteria for a provision are met.
The Company has been granted leasehold land for the
period of 99 years which has been treated as part of
properties plant and equipment due to duration of lease
period and availability of transfer of leasehold rights. In
absence of absolute certainty regarding vesting of
ownership with the Company at the determination of
lease, depreciation is being charged on the revalued figure
of land on straight line basis over the period of lease.
Expenditure incurred after the property, plant and
equipment have been put into operation, such as repairs
and maintenance, are normally charged to the
statements of profit and loss in the period in which the
costs are incurred. Major inspection and overhaul
expenditure is capitalized if the recognition criteria are
met.
Property, plant and equipment which are not ready for
intended use as on the date of Balance Sheet are
disclosed as “Capital work-in-progress". Assets in the
course of construction and freehold land are not
depreciated.
The Company has not revalued any of its property, plant
and equipment during the year.
(B) Capital work-in-progress:
Capital work in progress is stated at cost, if any. Assets
in the course of construction are capitalized in capital
work in progress account. At the point when an asset is
capable of operating in the manner intended by
management, the cost of construction is transferred to
the appropriate category of property, plant and
equipment. Costs associated with the commissioning of
an asset are capitalised when the asset is available for
use but incapable of operating at normal levels until the
period of commissioning has been completed. Cost
includes direct costs, related incidental expenses, other
directly attributable costs and borrowing costs. Advances
paid towards the acquisition of property, plant and
equipment outstanding at each balance sheet date is
classified as capital advances under “Other Non-Current
Assets".
(C) Investment Property
Property which is held for long-term rental yields or for
capital appreciation or both, is classified as investment
property. Investment property is measured initially at its
cost, including related transaction costs. Subsequent
expenditure is capitalised to the asset's carrying amount
only when it is probable that future economic benefits
associated with the expenditure will flow to the Company
and the cost of the item can be measured reliably. Repairs
and maintenance costs are expensed when incurred.
Depreciation on investment property is provided on a pro
rata basis on straight line method over the estimated
useful lives. Useful life of assets, as assessed by the
Management, corresponds to those prescribed by
Schedule II of the Companies Act, 2013.
Investment properties are derecognised either when they
have been disposed of or when they are permanently
withdrawn from use and no future economic benefit is
expected from their disposal. The difference between the
net disposal proceeds and the carrying amount of the
asset is recognised in Statement of Profit and Loss in
the period of derecognition.
(D) Impairment of non financial assets
At the end of each reporting period, the Company
assesses whether there is any indication that an assets
or a group of assets (cash generating unit) may be
impaired. If any such indication exists, the recoverable
amount of the asset or cash generating unit is estimated
in order to determine the extent of impairment loss (if
any). If it is not possible to estimate the recoverable
amount of an individual asset, the entity determines the
recoverable amount of the Cash Generated Unit (CGU)
to which the asset belongs.
Recoverable amount is the higher of fair value less cost
of disposal and value in use. In assessing the value in use,
the estimated future cash flow are discounted at their
present value using the appropriate discount rate that
reflects current market assessment of time value of
money and the risks specific to the assets for which the
estimates of future cash flow have not been adjusted.
In determining fair value less costs of disposal, recent
market transactions are taken into account. If no such
transactions can be identified, an appropriate valuation
model is used. These calculations are corroborated by
valuation multiples, quoted share prices for publicly traded
companies or other available fair value indicators.
If the recoverable amount of an assets (or cash
generating unit) is estimated to be less than its carrying
amount, the carrying amount of the assets (or cash
generating unit) is reduced to its recoverable amount.
An impairment loss is recognised immediately in the
statement of Profit & 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, so that the increased carrying amount does not
exceed the carrying amount that would have been
determined had no impairment loss recognized originally
in the statement of Profit & Loss.
No Impairment was identified in FY 2024-25 and in
previous FY 2023-24.
(E) Financial instruments
A financial instrument is any contact 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 recognized when a 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 and loss)
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 recognized
immediately in the statement of profit and Loss.
(i) Financial Assets
(a) Initial recognition and measurement:
Financial assets, except for trade receivables, are
recognized when the Company becomes a party to
the contractual provisions of the instrument.
Trade receivables are initially recognised at
transaction price as they do not contain a significant
financing component. This implies that the effective
interest rate for these receivables is zero.
(b) Subsequent measurement of financial assets:
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 and are classified in four categories:
• Amortised cost
• Fair value through other comprehensive income
(FVTOCI) with recycling of cumulative gains and
losses (debt instruments)
• Fair value through OCI with no recycling of
cumulative gains and losses upon derecognition
(equity instruments)
• Fair value through profit or loss
The classification of financial assets at initial
recognition depends on the financial asset's
contractual cash flow characteristics and the
Company's business model for managing them.
In order for a financial asset to be classified and
measured at amortized cost or fair value through
OCI, it needs to give rise to cash flows that are 'solely
payments of principal and interest (SPPI)' on the
principal amount outstanding. This assessment is
referred to as the SPPI test and is performed at an
instrument level.
Financial assets with cash flows that are not SPPI
are classified and measured at fair value through
profit or loss, irrespective of the business model. The
Company's business model for managing financial
assets refers to how it manages its financial assets
in order to generate cash flows. The business model
determines whether cash flows will result from
collecting contractual cash flows, selling the financial
assets, or both.
Financial assets classified and measured at
amortized cost are held within a business model with
the objective to hold financial assets in order to
collect contractual cash flows while financial assets
classified and measured at fair value through OCI
are held within a business model with the objective
of both holding to collect contractual cash flows and
selling.
(c) Derecognition of financial assets:
The Company derecognizes a financial asset when
- the contractual rights to receive the cash flows
from the asset expire, or
- the Company has transferred its right to receive
cash flows from the asset or has assumed an
obligation to pay the received cash flows in full
without material delay to a third party under a
'pass-through' arrangement; and either
a) It transfers the financial asset and
substantially all the risks and rewards of
ownership of the asset to another party or
b) The company has neither transferred nor
retained substantially all the risks and
rewards of the asset, but has transferred
control of the asset.
On derecognition of a financial asset in its entirety,
the difference between the asset's carrying amount
and the sum of the consideration received and
receivable and the cumulative gain or loss that had
been recognized in other comprehensive income and
accumulated in equity is recognized in the Statement
of Profit and Loss if such gain or loss would have
otherwise been recognized in the Statement of Profit
and loss on disposal of that financial asset.
(d) Impairment of financial assets:
In accordance with Ind AS 1 09, the Company applies
expected credit loss (ECL) model for measurement
and recognition of impairment loss on the financial
assets that are debt instruments, and are measured
at amortised cost e.g., loans, deposits and trade
receivables or any contractual right to receive cash
or another financial asset that result from
transactions that are within the scope.
The Company follows 'simplified approach' for
recognition of loss allowance on trade receivables.
The application of simplified approach does not
require the Company to track changes in credit risk.
Rather, it recognizes loss allowance based on lifetime
ECLs at each reporting date, right from its initial
recognition. ECL allowance recognised (or reversed)
during the period is recognised as expense (or
income) in the standalone statement of profit and
loss under the head 'Other expenses'.
(e) Write off
The gross carrying amount of a financial asset is
written off when the Company has no reasonable
expectations of recovering the financial asset in its
entirety or a portion thereof. A write-off constitutes
a derecognition event.
(ii) Financial Liabilities
(a) Initial Recognition and Measurement
Financial liabilities are recognized when the Company
becomes a party to the contractual provisions of the
instrument. Financial liabilities are initially measured
at the amortized cost unless at initial recognition,
they are classified as fair value through profit and
loss. The Company's financial liabilities include trade
and other payables and loans and borrowings
including bank overdrafts/cash credits.
(b) Subsequent measurement of financial liabilities:
All the financial liabilities are subsequently measured
at amortized cost using the effective interest rate
method or at fair value through profit and loss.
Financial liabilities carried at fair value through profit
or loss are measured at fair value with all changes
in fair value recognized in the standalone statement
of profit and loss.
(c) Derecognition of financial liabilities
A financial liability is derecognized when the obligation
under the liability is discharged or cancelled or
expires. The difference in the carrying amounts and
the consideration paid is recognized in the Statement
of Profit and Loss.
(d) Offsetting of financial instruments
Financial assets and financial liabilities are offset and
the net amount is reported in the balance sheet if
there is a currently enforceable legal right to offset
the recognized amounts and there is an intention to
settle on a net basis, to realize the assets and settle
the liabilities simultaneously.
(F) Inventories
Inventories are valued at the lower of cost and net
realisable value except scrap and by-products which are
valued at net realisable value. Costs comprises as follow:
(i) Raw materials, packing materials and store &
spares etc:
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. The aforesaid items are
valued at net realisable value if the finished products
in which they are to be incorporated are expected to
be sold at a loss.
(ii) 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. In pursuance of Ind AS-2 indirect
production overheads (estimated by the
Management) have been allocated for ascertainment
of cost. Net realisable value is the estimated selling
price in the ordinary course of business, less
estimated costs of completion and the estimated
costs necessary to make the sale.
Obsolete inventories are identified and written down
to net realisable value. Slow moving and defective
inventories are identified and provided to net
realisable value.
(G) Fair value measurement:
The Company measures certain financial instruments,
defined benefit liabilities and equity settled employee
share-based payment plan at fair value at each reporting
date. Fair value is the price that would be received to sell
an assets or paid to transfer a liabilities in an orderly
transaction between market participants at the
measurement date.
The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the
liability takes place either:
i. in the principal market for the asset or liability, or
ii. in the absence of a principal market, in the most
advantageous market for the asset or liability.
The principal or the most advantageous market must be
accessible by the Company.
The fair value of an asset or a liability is measured using
the assumptions that market participants would use when
pricing the asset or liability, assuming that market
participants act in their economic best interest.
A fair value measurement of a non-financial asset takes
into account a market participant's ability to generate
economic benefits by using the asset in its highest and
best use or by selling it to another market participant
that would use the asset in its highest and best use.
The Company uses valuation techniques that are
appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximising the
use of relevant observable inputs and minimising the use
of unobservable inputs.
All assets and liabilities for which fair value is measured
or disclosed in the financial statements are categorised
within the fair value hierarchy, which are described as
follows ; level I - III
Level I input
Level I input are quoted price in active market for identical
assets or liabilities that the entity can access at the
measurement date.
Level II input
Level II input are input other than quoted market prices
included within level I that are observable for the assets
or liabilities either directly or indirectly.
Level III input
Level III inputs are unobservable inputs for the asset or
liability. An entity develops unobservable inputs using the
best information available in the circumstances, which
might include the entity's own data, taking into account
all information about market participant assumptions that
is reasonably available.
(H) Assets classified as held for sale
Non-current assets are classified as held for sale if their
carrying amount will be recovered principally through a
sale transaction rather than through continuing use. This
condition is regarded as met only when the asset is
available for immediate sale in its present condition
subject only to terms that are usual and customary for
sale of such asset and its sale is highly probable.
Management must be committed to the sale, which
should be expected to qualify for recognition as a
completed sale within one year from the date of
classification. As at each balance sheet date, the
management reviews the appropriateness of such
classification. Non-current assets classified as held for
sale are measured at the lower of their carrying amount
and fair value less costs to sell.
Property, plant and equipment once classified as held for
sale are not depreciated.
(I) Cash and cash equivalent:
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, which are
subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and
cash equivalents consist of cash at banks, on hand and
short-term deposits, as defined above.
|