2. Material Accounting Policies Information
The material 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.
a) Statement of Compliance
The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under section 133 of the
Companies Act 2013 (the 'Act') and other relevant provisions of the Act.
b) Basis of preparation
The financial statements have been prepared under the historical cost convention with the exception of following assets and liabilities
which have been measured at fair value:
Ý Derivative financial instruments;
Ý Certain financial assets and liabilities measured at fair value (Refer accounting policy regarding financial instruments);
Ý Employee benefit expenses (Refer accounting policy regarding employee benefit expenses)
c) Use of estimates
In preparing the financial statements in conformity with Ind AS, management has made estimates, judgments and assumptions
which affect the application of accounting policies and the reported amounts of assets and liabilities as at the date of financial
statements and the reported amounts of revenues and expenses during the period. The estimates and associated assumptions are
based on historical experience and others 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 are recognized prospectively.
Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their affects
are disclosed in the notes to financial statements.
Critical estimates and judgements
The areas involving critical estimates or judgements are as follows:
Ý Estimated fair value of unlisted securities
The fair value of financial instruments that are not traded in an active market is determined using valuation technique. The
management uses its judgement to select a variety of methods and make assumptions that are mainly based on market
conditions existing at the end of each reporting period.
Ý Estimation of defined benefit obligation
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial
valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future.
These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities
involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these
assumptions. All assumptions are reviewed at each reporting date.
Ý Recognition of deferred tax liabilities
The extent to which deferred tax liabilities can be recognized is based on an assessment of the probability of the future taxable
income against which the deferred tax liabilities can be utilized.
Ý Recognition and measurement of provisions and contingencies
The management has made key assumptions about the likelihood and magnitude of an outflow of resources.
Ý Impairment of trade receivables
The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The
management uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on
the company's past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
Ý Measurement of Right of Use Asset (ROUA)and Lease liabilities Refer note "g".
d. Current and 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:
Ý Expected to be realized or intended to be sold or consumed in normal operating cycle; or
Ý Held primarily for the purpose of trading; or
Ý Expected to be realized within twelve months after the reporting period; or
Ý 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:
Ý It is expected to be settled in normal operating cycle; or
Ý It is held primarily for the purpose of trading; or
Ý It is due to be settled within twelve months after the reporting period; or
Ý 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 only.
e. Business Combination
Business Combinations are accounted for using the acquisition method of accounting,except for common control transactions
which are accounted using the pooling of interest method and being accounted at carrying values.
The cost of an acquisition is measured at the fair value of the assets transferred,equity instruments issued and liabilities assumed at
their acquisition date i.e. date on which control is acquired.Contingent consideration to be transferred is recognised at fair value and
included as part of cost of acquisition.Transaction related costs are expensed in the period in which the costs incurred.
For each business combination, the Company elects whether to measure the non-controlling interests in the acquiree at fair value
or at the proportionate share of the acquiree's indentifiable net assets.
Goodwill arising on business combination is initially measured at cost, being the excess of the aggregate of the consideration
transferred and the amount recognised for non-controlling interests, and any previous interest held,over the fair value of net
identifiable assets acquired and liabilities assumed.After initial recognition,Goodwill is tested for impairment annually and measured
at cost less any accumulated impairment losses if any.
Common control business combination: Business combinations involving entities or business that are controlled by the company are
accounted using the pooling of interest method.
f. Revenue from Contracts with Customers
Revenue from contracts with customers is recognized to the extent that is probable that the economic benefits will flow to the
company and revenue can be reliably measurable regardless of when payment is being received. Revenue towards satisfaction
of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that
performance obligation. The transaction price of goods sold and services rendered is net of variable consideration on account of
various discounts and schemes offered by the Company as part of the contract.
Ind AS 115 provides a single model of accounting for revenue arising from contracts with customers based on the identification and
satisfaction of performance obligations. Specifically, the standard introduces a 5-step approach to revenue recognition.
Stepl: Identify the contract(s) with a customer.
Step2: Identify the performance obligation in contract
Step3: Determine the transaction price
Step4: Allocate the transaction price to the performance obligations in the contract.
Step5: Recognise revenue when [or as] the entity satisfies a performance obligation.
Disaggregate revenue information:
The disaggregated revenue of the Company best depicts how the nature, amount,timing and uncertainty of revenues and cash
flows are affected by industry, market and other economic factors.
Refer Note No. 25 for Disaggregate revenue information.
Other income
Other income is comprised primarily of interest income, insurance claim received, gain on investments and exchange gain etc.
A. Conversion Income
Revenue from sale of service is recognized when control has been transferred to the buyer usually when the delivery of goods
after due process of conversion takes place, revenue is booked when all the performance obligations are satisfied.
B. Export Incentives
Income from export incentives such as duty drawback and Remission of duties and taxes on export products(RoDTEP) are
recognised on accrual basis.
C. Interest Income
Interest income is recognized using the Effective Interest Rate (EIR).
g. Leases
The Company as a lessor
Lease Income from operating leases where the Company is a lessor is recognized in the statement of profit and loss on a straight¬
line basis over the lease term.
The Company as a lessee
The Company assesses whether a contract is or contains a lease, at inception of a contract.The assessment involves the exercise
of Judgement about whether(i) the contract involves the use of an identified asset,(ii) the Company has substantially all of the
economic benefits from the use of the asset through the period of the lease,and (iii) the Company has the right to direct the use
of the asset.
Right of Use Assets
The Company recognises a right -of-use asset ("ROU") and a corresponding lease liability for all lease arrangements .The right-
of- use assets are initially recognised at cost, which companies the initial amount of the lease liability adjusted for lease payments
made at or prior to the commencement date of the lease(i.e. the date the underlying asset is available for use) plus any initial direct
costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses, if
any Right-of-use assets are depreciated from the commencement date on a straight -line-basis over the shorter of lease term and
the useful life of the underlying assets.
Lease Liability
The lease liability is initially measured at the present value of the future lease payments.The lease payments are discounted using
the interest rate implicit in the lease or, if not readily determinable using the incremental borrowing rates.The lease liability is
subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount
to reflect the lease payments made.
A lease liability is remeasured upon the occurrence of certain events such as a change in the lease term or a change in an index or
rate used to determine lease payments.There measurement normally also adjusts the leased assets.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as
financing cash flows.
Leasehold Rental Property
The company has taken office premises on lease for a term of 9 years. The lease has been accounted for in accordance with Ind
AS 116.Accordingly,the company has recognized a Right-of-Use asset and a corresponding lease liability. The Right-of-Use asset
is depreciated over the lease term, and interest expenses is recognized on the lease liability using the effective interest method.
h. Property, Plant and Equipment
The Company has elected to continue with the carrying value of its Property Plant and Equipment(PPE) recognised as on April 1,
2017(transition date) measured as per the Previous GAAP and used that carrying value as its deemed cost as on the transition date
as per Para D7AA of Ind AS 101.
Property, Plant and Equipment represent a significant proportion of the asset base of the company. Free hold land is carried at
historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation. Historical cost includes
expenditures that are directly attributable to the acquisition of the items.
Property, Plant and Equipment are stated at cost, less accumulated depreciation and impairment, if any. Costs directly attributable
to acquisition are capitalized until the property, plant and equipment are ready for use, as intended by management.
The cost of a self-constructed item of property, plant and equipment comprises the cost of materials and direct labor, any other
costs directly attributable to bringing the item to working condition for its intended use.
Subsequent costs are included in the assets 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 company and the cost of the item can be
measured reliably.
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.
Other Indirect Expenses incurred relating to project, during the project development stage prior to its intended use, are considered
as pre-operative expenses and disclosed under Capital Work-in Progress.
Depreciation on property, plant and equipment is provided based on useful life of the assets using straight line method as prescribed
in Schedule II to the Companies Act, 2013, as below
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 and the cost of assets not put to use before such date are disclosed under 'Capital work-
in-progress.
The gain or loss arising on disposal of an item of property,plant and equipment is determined as the difference between sale
proceeds and carrying value of such item,and is recognised in the statement of profit and loss.
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.
i. Intangible Assets
Software
Software is measured initially at cost and subsequently at cost less accumulated amortization and impairment.Software is amortised
over its useful life on a straight line basis, as below:
Item Useful life
Computer Software - 5 years
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