7. Summary of Material Accounting Policies Information
a. Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Compa¬
ny and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is
measured at the fair value of the consideration received or receivable, taking into account contractually
defined terms of payment and excluding taxes or duties collected on behalf of the government.
i. Sale of Goods
Sales are recognized when the substantial risks and rewards of ownership in the goods, including cus¬
tody, are transferred to the buyer as per the terms of the contract and are measured at the fair value of
the consideration received and receivable and net of trade discounts, allowable sales return and sales
tax/value added tax/goods and service tax.
ii. Interest Income
Interest Income from a financial asset is recognized when it is probable that the economic benefits
will flow to the Company and the amount of income can be measured reliably. Interest income is
accrued on a time basis, by reference to the principal outstanding and at the effective interest rate ap¬
plicable, which is the rate that exactly discounts estimated future cash receipts through the expected
life of the financial asset totheasset's net carrying amount on initial recognition.
iii. Dividend
Dividend income is recognised when the right to receive dividend is established.
b. Government grants
Government Grants are recognised where there is reasonable assurance that the grant will be received and
all attached condition will be complied with.
When the grant relates to an expense item, it is recognised as income on a systematic basis over the peri¬
ods that the related costs, for which it is intended to compensate, are expensed.
Grants related to specific fixed assets are deducted from the gross va lue of the concerned assets in arriving
at their book values.
c. Taxation
Income tax expense represents the sum of current and deferred tax (including MAT).
Current income tax assets and liabilities are measured at the amount to be recovered from or paid to
taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted at the reporting date.
Income tax expense is recognized in the Statement of Profit and Loss, except to the extent that it relates to
items recognized directly in equity or other comprehensive income, in such cases the tax is also recognized
directly in equity or in other comprehensive income. Deferred tax is recognised on differences between
the carrying amounts of assets and liabilities in the Balance sheet and the tax bases used in the computa¬
tion of taxable profit.
Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax as¬
sets are generally recognized for all deductible temporary differences, Deferred tax assets are recognized
to the extent that it is probable that future taxable profits will be available against which those deductible
temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised.
Deferred tax assets and deferred tax liabilities are offset, and presented as net.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available against which the tem¬
porary differences can be utilised.
Minimum Alternative Tax (MAT) is applicable to the Company. Credit of MAT is recognised as an asset only
when and to the extent there is convincing evidence that the Company will pay normal income tax during
the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in
which the MAT credit becomes eligible to be recognised as an asset, the said asset is created by way of a
credit to the profit and loss account and shown as MAT credit entitlement.The Company reviews the same
at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent
there is no longer convincing evidence to the effect that the Company will pay normal income tax during
the specified period.
d. Property, Plant and Equipment
The Company considers the previous GAAP carrying value for all its Property, Plant and Equipment as
deemed cost at the transiton date, viz. 1 st April 2016.
Property, Plant and Equipment are stated at cost less accumulated depreciation and accumulated impair¬
ment of loss, if any.
Cost of any item of property, plant and equipment comprises its purchase price including import duties
and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable
cost of bringing the item to its working condition.
Depreciation is provided on the straight line method by depreciating carrying amount of Property, Plant
and Equipment over remaining useful life of the assets.
Depreciation methods, useful life and residual values are reviewed at each financial year end.
The useful life and residual value as per such review is normally in accordance with schedule II of the Com¬
panies Act 2013.
The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is de¬
termined as the difference between the sales proceeds and the carrying amount of the assetand is recog¬
nised in the Statement of Profit and Loss on the date of disposal or retirement.
e. Intangible Assets
Intangible assets are stated at cost less accumulated amortization and impairment. Intangible assets are
amortised over their respective individual estimated useful life on a straight line method.
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between
the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of
profit or loss when the asset is derecognised.
f. Impairment of Assets
The Company assesses at each balance sheet date whether there is any indication that a Property, plant
and equipment may have been impaired. If any such indication exists, the Company estimates the recover¬
able amount of the Property, plant and equipment. If such recoverable amount of the Property, plant and
equipment or the recoverable amount of the cash generating unit to which the Property, plant and equip¬
ment belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount.
The reduction is treated as an impairment loss and is recognized in the profit and loss. If at the balance
sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recov¬
erable amount is reassessed and the Asset is reflected at the recoverable amount subject to a maximum of
depreciated historical cost.
g. Borrowing Costs
Interest and other costs connected with the borrowing for the acquisition / construction of qualifying
fixed assets are capitalized up to the date that when such asset are ready for their intended use and other
borrowing cost are charged to statement of profit & loss. Borrowing cost includes exchange difference to
the extent regarded as an adjustment to the borrowing cost.
h. Lease
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116.
Identification of a lease requires significant judgment. The Company uses significant judgement in assess¬
ing the lease term (including anticipated renewals) and the applicable discount rate.
The Company determines the lease term as the non-cancellable period of a lease, together with both peri¬
ods covered by an option to extend the lease if the Company is reasonably certain to exercise that option;
and periods covered by an option to terminate the lease if the Company is reasonably certain not to exer¬
cise that option. In assessing whether the Company is reasonably certain to exercise an option to extend
a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances
that create an economic incentive for the Company to exercise the option to extend the lease, or not to
exercise the option to terminate the lease. The Company revises the lease term if there is a change in the
non-cancellable period of a lease.
The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluat¬
ed or for a portfolio of leases with similar characteristics.
Company as a lessee
The Company accounts for each lease component within the contract as a lease separately from non-
lease components of the contract and allocates the consideration in the contract to each lease component
based on the relative stand-alone price of the lease component and the aggregate stand-alone price of the
non-lease components.
The Company recognises right-of-use asset representing its right to use the underlying asset for the lease
term at the lease commencement date.The cost of the right-of-use asset measured at inception shall com¬
prise of the amount of the initial measurement of the lease liability adjusted for any lease payments made
at or before the commencement date less any lease incentives received, plus any initial direct costs in¬
curred and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying
asset or restoring the underlying asset or site on which it is located. The right-of-use assets is subsequently
measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted
for any remeasurement of the lease liability. The right-of-use assets is depreciated using the straight-line
method from the commencement date over the shorter of lease term or useful life of right-of-use asset.
The estimated useful lives of right-of-use assets are determined on the same basis as those of property,
plant and equipment. Right-of-use assets are tested for impairment whenever there is any indication that
their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of
profit and loss.
The Company measures the lease liability at the present value of the lease payments that are not paid at
the commencement date of the lease. The lease payments are discounted using the interest rate implicit
in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Com¬
pany uses incremental borrowing rate. For leases with reasonably similar characteristics, the Company,
on a lease-by-lease basis, may adopt either the incremental borrowing rate specific to the lease or the
incremental borrowing rate for the portfolio as a whole.The lease payments shall include fixed payments,
variable lease payments, residual value guarantees, exercise price of a purchase option where the Compa¬
ny is reasonably certain to exercise that option and payments of penalties for terminating the lease, if the
lease term reflects the lessee exercising an option to terminate the lease. The lease liability is subsequently
remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the car¬
rying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any
reassessment or lease modifications or to reflect revised in-substance fixed lease payments. The company
recognises the amount of the re-measurement of lease liability due to modification as an adjustment to
the right-of-use asset and statement of profit and loss depending upon the nature of modification. Where
the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the
measurement of the lease liability, the Company recognises any remaining amount of the re-measurement
in statement of profit and loss.
Company as a Lessor
At the inception of the lease the Company classifies each of its leases as either an operating lease or a
finance lease. The Company recognises lease payments received under operating leases as income on a
straight- line basis over the lease term. In case of a finance lease, finance income is recognised over the
lease term based on a pattern reflecting a constant periodic rate of return on the lessor's net investment
in the lease. When the Company is an intermediate lessor it accounts for its interests in the head lease and
the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use
asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short term
lease to which the Company applies the exemption described above, then it classifies the sub-lease as an
operating lease.
The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all
assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value.
The lease payments associated with these leases are recognized as an expense on a straight-line basis over
the lease term.
i. Foreign Currencies Translations
Transactions in foreign currencies are initially recorded in reporting currency by the Company at spot rates
at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency
spot rates of exchange at the reporting date. Exchange differences arising on settlement or translation of
monetary items are recognized in statement of profit and loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using
the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a
foreign currency are translated using the exchange rates at the date when the fair value is determined.The
gain or loss arising on translation of nonmonetary items measured at fair value is treated in line with the
recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items
whose fair value gain or loss is recognised in OCI or statement profit or loss are also recognised in OCI or
statement profit and loss, respectively).
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