II. Significant Material accounting policies information
Entity specific disclosure of material accounting policies where Ind AS permits alternative treatment is disclosed hereunder after assessing the materiality of the accounting policy information involving exercising of judgments considering the qualitative and quantitative factors like size and nature, characteristics of transactions, events or conditions. Entity's conclusion that the accounting policy is not material does not affect the disclosures required under Ind AS.
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, unless otherwise indicated.
III. 1 Basis of Preparation and Presentation
The financial statements are prepared on a 'going concern' basis under historical cost using accrual basis, except for the following assets and liabilities which have been measured at fair value amount:
i) Certain financial assets and liabilities
ii) employee defined benefit assets/(liability)
The financial statements have been prepared and presented in accordance with the Indian Accounting Standards (“Ind AS”) notified under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015 and other relevant provisions of the Act since 1st April 2017.
Company's financial statements are presented in Indian Rupees, which is also its functional currency and rounded off to the nearest Rs. lakhs.
For the purposes of current and non-current classification, the Entity reckoned its normal operating cycle as 12 months
111.2 Use of estimates and judgments
The preparation of financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
111.3 Property, plant and equipment
Property, plant and equipment are stated at cost, net of recoverable taxes, trade discount and rebates less accumulated depreciation and impairment losses, if any. Such cost includes purchase price, cost of manufacture including proportionate overhead expenditure and any cost directly attributable to bringing the assets to its working conditions for its intended use.
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.
Depreciation on property, plant and equipment is provided using written down vale method. Depreciation is provided based on useful life of the assets as prescribed in schedule II to the companies Act, 2013.
III. 4 Intangible assets
Intangible assets that are acquired by the company are stated at cost of acquisition net of recoverable taxes, trade discount and rebates less accumulated amortization/depletion and impairment loss, if any. Such cost includes purchase price, and any cost directly attributable to bringing the asset to its working condition for the intended use. Intangible Assets internally developed or under development by the Entity are stated by including the cost of outsourced services together with the relevant employee costs for such development and other relevant overhead expenditure.
Gains and Losses arising from de-recognition of an intangible assets are recorded in the statement of profit and loss, and are measured as the difference between the net disposal proceeds, if any, and the carrying amount of respective intangible assets as on the date of de-recognition.
111.5 Financial Instruments
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.
111.5.1 Financial Assets
All financial assets are recognised initially at fair value and in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset are amortized. Purchase and sale of financial assets are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
The financial assets are subsequently measured at fair value through Profit & Loss (FVTPL) excepting investments in subsidiary which are stated at cost.
111.5.2 Investment in subsidiaries
The Company has elected to carry its investment in Equity instruments of subsidiary at cost in accordance with Ind AS 27. Investment is evaluated for impairment by adopting the 'Value in Use' model for the purposes of ascertaining the estimated recoverable amount of the investment. In the absence of computation of 'Value in Use', the net-worth of the investee company is considered as the amount of 'value in use' and impairment is considered accordingly.
111.5.3 Impairment of financial assets
In accordance with Ind AS 109, the Company uses 'Expected Credit Loss' (ECL) model, for evaluating impairment of financial assets other than those measured at cost.
Receivables from Railways which are under the Government (including foreign government) are generally treated as fully recoverable based on past experience. Impairment on account of expected credit loss is however, assessed in respect of dues outstanding for a significant period of time.
111.6 Financial Liabilities
Initial recognition and measurement
All financial liabilities are recognized at fair value and in case of loans, net of directly attributable transaction costs. Fees of recurring nature are directly recognised in the Statement of Profit and Loss as finance cost.
Subsequent measurement
Financial liabilities are carried at amortized cost using the effective interest method in cases where the
contractual liability is for a long term. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
111.7 Derecognition of financial instruments
A financial asset (or a part of the financial asset) is derecognized from the Company's balance sheet 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 the financial liability) is derecognized from the Company's balance sheet when the obligation under the liability is discharged or cancelled or expires.
111.8 Cash and cash equivalents
Cash and cash equivalents consist of cash at banks and on hand, demand deposits and other short term deposits that are readily convertible into known amounts of cash and are subject to insignificant risk of changes in value and have a short term maturity. Deposits under pledge with the bankers for obtaining credit facilities are not included in cash & cash equivalents.
NI.9 Inventories
Inventories consist of raw materials, stores and spares, work-in-progress, costs incurred on customer contracts yet to be accepted by them and finished goods and measured at the lower of cost and net realisable value after providing for obsolescence. The cost of all categories of inventories is based on the weighted average method. Cost includes expenditures incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of finished goods and work-in-progress, cost includes an appropriate share of fixed overheads based on normal operating capacity for the relevant period(s).
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
MI.10 Impairment of non-financial assets
The carrying amounts of the Company's non-financial assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated to determine the extent of impairment if any.
The recoverable amount of an asset or cash-generating unit (as defined below) is the greater of its value in use and its fair value less costs to sell.
An impairment loss is recognised in the statement of profit and loss to the extent, the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
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