2.2.Summary of Material Accounting Policy Information
2.2.1. Property, Plant and Equipment
a) Property, Plant and Equipment (PPE) 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, borrowing
cost and any cost directly attributable to bringing the assets to its working condition for its intended use, net
charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable
to the assets.
b) Subsequent costs are included in the asset's carrying amount or recognised 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.
c) In the carrying amount of an item of PPE, the cost of replacing the part of such an item is recognized when
that cost is incurred if the recognition criteria are met. The carrying amount of those parts that are replaced
is derecognized in accordance with the derecognition principles.
d) Expenses incurred relating to project, net of income earned during the project development stage prior to
its intended use, are considered as pre - operative expenses and disclosed under Capital Work-in-Progress.
e) Depreciation on property, plant and equipment is provided using straight line method. Depreciation is
provided based on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013. Each
part of an item of Property, Plant & Equipment with a cost that is in relation to total cost of the Machine is
depreciated separately, if its useful life is different than the life of the Machine.
f) The depreciation for each year is recognised in the Statement of Profit & Loss unless it is included in the
carrying amount of another asset.
g) Based on the technical evaluation, the management believes that the useful life of Dies and Moulds is
6 years.
h) 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) An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset.
j) Gains or losses arising from derecognition of a property, plant and equipment 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 and Loss when the asset is derecognized.
k) Spare parts procured along with the Plant & Machinery or subsequently which meet the recognition criteria
are capitalized and added in the carrying amount of such item. The carrying amount of those spare parts
that are replaced is derecognized when no future economic benefits are expected from their use or upon
disposal. Other machinery spares are treated as "stores & spares" forming part of the inventory.
2.2.2. Leases.
a) The Company, as a lessee, recognises a right-of-use asset and a lease liability for its leasing arrangements,
if the contract conveys the right to control the use of an identified asset. The contract conveys the right
to control the use of an identified asset, if it involves the use of an identified asset and the Company has
substantially all of the economic benefits from use of the asset and has right to direct the use of the identified
asset. The cost of the right-of-use asset shall comprise of the amount of the initial measurement of the lease
liability adjusted for any lease payments made at or before the commencement date plus any initial direct
costs incurred. 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.
b) 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 Company uses
incremental borrowing rate.
c) For short-term and low value leases, the Company recognises the lease payments as an operating expense
on a straight-line basis over the lease term.
d) Lessors will continue to classify all leases under same classification principles and distinguish them between
two types of leases i.e. Finance Lease and Operating Lease.
2.2.3. Intangible assets
a) Intangible Assets 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,
borrowing costs, and any cost directly attributable to bringing the asset to its working condition for the
intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate
variations attributable to the intangible assets.
b) Subsequent costs are included in the asset's carrying amount or recognised 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.
c) Intangible assets are de-recognised either on their disposal or where no future economic benefits are
expected from their use.
d) Gains or losses arising from derecognition 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
and Loss when the asset is derecognized.
e) The amortisation period and the amortisation method for intangible asset with a finite useful life are reviewed
at each financial year end. If the expected useful of such asset is different from the previous estimates, the
changes are accounted for as change in an accounting estimate.
f) Intangible assets which are finite are amortized on a straight-line basis over their estimated useful lives. The
residual value of such intangible assets is assumed to be zero. An intangible asset with an indefinite useful
life is tested for impairment by comparing it's recoverable amount with its' carrying amount (a) annually and
(b) whenever there is an indication that the intangible asset may be impaired.
2.2.4. Capital Work in Progress
a) Expenditure incurred on assets under construction (including a project) is carries at cost under Capital
Work in Progress. Such costs comprises purchase price of asset including import duties and non-refundable
taxes after deducting trade discounts and rebates and costs that are directly attributable to bringing the
asset to the location and condition necessary for it to be capable of operating in the manner intended
by management.
b) Cost directly attributable to projects under construction include costs of employee benefits, expenditure
in relation to survey and investigation activities of the projects, cost of site preparation, initial delivery and
handling charges, installation and assembly costs, professional fees, expenditure on maintenance and up-
gradation etc. of common public facilities, depreciation on assets used in construction of project, interest
during construction and other costs if attributable to construction of projects. Such costs are accumulated
under "Capital works in progress" and subsequently allocated on systematic basis over major assets, other
than land and infrastructure facilities, on commissioning of projects.
c) Capital Expenditure incurred for creation of facilities, over which the Company does not have control but
the creation of which is essential principally for construction of the project is capitalized and carried under
"Capital work in progress" and subsequently allocated on systematic basis over major assets, other than land
and infrastructure facilities, on commissioning of projects, keeping in view the "attributability" and the "Unit
of Measure" concepts in Ind AS 16- "Property, Plant & Equipment". Expenditure of such nature incurred after
completion of the project, is charged to Statement of Profit and Loss.
2.2.5. Finance Cost
a) Borrowing costs include exchange differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost. Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily takes a substantial period of time to get ready for its
intended use or sale are capitalised as part of the cost of the asset. A qualifying asset is one that necessarily
takes substantial period of time to get ready for its intended use.
b) Interest income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalisation.
c) All other borrowing costs are expensed in the period in which they occur.
2.2.6. Inventories
a) Items of inventories are measured at lower of cost and net realisable value after providing for obsolescence,
if any, except in case of by-products which are valued at net realisable value. Cost of inventories comprises of
cost of purchase, cost of conversion and other costs including manufacturing overheads, net of recoverable
taxes incurred in bringing them to their respective present location and condition.
b) Cost of Inventory of raw materials, stores and spares, packing materials, trading and other products are
determined using the First-In, First-Out (FIFO) basis on moving average prices.
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