3. Significant Accounting Policies & Judgements
3.1 Property, Plant & Equipment:
Freehold land is carried at historical cost. All other items of property, plant and
equipment are stated at historical cost less depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
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
Ý associated with the item will flow to the group and the cost of the item can be measured
reliably. The carrying amount of any component accounted for as a separate asset is
derecognised whenjisplsced. All other repairs and maintenance are^cly^y^ed to profit or
loss during the B^ffii^l|l0ciod in which they are incurred.
Depreciation is calculated using the straight dine method to allocate their cost, net of
their residual values, over their estimated useful lives
The assets’ residual values, useful lives and method of depreciation are reviewed at each
financial year end and are adjusted prospectively, if appropriate.
3.2 Intangible Assets:
Intangible assets are carried at cost less accumulated amortization and accumulated
impairment losses, if any Cost includes expenditure that is directly attributable to the
acquisition of the intangible assets.
Identifiable intangible assets are recognised when it is probable that future economic
benefits attributed to the asset will flow to the Company and the cost of the asset can
be reliably measured.
Computer software are capitalized at the amount paid to acquire the respective license
for use and are amortized over period of useful lives. The assets useful lives are reviewed
at each financial year end.
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.
3.3 Capital Work-In-Progress:
Capital work-in-progress/intangible assets under development are carried at cost,
comprising direct cost, related incidental expenses and attributable borrowing cost.
3.4 Employee Benefits:
Short term employee benefits are recognised as an expense in the statement of profit
and loss of the year in which the related services are rendered.
Post employment and other long term employee benefits are charged off in the year in
which the employee has rendered services. The amount charged off is recognized at the
present value of the amounts payable determined using actuarial valuation techniques
based on Projected Unit Credit Method. Actuarial gain/losses in respect of post
employment and other long term benefits are charged to Other Comprehensive Income
(Net of Tax}.
Expenses regarding Retirement benefits in the form of Provident Fund are
for by the cogM^TN^^ompany does not have any defined contribution/f^&n.
3.5 Foreign Currency Transaction:
i. Transactions denominated in foreign currencies are normally recorded at the
exchange rate prevailing at the date of the transaction.
ii. Monetary Items denominated in foreign currencies at the year end are restated at
year end rates. In case of those items, which are covered by forward exchange contracts,
the difference between the year end rate and spot rate on the date of the contract is
recognized as exchange difference and transferred to dollar hedge account account as
on the date of Balance Sheet and the premium paid on forward contracts has been
recognized over the life of the contract.
iii. All other exchange difference are dealt with in the profit & loss account.
3.6 Investments:
Long term investments are stated at cost. Provision for diminution in the value of long¬
term investment is made only if such decline is other than temporary in the opinion of
the management. The carrying amount for current investments recognized in Financial
Statements is the lower of cost and fair value. Any reduction to fair value and any
reversals of such reductions, in case of these Current Investments, are included in the
profit and loss statement.
3.7 Inventories:
Inventories are valued at lower of cost and net realisable value. Cost includes all charges
incurred for bringing the goods to their present location and condition, including octroi
and other levies, transit insurance and receiving charges. Cost of finished goods include
appropriate proportion of overheads and, where applicable. Net realisable value is the
estimated selling price in the ordinary course of business, less the estimated costs of
completion and the estimated costs necessary to make the sale.
3.8 Revenue from Contract with Customers:
Revenue from contract with customers is recognised when control of the goods or
services are transferred to the customers at an amount that reflects the consideration
at which the company expects to be entitled in exchange for those goods or services.
The company has generally concluded that it is the principal in its revenue
arrangements, because it typically controls the goods or services before transferring
them to the customers.
Sale of Goods:
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Revenue oods is recognised at the point in time when conwwof the
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has been||fthe customer, generally on delivery of the goodsjpp^hs'BiPmfcj
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unfulfilled obligation that could affect the customer’s acceptance of the goods. The
company considers whether there are other promises in the contract that are separate
performance obligations to which a portion of the transaction price needs to be
allocated. In determining the transaction price for the sale of goods, the company
considers the effects of variable consideration, and consideration payable to the
customers (if any). Sales are recorded net of duties and taxes adjusted for discount and
after deducting returns, discounts and claims.
Dividend Income
Dividend income from investments is recognised when the Company’s right to receive is
established which generally occurs when the shareholders approve the dividend.
Interest Income
Interest income is included in other income in the statement of profit or loss. Interest
Income mainly include trading interest which is recognised on receipt basis.
Purchase
The Company recognizes the purchase at the point in time when control of the goods
has been received, generally on delivery of the goods and when the significant risks and
rewards of ownership have been transferred to the Company, in accordance with the
applicable accounting standards. In cases where invoices have been received but the
goods are yet to be delivered, such transactions are not recognized as purchases, and
no corresponding inventory is recorded until the physical receipt of goods.
3.9 GST paid on acquisition of assets or on incurring expenses:
Expenses and assets are recognised net of the amount of GST paid, except:
• When the tax incurred on a purchase of assets or services is not recoverable from the
taxation authority (Ineligible input credit), in which case, the tax paid is recognised as
part of the cost of acquisition of the asset or as part of the expense item, as applicable.
• When receivables and payables are stated with the amount of tax included.
• The net amount of tax recoverable from, or payable to, the taxation authority is
included as part of "Other Current Assets" or Other Current Liabilities, as the case may
be, in the balance sheet.
3.10 Taxation:
Tax expense recognized in Statement of Profit and Loss comprises the surnohdefm-red
tax and curr^>ers^fc3c>t to the extent it recognized m other comprehe/^eTn«tfi®k6r
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directly in Iff ;113Jp)
Current tax comprises the tax payable or receivable on taxable income or loss for the
year and any adjustment to the tax payable or receivable in respect of previous years.
Current tax is computed in accordance with relevant tax regulations. The amount of
current tax payable or receivable is the best estimate of the tax amount expected to be
paid or received after considering uncertainty related to income taxes, if any. Current
income tax relating to items recognised outside profit or loss is recognised outside profit
or loss (either in other comprehensive income or in equity).
Current tax assets and liabilities are offset only if there is a legally enforceable right to
set off the recognised amounts, and it is intended to realise the asset and settle the
liability on a net basis or simultaneously.
Deferred tax is recognised in respect of temporary differences between carrying amount
of assets and liabilities for financial reporting purposes and corresponding amount used
for taxation purposes. Deferred tax assets are recognised on unused tax loss, unused
tax credits and deductible temporary differences to the extent it is probable that the
future taxable profits will be available against which they can be used. This is assessed
based on the Company’s forecast of future operating results, adjusted for significant
non-taxable income and expenses and specific limits on the use of any unused tax loss.
Unrecognised deferred tax assets are re-assessed at each reporting date and are
recognised to the extent that it has become probable that future taxable profits will allow
the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to
apply in the year when the asset is realised or the liability is settled, based on tax rates
(and tax laws) that have been enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from
the manner in which the Company expects, at the reporting date to recover or settle the
carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset
only if there is a legally enforceable right to set off the recognised amounts, and it is
intended to realise the asset and settle the liability on a net basis or simultaneously.
Deferred tax relating to items recognised outside statement of profit and loss is
recognised outside statement of profit or loss (either in other comprehensive income or
in equity).
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to
items that are recognised in other comprehensive income or directly in equity, in which
case the currenJ/S^ESbferred tax are also recognised in other com«ff^ijfTsi^e income
or directly in e&jfltty respectively. fj'f
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