2.1 Summary of Significant Accounting Policies:a) Basis of preparation Of Financial Statements:
The financial statements have been prepared and
presented under the Historical Cost Convention, on
accrual basis of the accounting except for certain
financial assets and financial liabilities including
derivative instruments, if any, which are measured at
fair value/amortized cost/net present value at the end
of each reporting period; as explained in the accounting
policies below.
Fair Value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly
transaction between the market participants at the
measurement date. These accounting policies have
been applied consistently over all the period presented
in these financial statements.
All assets and liabilities have been classified as current
or non-current as per the Company’s normal operating
cycle and other criteria set out in Schedule III to the
Companies Act, 2013.
For the purpose of Current / Non - Current
classification of assets and liabilities, the Company
has ascertained its operating cycle as twelve months.
This is based on the nature of services and the time
between the acquisition of the assets or liabilities for
processing and their realization in Cash and Cash
Equivalents.
The Company’s financial statements are prepared and
presented in Indian Rupee, which is also the functional
currency for the Company. All amounts have been
rounded off to nearest lakhs, unless otherwise
indicated.
b) Use of Estimates:
The preparation of the financial statements is in
conformity with the Ind AS which requires
managements to make certain judgments, estimates
and assumptions that affect the application of the
accounting policies and the reported amounts of the
assets, liabilities, income and expenses (including
contingent liabilities) and the accompanying
disclosures. Actual results may differ from these
estimates. Estimates and underlying assumptions are
reviewed on a periodic basis. Revision to accounting
estimates are recognized in the period in which the
estimates are revised and in any future periods
affected.
The key assumptions concerning the future and other
key resources of estimation uncertainty at the reporting
date, have a significant risk of causing a material
adjustment to the carrying amount of the assets and
liabilities within the next financial year are described as
follow:
i. Income Tax:
The Company’s tax jurisdiction is in India. Significant
judgments are involved in estimating budgeted profits
for the purpose of paying advance tax, determining the
income tax provisions, including the amount expected
to be paid / recovered. (Refer Note No.32)
ii. Useful life of the Property, Plants and
Equipment:
Property, Plant and Equipment represent a significant
proportion of the asset base of the Company. The
charge in respect of periodic depreciation is derived
after determining an estimate of an asset’s expected
useful life and the expected residual value at the end of
its life.
The useful lives and residual values of Company’s
assets are determined by the management at the time
the asset is acquired and reviewed periodically,
including at each financial year end.
Useful lives of each these assets is based on the life
prescribed in Schedule II to the Companies Act, 2013
or based on the technical estimates, taking into
account the nature of the assets, estimated usage,
expected residual values and operating conditions of
the assets.
Estimated useful life of Property, Plant and Equipment
is based on a number of factors including the effects of
obsolescence, demand, competition and other
economic factors (such as the stability of industry and
known technological advances) and the level of
maintenance expenditures required to obtain the
expected future cash flows from the asset.
iii. Defined Benefits Obligations:
The costs of providing Gratuity and other post¬
employment benefits are charged to the Statement of
Profit and Loss in accordance with Ind AS - 19,
“Employee Benefits” over the period during which
benefit is derived from the employees’ services. It is
determined by using the Actuarial Valuation and
assessed on the basis of assumptions selected by the
management.
An actuarial valuation involves making various
assumptions that may differ from actual developments
in the future. These assumptions include salary
escalation rate, discount rates, expected rate of return
on assets and mortality rates. The same is disclosed in
Note No. 35, “Employee Benefits”. Due to complexities
involved in the valuation and its long term in nature, a
defined benefit obligation is highly sensitive to change
in these assumptions. All assumptions are reviewed at
each balance sheet date.
iv. Fair Value measurements of Financial
Instruments:
When the fair values of financial assets and financial
liabilities recorded in the balance sheet cannot be
measured based on quoted prices in active markets,
their fair value is measured using valuation techniques,
including the discounted cash flow model, which
involve various judgments and assumptions.
v. Allowance for impairment of trade receivables:
Judgments are required in assessing the recoverability
of overdue trade receivables and determining whether
a provision is against those receivables is required.
Factors considered include the credit rating of the
counterparty, the amount and timing of anticipated
future payments and any possible actions that can be
taken to mitigate the risk of non - payments. Moreover,
trade receivables are written off on a case-to-case
basis if deemed not to be collectible on the assessment
of the underlying facts and circumstances.
vi. Provisions:
The timing of recognition and quantification of the
liability requires estimates which can be subject to
change. The carrying amounts of provision and
liabilities are reviewed regularly and revised to take the
amount of changing the facts and circumstances.
vii. Impairment of Financial and Non - Financial
Assets:
The impairment provision of financial assets are based
on the assumptions about the risk of default and
expected cash loss rates. The Company uses judgment
in making these assumptions and selecting the inputs
to the impairment calculation, based on Company’s
past history, existing market conditions as well as
forward looking estimates at the end of the reporting
period.
In case of Non - Financial Assets, the Company
estimates asset’s recoverable amount, this is higher of
an assets or Cash Generating Units (CGU)’s fair value
less the cost of disposal and the value in use.
In assessing the value in use, the estimated future cash
flows are discounted using the pre - tax discount rate
that reflects current market assessments of the time
value of money and the risk specific to the assets. In
determining the fair value less cost of disposal, recent
market transactions are taken into accounts, if no such
transactions can be identified, an appropriate
valuation model is used.
viii. Recognition of Deferred Tax Assets and
Liabilities:
Deferred tax assets and liabilities are recognized for
deductible/taxable temporary differences and unused
tax losses and tax credits for which there is probability
of utilization against the future taxable profit. The
Company uses judgments to determine the amount of
deferred tax that can be recognized, based upon the
likely timing and the level of future taxable profits and
business developments.
ix. Inventory Management:
Inventory consists of a large variety of items of raw
materials, stores and spares finished goods with
variation in sizes and weights. Measurement of items of
inventory is complex and involves significant
judgements and estimates. The Company performs
physical counts of the inventory on a periodic basis and
arrives at the proper quantity of inventory which involve
estimates of quantity for certain types of items with
heavy weight or in such forms where complete count is
not practicable.
c) Property, Plants and Equipment:Measurement at Recognition:
An item of Property, Plant and Equipment that
qualifies as an asset is measured on the initial
recognition at cost, net of recoverable taxes, if
any. Following the initial recognition, item of
property, plants and equipment are carries at its
cost less accumulated depreciation /
amortization and accumulated impairment
losses, if any.
The Company identifies and determines cost of
each part of an item of Property, Plant and
Equipment separately, if the part has a cost which
is significant to the total costs of that item of
Property, Plant and Equipment and has a useful
life that is materially different from that of
remaining items.
The cost of an item of property, plants and
equipment comprises of its purchase price
including import duties and other non - refundable
purchase taxes or levies, directly attributable to
the cost of bringing the asset to its present
location and working condition for its intended use
and the initial estimate of decommissioning,
restoration and similar liabilities, if any. Any trade
discount and rebates are deducted in arriving at
the purchase price of such Property, Plant and
Equipment.
Such cost also includes the cost of replacing a
part of the plant and equipment and the borrowing
cost of the long - term construction projects, if the
recognition criteria are met. Expenses directly
attributable to new manufacturing facility during
its construction period are capitalized if the
recognition criteria are met. Expenditure related to
plans, designs and drawings of buildings or plant
and machinery is capitalized under relevant heads
of property, plant and equipment if the recognition
criteria are met.
When the significant parts of Property, Plant and
Equipment are required to be replaced at
periodical intervals, the Company recognizes
such part as individual assets with specific useful
lives and depreciates them accordingly. Likewise,
when a major inspection is performed, its cost is
recognized in the carrying amount of the plant and
equipment as replacement, if the recognition
criteria are satisfied, all other repair and
maintenance costs are recognized in the
Statement of Profit and Loss as and when
incurred. The present value of the expected cost
for the decommissioning of an asset after its use
is included in the cost of the respective asset if the
recognition criteria for a provision are met.
All the costs, including administrative, financing
and general overhead expenses, as are
specifically attributable to construction of a
project or to the acquisition of a Property, Plants
and Equipment or bringing it to its present location
and working condition, is included as a part of the
cost of construction of the project or as a part of
the cost of Property, Plant and Equipment, till the
commencement of commercial production. Any
adjustments arising from exchange rate variations
attributable to the Property, Plant and Equipment
are capitalized as aforementioned.
Borrowing cost relating to the acquisition /
construction of Property, Plant and Equipment
which takes the substantial period of time to get
ready for its intended use are also included in the
cost of Property, Plant and Equipment / cost of
constructions to the extent they relate to the
period till such Property, Plant and Equipment are
ready to be put to use.
Any subsequent expenditure related to an item of
Property, Plant and Equipment is added to its book
value only and only if it increases the future
economic benefits from the existing asset beyond
its previously assessed standard of performance.
Any items such as spare parts, stand by
equipment and servicing equipment that meet the
definitions of the Property, Plant and Equipment
are capitalized at cost and depreciated over the
useful life of the respective Property, Plant and
Equipment. Cost is in the nature of repair and
maintenances are recognized in the Standalone
Statement of Profit and Loss as and when
incurred.
The Company has elected to consider the carrying
amount of all its property, plants and equipment
appearing the financial statements prepared in
accordance with the Accounting Standards
notified under the Section 133 of the Companies
Act, 2013, read together with the Rule 7 of the
Companies (Accounts) Rule, 2014, as amended
and used the same as deemed cost in the Opening
Ind AS Balance Sheet prepared as on April 1, 2019.
Capital Work-in-Progress and Capital Advances:
Cost of Property, Plant and Equipment not ready
for intended use, as on the balance sheet date, is
shown as a “Capital Work-in-Progress”. The
Capital Work-in-Progress is stated at cost. Any
expenditure in relation to survey and investigation
of the properties is carried as Capital Work-in¬
Progress. Such expenditure is either capitalized as
cost of the projects on completion of construction
project or the same is expensed in the period in
which it is decided to abandon such project. Any
advances given towards acquisition of Property,
Plants and Equipment outstanding at each
balance sheet date is disclosed as “Other Current
Assets”.
Depreciation:
Depreciation on each part of Property, Plants and
Equipment is provided to the extent of the
depreciable amount of the assets on the basis of
“Straight Line Method (SLM)” on the useful life of
the tangible property, plants and equipment and is
charged to the Statement of Profit and Loss, as per
the requirement of Schedule - II to the Companies
Act, 2013.The useful life of the Property, Plants
and Equipment is estimated as prescribed in
Schedule II of the companies Act 2013 or
estimated by the management as per technical
evaluation based on the nature of the Property,
Plants and Equipment, the usage of the Property,
Plants and Equipment, expected physical wear
and tear of the such Property, Plants and
Equipment, the operating conditions, anticipated
technological changes, manufacturer warranties
and maintenance support of the Property, Plants
and Equipment etc.
When the parts of an item of the Property, Plants
and Equipment have different useful life, they are
accounted for as a separate item (major
components) and are depreciated over their
useful life or over the remaining useful life of the
principal Property, Plants and Equipment,
whichever is less.
Useful lives of each class of Property, Plants and
Equipment as prescribed under Part C of Schedule
II to the Companies Act, 2013; except as based on
technical evaluation are as under: -
Freehold land is not depreciated. Leasehold land
and their improvement costs are amortized over
the period of the lease. The useful lives, residual
value of each part of an item of Property, Plants
and Equipment and the method of depreciation
are reviewed at the end of each reporting period, if
any, of these expectations differ from the previous
estimates, such change is accounted for as a
change in accounting estimate and adjusted
prospectively, if appropriate.
Derecognition:
The carrying amount of an item of Property, Plants
and Equipment and Intangible Assets is
recognized on disposal or when no future
economic benefits are expected from its use or
disposal. The gain or loss arising from
derecognition of the Property, Plants and
Equipment is measured as the difference between
the net disposal proceeds and the carrying
amount of the assets and is recognized in the
Statement of Profit and Loss, as and when the
assets are derecognized.
d) Intangible AssetsMeasurement at Recognition:
Intangible assets acquired separately is measured
on the initial recognition at Cost. Intangible assets
arising on the acquisition of business are
measured at fair value as at the date of
acquisition. Internally generated intangible assets
including research cost are not capitalized and the
related expenditure is recognized in the Statement
of Profit and Loss in the period in which the
expenditure is incurred. Following the initial
recognition, intangible assets are carried at cost
less accumulated amortization and accumulated
impairment loss, if any.
The Company has elected to consider the carrying
amount of all its intangible assets appearing in the
financial statements prepared in accordance with
the Accounting Standards notified under the
Section 133 of the Companies Act, 2013, read
together with the Rule 7 of the Companies
(Accounts) Rule, 2014, as amended and used the
same as deemed cost in the Opening Ind AS
Balance Sheet prepared as on April 1, 2019.
Amortization:
Intangible assets with the finite lives are amortized
on a “Straight Line Basis” over the estimated
useful economics life of such Intangible assets.
The amortization expenses on Intangible assets
with the finite lives are recognized in the
Statement of Profit and Loss.
The amortization period and the amortization
method for an intangible asset with the finite
useful life are reviewed at the end of each
financial year. If any of these expectations differ
from the previous estimates, such changes are
accounted for as a change in an accounting
estimate.
Intangible assets including Computer software
are amortized on straight-line basis over a period
of Five years.
Derecognition:
The carrying amount of an Intangible asset is
recognized on disposal or when no future
economic benefits are expected from its use or
disposal. The gain or loss arising from the
derecognition of an Intangible asset is measured
as the difference between the net disposal
proceeds and the carrying amount of the
intangible asset and is recognized in the
Statement of Profit and Loss, as and when such
asset is derecognized.
e) Impairment:
Assets that have an indefinite useful life, for
example goodwill, are not subject to amortization
and are tested for impairment annually and
whenever there is an indication that the asset may
be impaired.
Assets that are subject to depreciation and
amortization and assets representing investments
in subsidiary and associate companies are
reviewed for impairment, whenever events or
changes in circumstances indicate that carrying
amount may not be recoverable. Such
circumstances include, though are not limited to,
significant or sustained decline in revenues or
earnings and material adverse changes in the
economic environment.
The Company assesses at each reporting date
whether there is an indication that assets may be
impaired. If any indication exists based on internal
or external factors, or when annual impairment
testing for assets is required, the Company
estimates the asset’s recoverable amount. Where
the carrying amount of the assets or its cash
generating unit (CGU) exceeds its recoverable
amount, the assets are considered impaired and
is written down to its recoverable amount. The
recoverable amount is the greater of the fair value
less cost to sell and value in use. In assessing
value in use, the estimated future cash flows are
discounted to their present value using a pre - tax
rate that reflects current market rates and the risk
specific to the assets. For those assets that does
not generate largely independent cash inflows,
the recoverable amount is determined for the CGU
to which the assets belong. Fair value less cost to
sell is the best estimate of the amount obtainable
from the sale of an asset in an arm’s length
transactions between knowledgeable, willing
parties, less cost of disposal. After the
impairment, depreciation is provided on the
revised carrying amount of the assets over its
remaining useful life.
Reversal of impairment losses recognized in prior
years is recorded when there is an indication that
the impairment losses recognized for the assets
no longer exists or has decreased. However, the
increase in the carrying amount of assets due to
the reversal of an impairment loss is recognized to
the extent it does exceed the carrying amount that
would have been determined (net of depreciation)
had no Impairment Loss been recognized for the
assets in the prior years.
Impairment losses, if any, are recognized in the
Statement of Profit and Loss and included in
depreciation and amortization expense.
Impairment losses are reversed in the Statement
of Profit and Loss only to the extent that the asset’s
carrying amount does not exceed the carrying
amount that would have been determined if no
impairment loss had previously been recognized.
f) Lease:
A lease is classified at the inception date as
finance lease or an operating lease. A lease that
transfers substantially all the risk and rewards
incidental to the ownership to the Company is
classified as a finance lease. All other leases are
classified as operating lease.
The Company as a Lessee:a) Operating Lease:
Rental payable under the operating lease is
charged to the Statement of Profit and Loss on a
straight - line basis over the term of the relevant
lease except where another systematic basis is
more representative of time pattern in which
economic benefits from the leased assets are
consumed.
b) Finance Lease:
Finance lease is capitalized at the
commencement of the lease, at the lower of the
fair value of the property or the present value of the
minimum lease payments. The corresponding
liability to the lessor is included in the Balance
Sheet as a finance lease obligation. Lease
payments are apportioned between finance
expenses and the reduction of the lease
obligation so as to achieve a constant rate of
interest on the remaining balance of the liability.
Finance expenses are charged directly against the
income over the period of the lease unless they are
directly attributable to qualifying assets, in which
case they are capitalized. Contingent rentals are
recognized as an expense in the period in which
they are incurred.
A leased asset is depreciated over the useful lives
of the assets, however, if there is no reasonable
certainty that the Company will obtain ownership
by the end of the lease term, the assets is
depreciated over the shorter of the estimated
useful lives of the assets and the lease terms.
The Company as a Lessor:
Lease payments under operating leases are
recognized as an income on a straight - line basis
in the statement of profit and loss over the lease
term except where the lease payments are
structured to increase in line with expected
general inflation. The respective leased assets are
included in the Balance Sheet based on their
nature.
Assets given under finance lease are recognised at
an amount equal to the net investment in the
lease. Lease rentals are apportioned between
principal and interest on the Internal Rate of
Return (IRR) method. The principal amount
received reduces the net investment in the lease
and interest is recognized as revenue. Initial direct
cost such as legal costs, brokerage costs etc. are
recognized immediately in the Statement of Profit
and Loss/ Profit and Loss Account
g) Investments:
Investments are classified into Current or Non -
Current Investments. Investments that are readily
realizable and intended to be held for not more
than a year from the date of acquisition are
classified as Current Investments. All other
Investments are classified as Non - Current
Investments. However, that part of Non - Current
Investments which are expected to be realized
within twelve months from the Balance Sheet date
is also presented under “Current Investments”
under “Current portion of Non - Current
Investments” in consonance with classification of
Current / Non - Current classification of Schedule
- III of the Act.
All the equity investment which covered under the
scope of Ind AS 109, “Financial Instruments” is
measured at the fair value. Investment in Mutual
Fund is measured at fair value through profit and
loss (FVTPL). Trading Instruments are trading at
fair value through profit and loss (FVTPL).
The cost of investments comprises the purchase
price and directly attributable acquisition charges
such as brokerage, fess and duties.
h) Investments Properties:
The property that is held for capital appreciation or
for earning rentals or both or, which are not
intended to be occupied substantially for use by,
or in the operations of the Company is classified
as Investment Properties. Items of investment
properties are measured at cost less accumulated
depreciation / amortization and accumulated
impairment losses. Cost includes expenditure
that is directly attributable to bringing the asset to
the location and condition necessary for its
intended use. Investment properties are
depreciated on straight line method on pro-rata
basis at the rates specified therein. Subsequent
expenditure including cost of major overhaul and
inspection is recognized as an increase in the
carrying amount of the asset 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.
i) Inventories:
Inventories of the raw material, work-in-progress,
finished goods, packing material, stores and
spares, components, consumables and stock in
trade are carried at lower of cost and net realizable
value. However, raw material and other items held
for use in production of inventories are not written
down below cost if the finished goods in which
they will be incorporated are expected to be sold
at or above cost. The comparison of cost and net
realizable value is made on an item by item basis.
In determining the cost of raw materials, work-in¬
progress, finished goods, packing materials,
stores and spares, components and stock in trade
“First in First Out (FIFO)” method is used. Cost of
inventories included the cost incurred in bringing
each product to its present location and
conditions are accounted as follows:
i) Raw Material: Cost included the purchase
price net of all direct and indirect taxes,
duties (other than those which is recoverable
from tax authorities) and other direct or
indirect costs incurred to bring the
inventories into their present location and
conditions.
ii) Finished Goods and Work-in-Progress: Cost
included cost of direct materials and packing
material and the labor cost and an
appropriate proportion of fixed and variable
overhead based on the normal operating
capacity of the Company, but excluding the
borrowing costs but include the other costs
incurred in bringing the inventories to their
present location and condition. Fixed
production overheads are allocated based of
normal capacity of production facilities. Cost
is determined on “First in First out basis
(FIFO)”.
iii) Stock in Trade: Stock of raw material
consists of raw material intended for trading.
Cost of raw material intended for trading
included the purchase price and other direct
or indirect costs incurred in bringing the
inventories to their present location and
conditions. Cost is determined on “First in
First out basis (FIFO)”.
iv) Stores / spares: Cost included the purchase
price net of all direct and indirect taxes,
duties (other than those which is recoverable
from tax authorities) and other direct or
indirect costs incurred to bring the
inventories into their present location and
conditions.
The stock of waste or scrap is valued at net
realizable value.
“Net Realizable Value” is the estimated
selling price of inventories in the ordinary
course of business, less estimated costs of
completion and estimated cost necessary to
make the sales of the products.
j) Borrowing Costs:
Borrowing cost include the interest, commitments
charges on bank borrowings, amortization of
ancillary costs incurred in connection with the
arrangement of borrowings.
Borrowing costs that are directly attributable to
the acquisition or construction of qualifying
property, plants and equipment are capitalized as
a part of cost of that property, plants and
equipment until such time that the assets are
substantially ready for their intended use.
Qualifying assets are assets which take the
substantial period of time to get ready for the
intended use or sale.
When the Company borrows the funds specially
for the purpose of obtaining the qualifying assets,
the borrowing costs incurred are capitalized with
qualifying assets. When the Company borrows
fund generally and use them for obtaining a
qualifying asset, the capitalization of borrowing
costs is computed on weighted average cost of
general cost that are outstanding during the
reporting period and used for acquisition of the
qualifying assets.
Capitalization of the borrowing costs ceases when
substantially all the activities necessary to
prepare the qualifying assets for intended use are
complete.
Other Borrowing Costs are recognized as
expenses in the period in which they are incurred.
Any interest income earned on temporary
investment of specific borrowings pending their
expenditure on qualifying assets is deducted from
the borrowing costs eligible for capitalization.
Any exchange differences arising from foreign
currency borrowings to the extent that they are
regarded as adjustments to interest costs are
recognized as Borrowing Costs, and are
capitalized as a part of cost of such property,
plants and equipment if they are directly
attributable to their acquisition or charged to the
Standalone Statement or Profit and Loss.
k) Employee Benefits:Short Term Employee Benefits:
All the employee benefits payable wholly within
twelve months of rendering the services are
classified as short - term employee benefits and
they are recognized in the period in which the
employee renders the related services. The
Company recognizes the undiscounted amount of
short - term employee benefits expected to be
paid in the exchange for services are rendered as
a liability (accrued expense) after deducting any
amount already paid.
The benefit in the form of Leave Encashment is a
non-accumulating short term compensated
absence. It is accounted in the year when
absences occur and charged to Statement of
Profit & Loss of the year.
Post - Employment Benefits:a. Defined Contribution Plans:
Defined contribution plans are employee state
insurance scheme and Government
administrated provident fund scheme for all the
applicable employees. The Company makes
specified monthly contribution towards Employee
Provident Fund scheme as per the norms
prescribed by the Central Government. The
Company’s contribution to defined contribution
plans is recognized in the Statement of Profit and
Loss in the reporting which they relate.
Recognition and Measurement of Defined
Contribution Plans
The Company recognizes contribution payable to
a defined contribution plan as an expense in the
Statement of Profit and Loss when the employees
render services to the Company during the
reporting period. If the contributions payable for
services received from employees before the
reporting date exceed the contributions already
paid, the deficit payable is recognized as a
liability after deducting the contribution already
paid. If the contribution already paid exceeds the
contribution due for services received before the
reporting date, the excess is recognized as an
asset to the extent that the prepayment will lead
to, for example, a reduction in future payments or
a cash refund.
b. Defined Benefits Plans:i) Gratuity Scheme:
The Company operates a defined benefit gratuity
plan for employees. The Company pays the
gratuity to the employee whoever has completed
five years of service with the Company at the time
of resignation or superannuation. The Gratuity is
paid at 15 Days salary for every completed year of
service as per the Payment of Gratuity Act, 1972.
The liability in respect of gratuity and other post -
employment benefits is calculated using the
“Project Unit Credit Method” and spread over the
period during which the benefit is expected to be
derived from employee services.
Re - measurement of defined benefits plans in
respect of post employments are charged to Other
Comprehensive Income.
Recognition and Measurement of Defined
Benefit Plans:
The cost of providing defined benefits is
determined using the Projected Unit Cash Credit
method with actuarial valuations being carried out
at each Balance Sheet date. The defined benefit
obligations recognized in the Balance Sheet
represent the present value of the defined benefit
obligations as reduced by the fair value of plan
assets, if applicable. Any defined benefit asset
(negative defined benefit obligations resulting
from this calculation) is recognized representing
the present value of available refunds and
reductions in future contributions to the plan.
All expenses represented by current service cost,
past service cost, if any, and net interest on the
defined benefit liability / (asset) are recognized in
the Statement of Profit and Loss.
Remeasurements of the net defined benefit
liability / (asset) comprising actuarial gains and
losses and the return on the plan assets
(excluding amounts included in net interest on the
net defined benefit liability/asset), are recognized
in Other Comprehensive Income. Such
Remeasurements are not reclassified to the
Statement of Profit and Loss in the subsequent
periods.
Past service cost is recognized immediately to the
extent that the benefits are already vested, else is
amortized on a straight - line basis over the
average period until the amended benefits
become vested. Actuarial gain or losses in respect
of the defined benefit plans are recognized in the
Statement of Profit and Loss in the year in which
they arise.
The Company preset the above liability as Current
and Non - Current in the Balance Sheet as per the
Actuarial Valuation by the Independent actuary;
however, the entire liability towards gratuity is
considered as current as the Company will
contribute this amount to the Gratuity Fund within
next twelve months.
l) Revenue Recognition:
Revenue is recognized when it is probable that
economic benefit associated with the transaction
flows to the Company in ordinary course of its
activities and the amount of revenue can be
measured reliably, regardless of when the
payment is being made. Revenue is measured at
the fair value of consideration received or
receivable, taking into the account contractually
defined terms of payments, net of its returns,
trade discounts and volume rebates allowed.
Revenue includes only the gross inflows of
economic benefits, including the excise duty,
received and receivable by the Company, on its
own account. Amount collected on behalf of third
parties such as sales tax, value added tax and
goods and service tax (GST) are excluded from the
Revenue.
Revenue from contract with the customers is
recognized upon the transfer of control of
promised products or services to customers in an
amount that reflects the consideration which the
Company expects to receive in exchange for those
products and services. Revenue is measured
based on the transaction price, which is the
consideration, adjusted discounts and other
incentives, if any, as per the contract with
customers. Revenue also excludes taxes or
amounts collected from customers in its capacity
as agents.
Sale of Products:
Revenue from sales of goods is recognized, when
all the significant risks and rewards of the
ownership of the goods is passed to the buyer,
recovery of the consideration is probable,
associated cost can be estimated reliably, there is
no continuing effective control or managerial
involvement with the goods and amount of
revenue can be measured reliably, which is
generally considered on dispatch of goods to the
customers except in case of the consignment
sales.
Sales (Gross) includes Excise Duty but excludes
VAT and Goods and Service Tax (GST) and is net of
discounts and incentives to the customers. Excise
Duty to the extent included in the gross turnover is
deducted to arrive at the net turnover.
Sale of Services:
Revenue from Sale of Services is recognized as per
the Completed Service Contract Method of
Revenue recognition except in the few cases when
the Revenue from Sale of Services is recognized on
accrual basis as per the Contractual agreement
basis. Stage of completion is measured by the
service performed till the balance sheet date as a
percentage of total service contracted.
Revenue from Contracts:
Revenue from contracts with customers is
recognized on transfer of control of promised
goods or services to a customer at an amount that
reflects the consideration to which the Company
is expected to be entitled to in exchange for those
goods or services.
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.
This variable consideration is estimated based on
the expected value of outflow. Revenue (net of
variable consideration) is recognized only to the
extent that it is highly probable that the amount
will not be subject to significant reversal when
uncertainty relating to its recognition is resolved.
Export Incentives:
Export incentive revenues are recognized when
the right to receive the credit is established and
there is no significant uncertainty regarding the
ultimate collection.
Interest:
Revenue from Interest income is recognized using
the effective interest method. Effective Interest
Rate (EIR) is the rate that exactly discounts the
estimated future cash payments or receipts over
the expected life of the financial instruments or a
shorter period, where appropriate, to the gross
carrying amount of the financial assets or to the
amortized cost of financial liability.
Royalty:
Royalty income is recognized on an accrual basis
in accordance with the substance of the relevant
agreement.
Dividend:
Revenue is recognized when the Company’s right
to receive the payment is established at the end of
the reporting date, which is generally when the
shareholders approve the dividend at the Annual
General Meeting / Extraordinary General Meeting.
Surplus / (Loss) on disposal of Property, Plants
and Equipment / Investments:
Surplus or loss on disposal of property, plants and
equipment or investment is recorded on transfers
of title from the Company, and is determined as
the difference between the sales price and
carrying value of the property, plants and
equipment or investments and other incidental
expenses.
Rental Income:
Rental income arising from operating lease on
investments properties is accounted for on a
straight - line basis over the lease term except the
case where the incremental lease reflects
inflationary effect and rental income is accounted
in such case by actual rent for the period.
Insurance Claim:
Claim receivable on account of insurance is
accounted for to the extent the Company is
reasonably certain of their ultimate collections.
Other Income:
Revenue from other income is recognized when
the payment of that related income is received or
credited.
m) Foreign Currency Transactions:
a) Initial Recognition:
Transactions in the Foreign Currencies entered
into by the Company are accounted in the
functional currency (i.e. Indian Rupee '), by
applying the exchange rates prevailing on the date
of the transaction. Any exchange difference
arising on foreign exchange transactions settled
during the reporting period are recognized in the
Statement of Profit and Loss.
b) Conversion of Foreign Currency Items at
Reporting Date:
Foreign Currency Monetary Items of the Company
are restated at the end of the reporting date by
using the closing exchange rate as prescribed by
the Reserve Bank of India, RBI Reference Rate.
Non - Monetary Items are recorded at the
exchange rate prevailing on the date of the
transactions.
Non - Monetary Items that are measured at fair
value in a foreign currency are translated using the
exchange rates at the date when the fair value is
measured. Exchange differences arising out of
these translations are recognized in the Statement
of Profit and Loss except exchange gain or loss
arising on Non - Monetary Items measured at fair
value of the item which are recognized Statement
of Profit and Loss or Other Comprehensive Income
depending upon their fair value gain or loss
recognized in Statement of Profit or Loss and
Other Comprehensive Income, respectively.
Exchange differences arising on monetary items
that, in substance, form part of the Company’s net
investment in a foreign operation (having a
functional currency other than Indian Rupees) are
accumulated in Foreign Currency Translation
Reserve.
All the other exchange differences arising on
settlement or translation of monetary items and
the mark to market losses / gain are dealt with in
the Statement of Profit and Loss as Income or
Expenses in the period in which they arise except
to the extent that they are regarded as an
adjustment to the Finance Costs on foreign
currency borrowings that are directly attributable
to the acquisition or constructions of the
qualifying assets, are capitalized to the qualifying
assets.
n) Government Grants and Subsidies:
Any subsidy from the Government authorities or
any other authorities which the company is
entitled to receive in respect of manufacturing or
other facilities are dealt as follows:
i) Grants in the nature of subsidies which are non
- refundable are recognized as income where
there is reasonable assurance that the
Company will comply with all the necessary
conditions attached to them. Income from
grants is recognized on a systematic basis over
periods in which the related costs that are
intended to be compensated by such grants
are recognized.
ii) A government grant which becomes receivable
by an entity as compensation for expenses or
losses incurred in a previous period is
recognised in profit or loss of the period in
which it becomes receivable.
iii) Government grants related to assets, including
non-monetary grants at fair value, is presented
in the balance sheet by deducting the grant in
arriving at the carrying amount of the asset. The
grant is recognised in profit or loss over the life
of a depreciable asset as a reduced
depreciation expense.
o) 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.
Financial Assets:
Initial Recognition and Measurement:
The Company recognizes a financial asset in its
Balance Sheet when it becomes party to the
contractual provisions of the instrument. All
financial assets are recognized initially at fair
value, plus in the case of financial assets not
recorded at fair value through profit or loss
(FVTPL), transaction costs that are attributable to
the acquisition of the financial asset.
Where the fair value of a financial asset at initial
recognition is different from its transaction price,
the difference between the fair value and the
transaction price is recognized as a gain or loss in
the Statement of Profit and Loss at initial
recognition if the fair value is determined through
a quoted market price in an active market for an
identical asset (i.e. level 1 input) or through a
valuation technique that uses data from
observable markets (i.e. level 2 input).
In case the fair value is not determined using a
level 1 or level 2 input as mentioned above, the
difference between the fair value and transaction
price is deferred appropriately and recognized as
a gain or loss in the Statement of Profit and Loss
only to the extent that such gain or loss arises due
to a change in factor that market participants take
into account when pricing the financial asset.
However, trade receivables that do not contain a
significant financing component are measured at
transaction price.
Subsequent Measurement:
For subsequent measurement, the Company
classifies a financial asset in accordance with the
below criteria:
i) The Company’s business model for managing
the financial asset and
ii) The contractual cash flow characteristics of
the financial asset.
Based on the above criteria, the Company
classifies its financial assets into the following
categories:
i) Financial assets measured at amortized cost
ii) Financial assets measured at fair value
through other comprehensive income
(FVTOCI)
iii) Financial assets measured at fair value
through profit or loss (FVTPL)
Financial Assets measured at Amortized Cost:
A financial asset is measured at the amortized
cost if both the following conditions are met:
a) The Company’s business model objective for
managing the financial asset is to hold
financial assets in order to collect contractual
cash flows, and
b) The contractual terms of the financial asset
give rise on specified dates to cash flows that
are solely payments of principal and interest
on the principal amount outstanding.
This category applies to cash and bank balances,
trade receivables, loans and other financial assets
of the Company Refer Note No. 34 for further
details. Such financial assets are subsequently
measured at amortized cost using the effective
interest method.
Under the effective interest method, the future
cash receipts are exactly discounted to the initial
recognition value using the effective interest rate.
The cumulative amortization using the effective
interest method of the difference between the
initial recognition amount and the maturity
amount is added to the initial recognition value
(net of principal repayments, if any) of the
financial asset over the relevant period of the
financial asset to arrive at the amortized cost at
each reporting date. The corresponding effect of
the amortization under effective interest method
is recognized as interest income over the relevant
period of the financial asset. The same is included
under other income in the Statement of Profit and
Loss.
The amortized cost of a financial asset is also
adjusted for loss allowance, if any.
Financial Assets measured at FVTOCI:
A financial asset is measured at FVTOCI if both of
the following conditions are met:
a) The Company’s business model objective for
managing the financial asset is achieved both
by collecting contractual cash flows and
selling the financial assets, and
b) The contractual terms of the financial asset
give rise on specified dates to cash flows that
are solely payments of principal and interest
on the principal amount outstanding.
This category applies to certain investments in
debt instruments Refer Note No.34 for further
details). Such financial assets are subsequently
measured at fair value at each reporting date. Fair
value changes are recognized in the Other
Comprehensive Income (OCI). However, the
Company recognizes interest income and
impairment losses and its reversals in the
Statement of Profit and Loss.
On Derecognition of such financial assets,
cumulative gain or loss previously recognized in
OCI is reclassified from equity to Statement of
Profit and Loss.
On Derecognition of such financial assets,
cumulative gain or loss previously recognized in
OCI is not reclassified from the equity to
Statement of Profit and Loss. However, the
Company may transfer such cumulative gain or
loss into retained earnings within equity.
Financial Assets measured at FVTPL:
A financial asset is measured at FVTPL unless it is
measured at amortized cost or at FVTOCI as
explained above. This is a residual category
applied to all other investments of the Company
excluding investments in subsidiary and associate
companies. Such financial assets are
subsequently measured at fair value at each
reporting date. Fair value changes are recognized
in the Statement of Profit and Loss.
Derecognition
A financial asset (or, where applicable, a part of a
financial asset or part of a group of similar
financial assets) is derecognized (i.e. removed
from the Company’s Balance Sheet) when any of
the following occurs:
i) The contractual rights to cash flows from the
financial asset expires;
ii) The Company transfers its contractual rights to
receive cash flows of the financial asset and
has substantially transferred all the risks and
rewards of ownership of the financial asset;
iii) The Company retains the contractual rights to
receive cash flows but assumes a contractual
obligation to pay the cash flows without
material delay to one or more recipients under
a ‘pass-through’ arrangement (thereby
substantially transferring all the risks and
rewards of ownership of the financial asset)
iv) The Company neither transfers nor retains
substantially all risk and rewards of ownership
and does not retain control over the financial
asset.
In cases where Company has neither transferred
nor retained substantially all of the risks and
rewards of the financial asset, but retains control
of the financial asset, the Company continues to
recognize such financial asset to the extent of its
continuing involvement in the financial asset. In
that case, the Company also recognizes an
associated liability. The financial asset and the
associated liability are measured on a basis that
reflects the rights and obligations that the
Company has retained.
On Derecognition of a financial asset, (except as
mentioned in ii above for financial assets
measured at FVTOCI), the difference between the
carrying amount and the consideration received is
recognized in the Statement of Profit and Loss.
Impairment of Financial Assets:
The Company applies expected credit losses
(ECL) model for measurement and recognition of
loss allowance on the following:
i) Trade receivables and lease receivables
ii) Financial assets measured at amortized cost
(other than trade receivables and lease
receivables)
iii) Financial assets measured at fair value
through other comprehensive income
(FVTOCI)
In case of trade receivables and lease receivables,
the Company follows a simplified approach
wherein an amount equal to lifetime ECL is
measured and recognized as loss allowance.
In case of other assets (listed as ii and iii above),
the Company determines if there has been a
significant increase in credit risk of the financial
asset since initial recognition. If the credit risk of
such assets has not increased significantly, an
amount equal to 12-month ECL is measured and
recognized as loss allowance. However, if credit
risk has increased significantly, an amount equal
to lifetime ECL is measured and recognized as
loss allowance.
Subsequently, if the credit quality of the financial
asset improves such that there is no longer a
significant increase in credit risk since initial
recognition, the Company reverts to recognizing
impairment loss allowance based on 12 months-
ECL.
ECL is the difference between all contractual cash
flows that are due to the Company in accordance
with the contract and all the cash flows that the
entity expects to receive (i.e., all cash shortfalls),
discounted at the original effective interest rate.
Lifetime ECL are the expected credit losses
resulting from all possible default events over the
expected life of a financial asset. 12 months ECL
are a portion of the lifetime ECL which result from
default events that are possible within 12 months
from the reporting date.
ECL are measured in a manner that they reflect
unbiased and probability weighted amounts
determined by a range of outcomes, taking into
account the time value of money and other
reasonable information available as a result of
past events, current conditions and forecasts of
future economic conditions.
As a practical expedient, the Company uses a
provision matrix to measure lifetime ECL on its
portfolio of trade receivables. The provision matrix
is prepared based on historically observed default
rates over the expected life of trade receivables
and is adjusted for forward-looking estimates. At
each reporting date, the historically observed
default rates and changes in the forward-looking
estimates are updated.
ECL impairment loss allowance (or reversal)
recognized during the period is recognized as
income/ expense in the Statement of Profit and
Loss under the head “Other Expenses”.
Financial Liabilities:Initial Recognition and Measurement:
The Company recognizes a financial liability in its
Balance Sheet when it becomes party to the
contractual provisions of the instrument. All
financial liabilities are recognized initially at fair
value minus, in the case of financial liabilities not
recorded at fair value through profit or loss
(FVTPL), transaction costs that are attributable to
the acquisition of the financial liability.
Where the fair value of a financial liability at initial
recognition is different from its transaction price,
the difference between the fair value and the
transaction price is recognized as a gain or loss in
the Statement of Profit and Loss at initial
recognition if the fair value is determined through
a quoted market price in an active market for an
identical asset (i.e. level 1 input) or through a
valuation technique that uses data from
observable markets (i.e. level 2 input).
In case the fair value is not determined using a
level 1 or level 2 input as mentioned above, the
difference between the fair value and transaction
price is deferred appropriately and recognized as
a gain or loss in the Statement of Profit and Loss
only to the extent that such gain or loss arises due
to a change in factor that market participants take
into account when pricing the financial liability.
Subsequent Measurement
All financial liabilities of the Company are
subsequently measured at amortized cost using
the effective interest method. (Refer Note No 35
for further details).
Under the effective interest method, the future
cash payments are exactly discounted to the
initial recognition value using the effective
interest rate. The cumulative amortization using
the effective interest method of the difference
between the initial recognition amount and the
maturity amount is added to the initial recognition
value (net of principal repayments, if any) of the
financial liability over the relevant period of the
financial liability to arrive at the amortized cost at
each reporting date. The corresponding effect of
the amortization under effective interest method
is recognized as interest expense over the relevant
period of the financial liability. The same is
included under finance cost in the Statement of
Profit and Loss.
Derecognition
A financial liability is derecognized when the
obligation under the liability is discharged or
cancelled or expires. When an existing financial
liability is replaced by another from the same
lender on substantially different terms, or the
terms of an existing liability are substantially
modified, such an exchange or modification is
treated as the derecognition of the original liability
and the recognition of a new liability. The
difference between the carrying amount of the
financial liability derecognized and the
consideration paid is recognized in the Statement
of Profit and Loss.
p) Fair Value:
The Company measures financial instruments at
fair value in accordance with the accounting
policies mentioned above. Fair value is the price
that would be received to sell an asset or paid to
transfer a liability in an orderly transaction
between market participants at the measurement
date. The fair value measurement is based on the
presumption that the transaction to sell the asset
or transfer the liability takes place either:
* In the principal market for the assets or liability,
or
* In the absence of a principal market, in the
most advantageous market for the assets or
liabilities.
All assets and liabilities for which fair value is
measured or disclosed in the financial statements
are categorized within the fair value hierarchy that
categorizes into three levels, described as follows,
the inputs to valuation techniques used to
measure value. The fair value hierarchy gives the
highest priority to quoted prices in active markets
for identical assets or liabilities (Level 1 inputs)
and the lowest priority to unobservable inputs
(Level 3 inputs).
Level 1 - Quoted (unadjusted) market prices in
active markets for identical assets or
liabilities;
Level 2 - Inputs other than quoted prices included
within Level 1 that are observable for the
asset or liability, either directly or
indirectly;
Level 3 - Inputs that are unobservable for the asset
or liability
For assets and liabilities that are recognized in the
financial statements at fair value on a recurring
basis, the Company determines whether transfers
have occurred between levels in the hierarchy by
re-assessing categorization at the end of each
reporting period and discloses the same.
q) Taxes on Income:
Tax expense comprises Current and Deferred
Income tax. Tax expenses are recognized in the
Statement of Profit and Loss, except to the extent
that it relates to the items recognized in the other
comprehensive income or in equity. In that case
tax is also recognized in other comprehensive
income or equity.
Current Income tax is the amount of income tax
payable in respect of taxable profit for the period.
Taxable profit differs from “Profit Before Tax” as
reported under Statement of Profit and Loss
because of item of expenses or income that are
taxable or deductible in other years and items that
are never taxable or deductible under Income Tax
Act.
Current tax assets and liabilities are measured at
the amount expected to be recovered from or paid
to the Income Tax Authorities, based on tax rates
and laws that are enacted at the balance sheet
date. Current tax also includes any adjustments
amount to tax payable in respect of previous year.
Deferred tax is recognized on temporary
differences between the carrying amounts of
assets and liabilities in the financial statements
and the corresponding tax bases used in the
computation of taxable profit under Income Tax
Act, 1961.
Deferred tax liabilities are generally recognized for
all taxable temporary differences. However, in
case of temporary difference that arises from
initial recognition of assets or liabilities in a
transaction (other than business combination)
that affect neither the taxable profit nor the
accounting profit, deferred tax liabilities are not
recognized. Also, for temporary differences if any
that may arise from initial recognition of goodwill,
deferred tax liabilities are not recognized.
Deferred tax assets are generally recognized for all
deductible temporary differences to the extent it is
probable that taxable profits will be available
against which that deductible temporary
difference can be utilized. In case of temporary
differences that arise from initial recognition of
assets or liabilities in a transaction (other than
business combination) that affect neither the
taxable profit nor the accounting profit, deferred
tax assets are not recognized.
The carrying amount of deferred tax assets is
reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to
allow the benefits of part or all of such deferred
tax assets to be utilized.
Deferred tax assets and liabilities are measured at
the tax rates that have been enacted or
substantively enacted by the Balance Sheet date
and are expected to apply to taxable income in the
years in which those temporary differences are
expected to be recovered or settled.
Presentation
Current and deferred tax are recognized as
income or an expense in the Statement of Profit
and Loss, except when they relate to items that are
recognized in Other Comprehensive Income, in
which case, the current and deferred tax income /
expense are recognized in Other Comprehensive
Income.
The Company offsets current tax assets and
current tax liabilities, where it has a legally
enforceable right to set off the recognized
amounts and where it intends either to settle on a
net basis, or to realize the asset and settle the
liability simultaneously. In case of deferred tax
assets and deferred tax liabilities, the same are
offset if the Company has a legally enforceable
right to set off corresponding current tax assets
against current tax liabilities and the deferred tax
assets and deferred tax liabilities relate to income
taxes levied by the same tax authority on the
Company.
Deferred tax assets include Minimum Alternative
Tax (MAT) paid in accordance with the tax laws in
India, which is likely to give future economic
benefits in the form of availability of set off against
future income tax liability, Accordingly, MAT is
recognized as deferred tax assets in the balance
sheet when the asset can be measured reliably
and it is probable that the future economic benefit
associated with the asset will be realized.
However, for the years under reporting the
company has not recognized deferred tax assets
on MAT due to uncertainty arising out of tax
planning options available to the company as per
prevailing tax laws. (Refer Note 17)
If MAT Credit is recognized, the Company reviews
the same at each reporting period 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.
r) Segment Reporting:
Segments are identified having regard to the
dominant source and nature of risks and returns
and the internal organization and management
structure. The Company has considered as
Business Segments as Primary Segments. The
Company does not have any Geographical
Segments.
Identification of Segments:
The Company’s operating businesses are
organized and managed separately according to
the nature of products and services provided, with
each segment representing a Strategic business
unit that offers the different products and serves
the different markets. Majorly, the Company’
Business Segments are “Elevator Division”, “Steel
Polishing Division”.
Segments Accounting Policies:
The Company prepares its Segment Information in
conformity with the accounting policies adopted
for preparing and presenting the financial
statements of the Company as a whole.
Inter - Segment Transfer:
The Company does not recognize Inter - Segment
transfers at an any agreed value of the
transactions.
Allocation of Common Costs:
Common allocable costs are allocated to each
segment reporting according to the relative
contribution of each segment to the total of
common costs.
Unallocated Items:
Unallocated Items include the General Corporate
Income and Expense items which are not
allocated to any of the Business Segments.
Operating Segment is reported in the manner
consistent with the internal reporting provided to
the Chief Operating Decision Maker (CODM). The
CODM is responsible for assessing the
performance and allocating the resources of the
operating segment of the Company. Refer Note
No. 37 for Segment information.
s) Research and Developments:
Research and Developments expenditures of a
revenue nature are expensed out under the
respective heads of the account in the year in
which it is incurred. Expenditure of development
which does not meet the criteria for recognition as
an intangible asset is recognized as an expense
when it incurred.
Item of Property, Plants and Equipment and
acquired Intangible Assets utilized for research
and developments are capitalized and
depreciated in accordance with the policies
stated for Tangible Property, Plants and
Equipment and Intangible Assets.
t) Earnings per Share:
The Company reports the basic and diluted
Earnings per Share (EPS) in accordance with
Indian Accounting Standard - 33, “Earnings per
Share”. Basic EPS is computed by dividing the Net
Profit or Loss attributable to the Equity
Shareholders for the period by the weighted
average number of Equity shares outstanding
during the period.
Diluted EPS is computed by dividing the Net Profit
or Loss attributable to the Equity Shareholders for
the period by the weighted average number of
Equity Shares outstanding during the period as
adjusted for the effects of all potential Equity
Shares, except where the results are Anti -
Dilutive.
The weighted average number of Equity Shares
outstanding during the period is adjusted for
events such a Bonus Issue, Bonus elements in
right issue, share splits, and reverse share split
(consolidation of shares) that have changed the
number of Equity Shares outstanding, without a
corresponding change in resources.
Partly paid-up Equity Shares, if any, are treated as
fraction of Equity Shares to the extent that they are
entitled to participate in dividends to a fully paid
equity shares during the Reporting Period.
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