4A. MATERIAL ACCOUNTING POLICIES
A summary of the material and other accounting policies applied in the preparation of the financial statements are as given
below. These accounting policies have been applied consistently to all the periods presented in the financial statements.
4A.1 INCOME TAX
The income tax expense or credit for the period is the tax payable on the current period's taxable income based on the
applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses. Current and deferred tax is recognised in the statement of profit & loss,
except to the extent that these relate to items recognised in other comprehensive income or directly attributable to equity. In
these cases, the tax is also recognised in other comprehensive income or in statement of change in equity, respectively.
4A.1.1 Current Tax:
Current tax liabilities (or assets) for the current and prior periods are measured at the amount expected to be paid to or
recovered from the taxation authorities using the tax rates applicable to the reporting period.
4A.1.2 Deferred Tax
• Deferred Tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the
asset is realized or the liability is settled based on tax rates (and tax laws) that have been enacted or substantively
enacted by the end of the reporting period.
• Deferred tax is recognized using balance sheet approach on temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes (i.e.,
tax base). Deferred tax is
also recognized for carry forward of unused tax losses and unused tax credits.
• Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.
• The carrying amount of deferred tax assets is reviewed at the end of each reporting period. The Company reduces the
carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be
available to allow the benefit of part or that entire deferred tax asset to be utilized. Any such reduction is reversed to
the extent that it becomes probable that sufficient taxable profit will be available.
• Deferred tax relating to items recognized outside the Statement of Profit and Loss is recognized either in other
comprehensive income or in statement of change in equity. Deferred tax items are recognized in correlation to the
underlying transaction either in OCI or directly in equity.
• Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the
Company intends to settle its current tax assets and liabilities on a net basis.
4A.2 PROPERTY, PLANT AND EQUIPMENT
4A.2.1 Tangible Assets
4A.2.1.1 Recognition and Measurement:
• Property, plant and equipment & Investment Property have been carried under cost model.
• Property, plant and equipment held for use in the production or/and supply of goods or services, or for administrative
purposes, are stated in the balance sheet under cost model i.e. cost, less any accumulated depreciation and
accumulated impairment losses (if any), except for freehold land which are carried at historical cost.
• Cost of an item of property, plant and equipment acquired comprises its purchase price, including import duties and
non-refundable purchase taxes, after deducting any trade discounts and rebates, any directly attributable costs of
bringing the assets to its working condition and location for its intended use and present value of any estimated cost of
dismantling and removing the item and restoring the site on which it is located. Such costs include borrowing cost if
recognition criteria are met.
• If significant parts of an item of property, plant and equipment including their major components have different useful
lives, then they are accounted for as separate items of property, plant and equipment.
• Profit or loss arising on the disposal of property, plant and equipment are recognized in the Statement of Profit and
Loss.
4A.2.1.2 Subsequent Measurement:
• Subsequent costs are included in the asset's carrying amount, only when it is probable that future economic benefits
associated with the cost incurred will flow to the Company and the cost of the item can be measured reliably. The
carrying amount of any component accounted for as a separate asset is derecognized when replaced.
• Major Inspection/ Repairs/ Overhauling expenses are recognized in the carrying amount of the item of property, plant
and equipment as a replacement if the recognition criteria are satisfied. Any Unamortized part of the previously
recognized expenses of similar nature is derecognized.
4A.2.1.3 Depreciation and Amortization:
• Depreciation on Property, Plant & Equipment is provided on Straight Line Method in terms of life span of assets
prescribed in Schedule II of the Companies Act, 2013or as reassessed by the Company based on the technical
evaluation.
• In case the cost of part of tangible asset is significant to the total cost of the asset and useful life of that part is different
from the remaining useful life of the asset, depreciation is provided thereon on straight line method based on internal
assessment and independent technical evaluation carried out by external valuer.
• Depreciation on additions/disposals during the year is provided on pro-rata basis depending on the usage period of
asset since/upto the date of installation/disposal.
• Depreciation on assets built on leasehold land, which is transferrable to the lessor on expiry of lease period, is
amortized over the period of lease.
• Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if
appropriate.
4A.2.1.4 Disposal of Assets
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item
of property, plant and equipment is determined as the difference between net disposal proceeds and the carrying
amount of the asset and is recognized in the statement of profit and loss.
4A.2.1.5 Capital Work in Progress
Capital work-in-progress is stated at cost which includes expenses incurred during construction period, interest on
amount borrowed for acquisition of qualifying assets and other expenses incurred in connection with project
implementation in so far as such expenses relate to the period prior to the commencement of commercial production.
4A.3 RECOGNITION OF INCOME AND EXPENSES
4A.3.1 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.
4A.3.2 Sale of Products:
Revenue from sale of products is recognized when the control on the goods have been transferred to the customer.
The performance obligation in case of sale of products is satisfied at a point in time i.e., when the material is shipped to
the customer or on delivery to the customer, as may be specified in the contract.
4A.3.3 Sales are measured at the fair value of consideration received or receivable. Sales recognized is net of GST,
intermediary sales, rebates.
4A.3.4 Dividend for distribution is accounted for at the point of approval by relevant authority with due disclosure in
financial statements of dividend declared/recommended/proposed pending distribution.
4A.3.5 Other incomes have been recognized on accrual basis in financial statements except for cash flow information.
4A.3.6. Dividend income is accounted when the company's right to receive the payment is established, which is
generally when the appropriate authority approves the dividend.
4A.4 GOVERNMENT GRANTS
Government grant are recognized at their fair value, where there is reasonable assurance that the grant will be
received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognized
as income on a systematic basis over the period that the related costs, for which it is intended to compensate, are
expensed.
The grant relating to the acquisition/ construction of an item of property, plant and equipment are included in non
current liabilities as deferred income and are credited to profit or loss on the same systematic basis as the respective
assets are depreciated over their expected life and are presented within other operating income.
Alternatively, the same can be presented by deducting the grant from the carrying amount of the asset.
4A.5 INTANGIBLE ASSETS
4A.5.1 Intangible Assets are initially recognized at: -
1) In case the assets are acquired separately, then at cost
2) In case the assets are acquired in a business combination then at fair value.
3) In case the assets are internally generated then at capitalized development cost subject to satisfaction
of criteria of recognition (identifiability, control and future economic benefit) laid down from clause 11 to
17 of IND AS 38.
Following initial recognition, intangible assets are carried at cost less any accumulated amortization
and accumulated impairment loss. Research costs are recognized as expense in the period in which it
is incurred.
4A.5.2. Intangible assets with finite useful life are assessed for impairment whenever there is an indication that the
intangible assets may be impaired. Intangible assets with infinite useful life including goodwill are tested for impairment
annually.
4A.5.3 Intangible assets with finite useful life are amortized over the useful economic life on a straight line basis.
4A.5.4 Intangible Assets under development is stated at cost which includes expenses incurred in connection with
development of Intangible Assets in so far as such expenses relate to the period prior to the getting the assets ready
for use.
4B. OTHER ACCOUNTING POICIES
4B.1 CASH AND CASH EQUIVALENTS
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short term deposits
with an original maturity of three months or less, which are subject to an insignificant risk of change in value.
For the purpose of the statement of cash flows, cash and cash equivalents includes cash on hand, term
deposits and other short-term highly liquid investments, net of bank overdrafts as they are considered an
integral part of the Company's cash management. However, Bank overdrafts are shown within short term
borrowings in the balance sheet.
4B.2 EMPLOYEE BENEFITS
4B.2.1 Short Term Benefits
Short term employee benefit obligations are measured on an undiscounted basis and are expensed as the related
services are provided. Liabilities for wages and salaries, including non-monetary benefits that are expected to be
settled wholly within twelve months after the end of the period in which the employees render the related service
are recognized in respect of employees' services up to the end of the reporting period.
4B.2.2 Other Long Term Employee Benefits
The liabilities for earned leaves that are not expected to be settled wholly within twelve months are measured as
the present value of the expected future payments to be made in respect of services provided by employees up to
the end of the reporting period using the projected unit credit method. The benefits are discounted using the
government securities (G-Sec) at the end of the reporting period that have terms approximating to the terms of
related obligation. Remeasurements as the result of experience adjustment and changes in actuarial assumptions
are recognized in statement of profit and loss.
4B.2.3 Post-Employment Benefits
The Company operates the following post-employment schemes:
• Defined Contribution Plan
Defined contribution plans such as Provident Fund, Employee State Insurance etc. are charged to the
statement of profit and loss as and when incurred and paid to Authority.
• Defined Benefit Plans (Gratuity)
The liability or asset recognized in the Balance Sheet in respect of defined benefit plans is the present value of the
defined benefit obligation at the end of the reporting period less the fair value of plan assets. The Company's net
obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount
offuture benefit that employees have earned in the current and prior periods. The defined benefit obligation is
calculated annually by Actuaries using the projected unit credit method.
The liability recognized for defined benefit plans is the present value of the defined benefit obligation at the
reporting date less the fair value of plan assets, together with adjustments for unrecognized actuarial gains or
losses and past service costs. The net interest cost is calculated by applying the discount rate to the net balance of
the defined benefit obligation and the fair value of plan assets. The benefits are discounted using the government
securities (G-Sec) at the end of the reporting period that have terms approximating to the terms of related
obligation.
Re-measurements of the net defined benefit obligation, which comprise actuarial gains and losses, the return on
plan assets (excluding interest) and the effect of the asset ceiling, are recognized in other comprehensive income.
Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will
not be reclassified to the statement of profit and loss.
4B.3 FOREIGN CURRENCY TRANSACTIONS
• Foreign currency (other than the functional currency) transactions are translated into the functional
currency using the spot rates of exchanges at the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies are translated at the functional currency spot rate of exchanges at the reporting
date.
• Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation of monetary assets and liabilities are generally recognized in profit or loss in the year in which
they arise except for exchangedifferences on foreign currency borrowings relating to assets under
construction for future productive use, which are included in the cost of those qualifying assets when they
are regarded as an adjustment to interest costs on those foreign currency borrowings, the balance is
presented in the Statement of Profit and Loss within finance costs.
• Non-monetary items are not retranslated at period end and are measured at historical cost (translated
using the exchange rate at the transaction date).
4B.4 BORROWING COSTS
• Borrowing Costs consists of interest and other costs that an entity incurs in connection with the borrowings
of funds. Borrowing costs also includes foreign exchange difference to the extent regarded as an
adjustment to the borrowing costs.
• Borrowing costs directly attributable to the acquisition or construction of a qualifying asset are capitalized
as a part of the cost of that asset that necessarily takes a substantial period of time to complete and
prepare the asset for its intended use or sale.
• Transaction costs in respect of long term borrowing are amortized over the tenure of respective loans
using Effective Interest Rate (EIR) method. All other borrowing costs are recognized in the statement of
profit and loss in the period in which they are incurred.
4B.5 EARNINGS PER SHARE
Basic Earnings per share (EPS) amounts are calculated by dividing the profit for the year attributable to equity
holders by the weighted average number of equity shares outstanding during the year. Diluted EPS amounts are
calculated by dividing the profit attributable to equity holders adjusted for the effects of potential equity shares by
the weighted average number of equity shares outstanding during the year plus the weighted average number of
equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares.
4B.6 IMPAIRMENT OF NON-FINANCIAL ASSETS
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. An
asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value being higher of
value in use and net selling price. Value in use is computed at net present value of cash flow expected over the
balance useful lives of the assets. For the purpose of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows
from other assets or group of assets (Cash Generating Units - CGU).
An impairment loss is recognized as an expense in the Statement of Profit and Loss in the year in which an asset
is identified as impaired. The impairment loss recognized in earlier accounting period is reversed if there has been
an improvement in recoverable amount.
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