3 Significant Accounting Policies
3.1 Basis of Preparation
The Standalone Financial Statements have been
prepared under the historical cost convention on accrual
basis excepting certain financial instruments which
are measured in terms of relevant Ind AS at fair value/
amortized costs at the end of each reporting period.
Historical cost convention is generally based on the fair
value of the consideration given in exchange for goods
and services.
The Standalone Financial Statements are presented
in Indian Rupees and all values are rounded off to the
nearest lakhs upto two decimal places.
3.2 Fair Value Measurement
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
under current market conditions.
The Company categorizes assets and liabilities measured
at fair value into one of three levels depending on
the ability to observe inputs employed for such
measurement:
Level 1: Inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within
level 1 that are observable either directly or indirectly for
the asset or liability.
Level 3: Inputs for the asset or liability which are not
based on observable market data (unobservable inputs).
The company has an established control framework
with respect to the measurement of fair values. This
includes a finance team that has overall responsibility
for overseeing all significant fair value measurements
who regularly review significant unobservable inputs,
valuation adjustments and fair value hierarchy under
which the valuation should be classified.
3.3 Property Plant and Equipment
Property, Plant and Equipment are stated at cost of
acquisition, construction and subsequent improvements
thereto less accumulated depreciation and impairment
losses, if any. For this purpose cost include deemed cost
on the date of transition and comprises purchase price
of assets or its construction cost including duties and
taxes, inward freight and other expenses incidental to
acquisition or installation and adjustment for exchange
differences wherever applicable and any cost directly
attributable to bring the asset into the location and
condition necessary for it to be capable of operating in
the manner intended for its use.
Parts of an item of Property, Plant and Equipment having
different useful lives and material value and subsequent
expenditure on Property, Plant and Equipment arising
on account of capital improvement or other factors are
accounted for as separate components.
The cost of replacing part of an item of property, plant
and equipment is recognised in the carrying amount of
the item if it is probable that the future economic benefits
embodied within the part will flow to the Company and
its cost can be measured reliably. The costs of the day-
to-day servicing of property, plant and equipment are
recognised in the income statement when incurred.
3.4 Investment Property
"Investment properties are properties held to earn rentals
or for capital appreciation, or both. Investment properties
are measured initially at their cost of acquisition. The cost
comprises purchase price, borrowing cost, if capitalisation
criteria are met and directly attributable cost of bringing
the asset to its working condition for the intended use.
Subsequent costs are included in the asset's carrying
amount or recognised as a separate asset, as appropriate,
only when it is probable that the future econom ic benefits
associated with the item will flow to the Company. All
other repair and maintenance costs are recognised in the
Statement of Profit and Loss as incurred."
3.5 Derecognition of Tangible Assets and Investment
Property
An item of Property, Plant and Equipment and Investment
Property is de-recognised upon disposal or when no
future economic benefits are expected to arise from its
use or disposal. Gain or loss arising on the disposal or
retirement of an item of Property, Plant and Equipment
and Investment Property is determined as the difference
between the sales proceeds and the carrying amount of
the asset and is recognised in the Statement of Profit and
Loss.
3.6 Impairment of Tangible Assets and Investment
Property
Tangible assets and Investment Property are reviewed at
each balance sheet date for impairment. In case events
and circumstances indicate any impairment, recoverable
amount of assets is determined. An impairment loss is
recognized in the statement of profit and loss, whenever
the carrying amount of assets either belonging to Cash
Generating Unit (CGU) or otherwise exceeds recoverable
amount. The recoverable amount is the higher of asset's
fair value less cost of disposal and its value in use. In
assessing value in use, the estimated future cash flows
from the use of the assets are discounted to their present
value at appropriate rate.
Impairment losses recognized earlier may no longer exist
or may have come down. Based on such assessment at
each reporting period the impairment loss is reversed
and recognized in the Statement of Profit and Loss. In
such cases the carrying amount of the asset is increased
to the lower of its recoverable amount and the carrying
amount that have been determined, net of depreciation,
had no impairment loss been recognized for the asset in
prior years.
3.7 Capital work in progress and Capital Advances
Cost of assets not ready for intended use, as on the
Balance Sheet date, is shown as Capital work in progress.
Advances given towards acquisition of Property, Plant
and Equipment outstanding at each Balance Sheet date
are disclosed in Other Non Financial Assets.
3.8 Foreign Currency Transactions
Transactions in foreign currencies are accounted for at the
exchange rate prevailing on the date of the transaction.
Foreign currency assets and liabilities are translated at
exchange rates prevailing at the year end. The loss or
gain thereon and also on the exchange differences on
settlement of the foreign currency transaction during the
year are recognized in the Statement of Profit & Loss,
except in the cases where any fixed asset acquired from
a country outside India, in such case, these are adjusted
to the cost of respective fixed assets.
3.9 Financial Assets and Financial Liabilities
Financial Assets and Financial Liabilities (financial
instruments) are recognised when the Company becomes
a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets
and financial Liabilities (other than financial assets and
financial liabilities at fair value through profit or loss) are
added to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on initial
recognition. Transaction costs directly attributable to the
acquisition of financial assets or financial liabilities at fair
value through profit or loss are recognised immediately
in the Statement of Profit and Loss. However, trade
receivables that do not contain a significant financing
component are measured at transaction price.
The classification of financial instruments whether to
be measured at Amortized Cost, at Fair Value through
Profit or Loss (FVTPL) or at Fair Value through Other
Comprehensive Income (FVTOCI) depends on the
objective and contractual terms to which they relate.
Classification of financial instruments are determined on
initial recognition.
(i) Cash and cash equivalents
All highly liquid financial instruments, which are readily
convertible into determinable amounts of cash and
which are subject to an insignificant risk of change in
value and are having original maturities of three months
or less from the date of purchase, are considered as cash
equivalents. Cash and cash equivalents includes balances
with banks which are unrestricted for withdrawal and
usage.
(ii) Investment in subsidiaries
The Company has chosen to carry investments in
subsidiaries at cost less impairment, if any in the
standalone financial statements.
(iii) Financial Assets and Financial Liabilities measured
at amortised cost
Financial Assets held within a business whose objective
is to hold these assets in order to collect contractual
cash flows and 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 are measured at amortized cost.
The above Financial Assets and Financial Liabilities
subsequent to initial recognition are measured at
amortized cost using Effective Interest Rate (EIR) method.
The effective interest rate is the rate that discounts
estimated future cash payments or receipts (including all
fees and points paid or received, transaction costs and
other premiums or discounts) through the expected life
of the Financial Asset or Financial Liability to the gross
carrying amount of the financial asset or to the amortised
cost of financial liability, or, where appropriate, a shorter
period, to the net carrying amount on initial recognition.
(iv) Financial Asset at Fair Value through Other
Comprehensive Income (FVTOCI)
Financial assets are measured at fair value through other
comprehensive income if these financial assets are held
within a business whose objective is achieved by both
collecting contractual cash flows and selling financial
assets and 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. Subsequent to initial recognition,
they are measured at fair value and changes therein are
recognised directly in other comprehensive income.
(v) For the purpose of para (iii) and (iv) above, principal
is the fair value of the financial asset at initial recognition
and interest consists of consideration for the time value
of money and associated credit risk.
(vi) Financial Assets or Liabilities at Fair value through
profit or loss
Financial Instruments which does not meet the criteria of
amortised cost or fair value through other comprehensive
income, as applicable in each case, are classified as Fair
Value through Profit or loss. These are recognised at
fair value and changes therein are recognized in the
statement of profit and loss.
(vii) Impairment of financial assets
A financial asset is assessed for impairment at each
balance sheet date. A financial asset is considered to
be impaired if objective evidence indicates that one or
more events have had a negative effect on the estimated
future cash flows of that asset.
The company measures the loss allowance for a financial
asset at an amount equal to the lifetime expected credit
losses if the credit risk on that financial instrument has
increased significantly since initial recognition. If the
credit risk on a financial instrument has not increased
significantly since initial recognition, the company
measures the loss allowance for that financial instrument
at an amount equal to 12-month expected credit losses.
However, for trade receivables or contract assets
that result in relation to revenue from contracts with
customers, the company measures the loss allowance at
an amount equal to lifetime expected credit losses.
(viii) Derecognition of financial instruments
The Company derecognizes a financial asset or a group
of financial assets when the contractual rights to the
cash flows from the asset expire, or when it transfers the
financial asset and substantially all the risks and rewards
of ownership of the asset to another party.
On derecognition of a financial asset (except for equity
instruments designated as FVTOCI), the difference
between the asset's carrying amount and the sum of the
consideration received and receivable are recognized in
statement of profit and loss.
On derecognition of assets measured at FVTOCI the
cumulative gain or loss previously recognised in other
comprehensive income is reclassified from equity to
profit or loss as a reclassification adjustment.
Financial liabilities are derecognized if the Company's
obligations specified in the contract expire or are
discharged or cancelled. The difference between the
carrying amount of the financial liability derecognized
and the consideration paid and payable is recognized in
Statement of Profit and Loss.
3.10 Equity Share Capital
An equity instrument is a contract that evidences residual
interest in the assets of the company after deducting all
of its liabilities. Par value of the equity shares is recorded
as share capital and the amount received in excess of par
value is classified as Securities Premium.
Costs directly attributable to the issue of ordinary shares
are recognised as a deduction from equity, net of any tax
effects.
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