Significant Accounting Policies
1. Basis of Preparation
Compliance with Ind AS
These financial statements have been prepared in
accordance with the Indian Accounting Standards
(hereinafter referred to as the 'Ind AS') as notified by
Ministry of Corporate Affairs pursuant to Section 133 of
the Companies Act, 2013 ('Act') read with of the
Companies (Indian Accounting Standards) Rules, 2015 as
amended and other relevant provisions of the Act.
Historical cost convention
The financial statements have been prepared on a
historical cost basis, except certain financial assets and
liabilities are measured at fair value.
Current non-current classification
All assets and liabilities have been classified as current or
non-current as per the Company's normal operating
cycle (twelve months) and other criteria set out in the
Division II of Schedule III to the Act.
Rounding of amounts
All amounts disclosed in the financial statements and
notes have been rounded off to the nearest lakhs as per
the requirement of Schedule III, unless otherwise stated.
While preparing the financial statements where amounts
have been rounded off in Rupees Lakhs, value 0.00
represents value less than 1,000.
2. Property, Plant and Equipments
The Company has applied for the one time transition
exemption of considering the carrying cost on the
transition date i.e. September 22, 2020 as the deemed
All other items of property, plant and equipment are
stated at historical cost less accumulated depreciation
and accumulated impairment losses, if any. Historical
cost includes expenditure that is directly attributable to
the acquisition of the items.
Subsequent costs are included in the asset's carrying
amount or recognized as a separate asset, as
appropriate, only 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.
The company identifies and determines cost of each
component/part of the plant and equipment separately,
if the component/part has a cost which is significant to
the total cost of the plant and equipment and has useful
life that is materially different from that of the remaining
plant and equipment.
Gains or losses arising from derecognition of tangible
property, plant and equipment are measured as the
difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the
Statement of Profit and loss when the asset is
derecognized.
Depreciation in respect of Property, Plant and
Equipment is provided on straight line basis in
accordance with Schedule II of Companies Act 2013.
Cost incurred on assets under development are
disclosed under capital work in progress and not
depreciated till asset is ready to use.
Based on technical evaluation, the Management believes
that the useful lives as given above best represent the
period over which Management expects to use these
assets. Hence, the useful lives for the assets are different
from the useful lives prescribed under Part C of Schedule
II of the Companies Act, 2013.
The residual values, useful lives and method of
depreciation of property, plant and equipment is
reviewed at each financial year end and adjusted
prospectively, if appropriate.
3.Leases
The Company as a lessee
The Company assesses whether a contract contains a
lease, at the inception of a contract. A contract is, or
contains, a lease if the contract conveys the right to
control the use of an identified asset for a period of time
in exchange for consideration. To assess whether a
contract conveys the right to control the use of an
identified asset, the Company assesses whether:
1. The contract involves the use of an identified asset
2. The Company has substantially all of the economic
benefits from use of the asset through the period of the
lease and
3. The Company has the right to direct the use of the
asset.
At the date of commencement of lease, the company
has assessed the lease to be of low value and for a term
of less than 12 months. For these short-term and low
value leases, the Company recognizes the lease
payments as an operating expense on a straight-line
basis over the term of the lease.
4. 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
4.. 1. Initial recognition and measurement
All financial assets are initially recognized at fair value.
Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial
liabilities, which are not at fair value through profit or
loss, are adjusted to the fair value on initial recognition.
Purchase and sale of financial assets are recognized
using trade date accounting.
4.. 2. Subsequent measurement
4.. 2.1. Financial assets carried at amortized cost (AC)
A financial asset is measured at amortized cost if it is
held within a business model whose objective is to hold
the asset 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.
4.. 2.2. Financial assets at fair value through other
comprehensive income (FVTOCI)
A financial asset is measured at FVTOCI if it is held
within a business model 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.
4.. 2.3. Financial assets at fair value through profit or
loss (FVTPL)
A financial asset, which is not classified in any of the
above categories, is measured through FVTPL.
4.. 3. Impairment of financial assets
In accordance with Ind AS 109, the Company uses
'Expected Credit Loss' (ECL) model, for evaluating
impairment of financial assets other than those
measured at fair value through profit and loss (FVTPL).
Expected credit losses are measured through a loss
allowance at an amount equal to:
The 12-months expected credit losses (expected credit
losses that result from those default events on the
financial instrument that are possible within 12 months
after the reporting date); or
Full lifetime expected credit losses (expected credit
losses that result from all possible default events over
the life of the financial instrument).
For Trade Receivables Company applies 'simplified
approach' which requires expected lifetime losses to be
recognized from initial recognition of the receivables.
The Company uses historical default rates to determine
impairment loss on the portfolio of trade receivables. At
every reporting date these historical default rates are
reviewed and changes in the forward looking estimates
are analyzed.
For other assets, the Company uses 12 month Expected
Credit Loss (ECL) to provide for impairment loss where
there is no significant increase in credit risk. If there is
significant increase in credit risk full lifetime ECL is used.
Financial Liabilities
4.. 1. Initial recognition and measurement
All financial liabilities are recognized at fair value and in
case of loans, net of directly attributable cost. Fees of
recurring nature are directly recognized in the Statement
of Profit and Loss as finance cost.
4.. 2. Subsequent measurement
Financial liabilities are carried at amortized cost using
the effective interest method. For trade and other
payables maturing within one year from the balance
sheet date, the carrying amounts approximate fair value
due to the short maturity of these instruments.
De-recognition of financial instruments
The Company derecognizes a financial asset when the
contractual rights to the cash flows from the financial
asset expire or it transfers the financial asset and the
transfer qualifies for derecognition under Ind AS 109. A
financial liability (or a part of a financial liability) is
derecognized from the Company's Balance Sheet when
the obligation specified in the contract is discharged or
cancelled or expires.
Impairment of Financial Assets:
The impairment provisions for financial assets are based
on assumptions about risk of defaults and expected cash
loss rates. The company uses judgments in making these
assumptions and selecting the inputs to the impairment
calculation, based on companies past history, existing
market conditions as well as forward looking estimates at
the end of each reporting period.
5. Segment Reporting:
Operating segments are reported in a manner consistent
with the internal reporting provided to the
Chief Operating Decision Maker ('CODM').
6. Finance costs
Interest and other borrowing costs directly attributable
to qualifying assets are capitalized. Other interest and
borrowing costs are charged to Statement of Profit and
Loss in the period in which they occur.
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