2.2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Property, Plant and Equipment (PPE)
i) Property, plant and equipment are stated at cost, net of recoverable taxes, trade discount and rebates less accumulated
depreciation and impairment losses, if any. Such cost includes purchase price, borrowing cost and any cost directly
attributable to bringing the assets to its working condition for its intended use, net charges on foreign exchange contracts
and adjustments arising from exchange rate variations attributable to the assets.
ii) Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured
reliably. In the carrying amount of an item of PPE, the cost of replacing the part of such an item is recognized when that
cost is incurred if the recognition criteria are met. The carrying amount of those parts that are replaced is derecognized in
accordance with the derecognition principles.
iii) "Depreciation on property, plant and equipment is provided using straight line method. Depreciation is provided based on
useful life of the assets as prescribed in Schedule II to the Companies Act, 2013 . Each part of an item of Property, Plant
& Equipment with a cost that is significant in relation to total cost of the Machine is depreciated separately, if its useful
life is different than the life of the Machine.'
iv) The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each
financial year end and adjusted prospectively, if appropriate.
v) Gains or losses arising from derecognition of a property, plant and equipment are measured as the difference between the
net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the
asset is derecognised.
b) Leases
i) Leases are classified as finance leases whenever the terms of the lease, transfers substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as operating leases.
ii) Leased assets: Assets held under finance leases are initially recognised as assets of the Company at their fair value at the
inception of the lease or, if lower, at 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.
iii) Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant
rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in Statement of Profit
and Loss, unless they are directly attributable to qualifying assets, in which case they are capitalized. Contingent rentals are
recognised as expenses in the periods in which they are incurred.
iv) A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company
will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of
the asset and the lease term.
v) Operating lease payments are recognised as an expense in the Statement of Profit and Loss on a straight-line basis over the
lease term except where another systematic basis is more representative of time pattern in which economic benefits from
the leased assets are consumed.
c) Finance Cost
i) Borrowing costs include exchange differences arising from foreign currency borrowings to the extent they are regarded as
an adjustment to the interest cost. Borrowing costs directly attributable to the acquisition, construction or production of an
asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the
cost of the asset. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.
ii) Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets
is deducted from the borrowing costs eligible for capitalisation.
iii) All other borrowing costs are expensed in the period in which they occur.
d) Inventories
i) Securities Shown as Inventories are valued scrip wise at Market Value of securities.
e) Impairment of non-financial assets - property, plant and equipment and intangible assets
i) The Company assesses at each reporting date as to whether there is any indication that any property, plant and equipment
and intangible assets or group of assets, called Cash Generating Units (CGU) may be impaired. If any such indication
exists the recoverable amount of an asset or CGU is estimated to determine the extent of impairment, if any. When it is not
possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the
CGU to which the asset belongs.
ii) An impairment loss is recognised in the Statement of Profit and Loss to the extent, asset's carrying amount exceeds its
recoverable amount. The recoverable amount is higher of an asset's fair value less cost of disposal and value in use. Value
in use is based on the estimated future cash flows, discounted to their present value using pre-tax discount rate that reflects
current market assessments of the time value of money and risk specific to the assets.
iii) The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of
recoverable amount.
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