I. Property Plant and Equipment
a) Initial and subsequent recognition and CWIP:
Property Plant & Equipment are carried at
the cost of acquisition or construction, less
accumulated depreciation and accumulated
impairment, if any. The cost of items of Property
Plant & Equipment includes taxes (other than
those subsequently recoverable from tax
authorities), duties, freight and other directly
attributable costs related to the acquisition or
construction of the respective assets. Know¬
how related to plans, designs and drawings of
buildings or plant and machinery is capitalized
under relevant asset heads.
Subsequent costs are included in the
assets carrying amount or recognized as
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 carrying amount of
any component accounted for as a separate
asset is derecognized when replaced. All
other repairs & maintenance are charged to
profit and loss during the reporting period in
which they are incurred.
Capital work-in-progress comprises of the cost
of Property Plant and Equipment that are not
ready for their intended use at the reporting
date. Any gain or loss on de-recognition
(calculated as difference between the net
disposal proceeds and the carrying amount
of the asset) is recognized in the Statement of
Profit and Loss when the asset is derecognized.
b) Depreciation & Amortization:
Depreciation is provided on a pro-rata basis on
the straight-line method based on estimated
useful life prescribed under Schedule II to the
Companies Act, 2013 except in respect of the
following assets where the useful life has been
determined based on the technical evaluation
done by the management experts :
c) Impairment:
The carrying amounts of the Company's
tangible assets are reviewed at each balance
sheet date to determine whether there is any
indication of impairment. If any such indication
exists, the assets' recoverable amounts are
estimated in order to determine the extent of
impairment loss, if any. An impairment loss is
recognized whenever the carrying amount of
an asset exceeds its recoverable amount. The
impairment loss, if any, is recognized in the
Statement of Profit and Loss in the period in
which impairment takes place.
Where an impairment loss subsequently reverses,
the carrying amount of the asset is increased to
the revised estimate of its recoverable amount,
however subject to the increased carrying
amount not exceeding the carrying amount that
would have been determined (net of amortization
or depreciation) had no impairment loss been
recognized for the asset in prior accounting
periods.
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.
d) Non-Current Assets Held for Sale:
Non-Current Assets are classified as
Held for Sale if their carrying amount will
be recovered principally through a sale
transaction rather than through continuing
use and sale is considered highly probable.
Also, such assets are classified as held for sale
only if the management expects to complete
the sale within one year from the date of
classification.
Non-current assets classified as held for sale
are measured at the lower of their carrying
amount and the fair value less cost to sell.
Noncurrent assets are not depreciated or
amortized.
II. Intangible Assets:
a) Initial and subsequent recognition:
Intangible assets are recorded at the
consideration paid for acquisition of such assets
and are carried at cost less the accumulated
amortization and impairment, if any.
Separately purchased intangibles are initially
measured at cost. Intangible assets acquired
in a business combination are recognized at
fair value at the acquisition date. Subsequently
intangible assets are carried at cost less
accumulated amortization and accumulated
impairment loss, if any.
The useful lives of intangible assets is assessed
as either finite or infinite. Finite-life intangible
assets are amortized on a straight-line basis
over the period of their expected useful lives.
Estimated useful lives of finite-life intangible
assets is as follows:
Computer Software - 3 years
b) Amortization:
The amortization period and the amortization
method for finite-life intangible assets is
reviewed at the end of each financial year and
adjusted prospectively, if appropriate.
III. Investments property
a) Initial and subsequent recognition:
Investment properties are properties that
are held to earn rentals and /or for capital
appreciation (including property under
construction for such purposes) and not
occupied by the Company for its own use.
Investment properties are measured initially
at cost, including transaction costs and net
of recoverable taxes. The cost includes the
cost of replacing parts and borrowing costs if
recognition criteria are met. When significant
parts of the investment property are required
to be replaced at intervals, the Company
depreciates them separately based on their
specific useful lives. All other repair and
maintenance costs are recognized in profit or
loss as incurred.
Subsequent to initial recognition, investment
properties are stated at cost, less accumulated
depreciation and accumulated impairment
loss, if any.
b) Depreciation:
Depreciation on Investment property,
wherever applicable, is provided on straight
line basis as per useful lives prescribed in
Schedule II to Companies Act, 2013.
c) De-recognition:
Investment properties are derecognized either
when they have been disposed of or when they
are being occupied by the Company for its own
use or when they are permanently withdrawn
from use and no future economic benefit is
expected from their disposal. The difference
between the net disposal proceeds and the
carrying amount of the asset is recognized in
profit or loss in the period of de-recognition.
IV. Inventories:
Inventories are valued at lower of Cost and Net
Realizable Value.
The cost is determined as follows:
a) Raw and Packing Materials are valued at cost or
market value, whichever is lower, computed on
weighted average basis. The cost includes the
cost of purchase and other expenses directly
attributable to their acquisition but excludes
duties and taxes, which are subsequently
recoverable.
b) The finished goods inventory is valued at cost
or net realizable value whichever is lower. Cost
includes material cost, conversion, appropriate
factory overheads, any tax or duties (as
applicable) and other costs incurred in bringing
the inventories to their present location and
condition.
c) Work-in-Process is valued at material cost and
cost of conversion appropriate to their location
in the manufacturing cycle.
d) Stores, Spares and consumables are valued
at cost, computed on First in First Out (FIFO)
basis. The cost includes the cost of purchase
and other expenses directly attributable to
their acquisition but excludes duties and taxes
that are subsequently recoverable, if any.
Slow-moving and damaged, unserviceable stocks
are adequately provided wherever considered
necessary.
V. Cash and Cash Equivalents:
Cash and cash equivalents for the purposes of
Cash Flow Statements includes cash in hand,
deposits with banks and short-term highly liquid
investments, which are readily convertible into
cash and have original maturities of three months
or less and which are subject to an insignificant risk
of changes in value.
VI. Non-current Assets held for sale:
Non-current assets or disposal groups comprising
of assets and liabilities are classified as ‘held for
sale' when all the following criteria are met:
(i) decision has been made to sell
(ii) the assets are available for immediate sale in
its present condition
(iii) the assets are being actively marketed
(iv) sale has been agreed or expected to be
concluded within 12 months of the Balance
Sheet date
Subsequently, such non-current assets and disposal
groups classified as held for sale are measured at
the lower of its carrying value and fair value less
cost to sell. Non-current assets held for sale are not
depreciated or amortized.
VII. Borrowing costs:
Borrowing costs, if any, directly attributable
to the acquisition, construction or production
of an qualifying asset (net of income earned on
temporary deployment of funds) that necessarily
takes a substantial period of time to get ready for
its intended use or sale are capitalized. All other
borrowing costs are charged to statement of
profit and loss. Borrowing costs include interest,
amortization of ancillary costs incurred in
connection with the arrangement of borrowings
and exchange differences arising from foreign
currency borrowings to the extent they are
regarded as an adjustment to the borrowing cost.
General Borrowing cost incurred in connection
with qualifying assets is capitalized by applying
the capitalization rate on the quantum of such
borrowings utilized for such assets.
VIII. Revenue recognition:
Revenue from contracts with customers is
recognized when control of the goods or services
are transferred to the customer at an amount that
reflects the consideration to which the company
expects to be entitled in exchange for those goods
or services.
Revenue is measured based on the transaction price,
which is the consideration, adjusted for discounts
and other incentives, if any, as specified in the
contract with the customer. Revenue also excludes
taxes or other amounts collected from customers
in its capacity as an agent. If the consideration in a
contract includes a variable amount, the company
estimates the amount of consideration to which it will
be entitled in exchange for transferring the goods to
the customer. The variable consideration is estimated
at contract inception and constrained until it is highly
probable that a significant revenue reversal in the
amount of cumulative revenue recognized will not
occur when the associated uncertainty with the
variable consideration is subsequently resolved.
Dividend income is recognized in statement of
profit and loss only when the right to receive
payment is established, which is generally when
shareholders approve dividend.
Export incentives receivable under Duty Drawback
Scheme and MEIS are accounted on accrual basis.
Interest income is recognized using the effective
interest rate (EIR) method.
Insurance claims are recognized post filing of the
claim with the insurer.
IX. Foreign Currency Transactions:
Transactions denominated in foreign currencies are
normally recorded at the exchange rate prevailing
on the date of transaction. Monetary items
denominated in foreign currencies at the yearend
are re-measured at the exchange rate prevailing
on the balance sheet date. Non-monetary foreign
currency items are carried at cost. Any income or
expense on account of exchange difference either
on settlement or on restatement is recognized in
the Statement of Profit and Loss.
The Exchange Rate Difference and the forward
premium on the loan taken for capital assets are
being capitalized along with Interest till the date of
commissioning of the said capital assets.
X. Employee Benefits:
a) Short term employee benefits:
All employee benefits payable wholly within
twelve months of rendering the service are
classified as short term employee benefits and
they are recognized in the period in which the
employee renders the related service. The
Company recognizes the undiscounted amount
of short-term employee benefits expected to
be paid in exchange for services rendered as a
liability (accrued expense) after deducting any
amount already paid.
b) Long term employee benefits:
i) Defined contribution plans:
Contributions to defined contribution
schemes such as employees state insurance,
labour welfare fund, superannuation
scheme, employee pension scheme etc.
are charged as an expense based on the
amount of contribution required to be
made as and when services are rendered
by the employees. Company's provident
fund contribution is made to a government
administered fund and is charges as an
expense in the Statement of Profit and
Loss. The above benefits are classified
as Defined Contribution Schemes as
the Company has no further obligations
beyond the monthly contributions.
ii) Defined benefit plans:
The Company operates a defined benefit
gratuity plan, which required contributions
to be made to a separately administered
fund. The cost of providing benefits under
the defined benefit plan is determined
using the projected unit credit method.
Re-measurements, comprising of actuarial
gains and losses, the effect of the asset
ceiling, excluding amounts included in net
interest on the net defined benefit liability
and the return on plan assets (excluding
amounts included in net interest on the net
defined benefit liability) are recognized
immediately, in the balance sheet with a
corresponding debit or credit to retained
earnings through Other Comprehensive
Income in the period in which they occur.
Re-measurements are not reclassified to
profit or loss in subsequent periods.
Past service costs are recognized in profit
or loss on the earlier of:
• The date of the plan amendment or
curtailment or
• The date that the Company recognizes
related restructuring costs
• Net interest is calculated by applying
the discount rate to the net defined
liability or asset. The Company
recognizes the following changes in
the net defined benefit obligation as
an expense in the statement of Profit
and Loss:
• Service costs comprising current
service costs, pasts service costs,
gains and
• Losses on curtailments and non¬
routine settlements.
• Net Interest expense or income.
iii) Others: The Company operates a
Long-Term Incentive (“LTI”) Plan for
eligible employees. Under the Plan,
employees are entitled to receive
cash awards subject to completion
of specified service conditions over
a vesting period of 5 years and
achievement of defined performance
conditions. The Plan is cash-settled
and does not involve the issuance of
equity instruments.
The LTI Plan is classified as an
Other Long-Term Employee Benefit
in accordance with Ind AS 19 -
Employee Benefits. Liability is
measured at the present value of
the defined benefit obligation at the
reporting date. Remeasurements
are recognized immediately in the
Statement of Profit and Loss
c) Termination benefits:
Termination benefits in the nature of voluntary
retirement benefits or termination benefits
arising from restructuring are recognized in
the Statement of Profit or Loss. The Company
recognizes termination benefits at the earlier
of the following dates:
• When the Company can no longer
withdraw the offer of these benefits
• When the company recognizes costs for
restructuring that is within the scope of
IND AS 37 and involves the payment of
termination benefits.
XI. Fair Value Measurement:
The Company measures financial instruments at
fair value on each Balance Sheet date. Fair value is
the price that would be received to sell an asset or
settle a liability in an ordinary transaction between
market participants at the measurement date. The
fair value measurement is based on presumption
that the transaction to sell the asset or transfer the
liability takes place either:
• In the principal market for the asset or liability
or
• In absence of principal market, in the most
advantageous market for asset or liability. The
principal or the most advantageous market
should be accessible to the Company.
The fair value of an asset or a liability is measured
using the assu ption that market participants
would use when pricing an asset or liability acting
in their best economic interest. The Company uses
valuation techniques, that are appropriate in the
circumstances and for which sufficient data are
available to measure fair value, maximizing the use
of relevant observable inputs and minimizing the
use of unobservable inputs.
All assets and liabilities for which fair value is
measured or disclosed in the financial statements
are categorized within the fair value hierarchy,
described as follows, based on the lowest level input
that is significant to the fair value measurement as
a whole:-
• Level 1 - Quoted market prices in active
market for identical assets or liabilities.
• Level 2 - valuation techniques for which the
lowest level input that is significant to the fair
value measurement is directly or indirectly
observable.
• Level 3 - valuation techniques for which the
lowest level input that is significant to the fair
value measurement is unobservable.
For assets and liabilities that are recognized in
the financial statements on a recurring basis,
the Company determines whether transfers
have occurred between levels in the hierarchy
by re-assessing categorization (based on the
lowest level input that is significant to the fair
value measurement as whole) at the end of each
reporting period.
External valuers are involved in valuation of
significant assets, such as properties, unquoted
financial assets etc. Involvement of independent
external valuers is decided upon annually by the
Company. Further such valuation is conducted
annually at the end of the financial year and the
impact if any on account of such fair valuation is
taken in the annual financial statements.
For the purpose of fair value disclosures, the
Company has determined classes of assets and
liabilities on the basis of the nature, characteristics
and risks of the asset or liability and the level of the
fair value hierarchy as explained above.
XII. Leases:
The Company's lease asset classes primarily consist
of leases for land and buildings. The Company, at
the inception of a contract, assesses whether the
contract is a lease or not lease. A contract is, or
contains, a lease if the contract conveys the right
to control the use of an identified asset for a time in
exchange for a consideration.
The Company recognizes a right-of-use asset and
a lease liability at the lease commencement date.
The right-of-use asset is initially measured at cost,
which comprises the initial amount of the lease
liability adjusted for any lease payments made at
or before the commencement date, plus any initial
direct costs incurred and an estimate of costs to
dismantle and remove the underlying asset or to
restore the underlying asset or the site on which it
is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated
using the straight-line method from the
commencement date to the end of the lease term.
The lease liability is initially measured at the
present value of the lease payments that are not
paid at the commencement date, discounted using
the Company's incremental borrowing rate. It is
remeasured when there is a change in future lease
payments arising from a change in an index or rate,
if there is a change in the Company's estimate of the
amount expected to be payable under a residual
value guarantee, or if the Company changes its
assessment of whether it will exercise a purchase,
extension or termination option. When the lease
liability is remeasured in this way, a corresponding
adjustment is made to the carrying amount of the
right-of-use asset, or is recorded in profit or loss if
the carrying amount of the right-of-use asset has
been reduced to zero.
The Company has elected not to recognise right-
of-use assets and lease liabilities for short-term
leases that have a lease term of 12 months or less
and leases of low-value assets (assets of less than
Rs. 1,00,000 in value). The Company recognises
the lease payments associated with these leases as
an expense over the lease term.
In the comparative period, leases under which the
Company assumes substantially all the risks and
rewards of ownership are classified as finance
leases. When acquired, such assets are capitalized
at fair value or present value of the minimum lease
payments at the inception of the lease, whichever
is lower. Lease payments and receipts under
operating leases are recognised as an expense and
income respectively, 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.
XIII. 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.
a) Financial Assets:
i) Initial recognition and measurement:
Financial assets are recognized when
the Company becomes a party to the
contractual provisions of the instrument.
On initial recognition, all financial assets
are recognized at fair value. In case of
financial assets which are recognized at
Fair Value through Profit and Loss (FVTPL),
its transaction costs are recognized in the
statement of profit and loss. In other cases,
transaction costs are attributable to the
acquisition value of the financial asset are
added to the value of financial asset.
Financial assets are not reclassified
subsequent to their recognition, except and
if and in the period the Company changes
its business model for managing financial
assets.
ii) Subsequent measurement:
Financial assets are subsequently classified
and measured at:
• Amortized cost
• Fair value through profit and loss (FVTPL)
• Fair value through other comprehensive
income (FVTOCL)
Investments in Debt Instruments:
A debt instrument is measured at amortized
cost or at FVTPL. Any debt instrument, which
does not meet the criteria for categorization
as at amortized cost or as FVTOCI, is classified
as at FVTPL. Debt instruments included within
the FVTPL category are measured at fair value
with all changes recognized in the Statement of
profit and loss.
a) Financial Assets measured at amortized cost:
Financial assets are measured at amortized cost
when the asset is held within a business model,
whose objective is to hold assets for collecting
contractual cash flows and contractual terms
of the assets are such that they give rise on
specified dates to cash flows that are solely
payments of principal and interest. Such
financial assets are subsequently measured at
amortized cost using the effective interest rate
method (EIR). The EIR is the rate that discounts
estimated future cash income through the
expected life of financial instrument. The
losses from impairment are recognized in the
statement of profit and loss.
b) Financial Assets measured at fair value
through OCI (FVTOCI):
Financial assets under this category are
measured initially as well as at each reporting
date at fair value. Fair value movements are
recognized in the other comprehensive income.
c) Financial Assets measured at fair value
through profit and loss:
Financial Assets under this category are
measured initially as well as at each reporting
date at fair value, with all changes recognized
in statement of profit and loss.
Investments in Equity Instruments:
All investments in equity instruments classified
under financial assets are initially measured
at fair value. The Company may, on initial
recognition, chooses to measure the same
either at FVTOCI or FVTPL, which is done on
an instrument-by-instrument basis.
Fair value changes on an equity instrument is
recognized as other income in the Statement
of Profit and Loss unless the Company
has elected to measure irrevocably such
instrument at FVTOCI. Fair value changes
excluding dividends, on an equity instrument
measured at FVTOCI are recognized in
OCI. Amounts recognized in OCI are not
subsequently reclassified to the Statement of
Profit and Loss even on the sale of investment.
Dividend income on the investments in equity
instruments are recognized as ‘other income' in
the Statement of Profit and Loss.
Investment in Subsidiary, Joint Venture and
Associate
Investments in equity instruments of Subsidiaries
are measured at costs. Provision for impairment
loss on such investment is made only when there
is a diminution in the value of investment which is
other than temporary.
iii) Derecognition of Financial Assets:
A financial asset is derecognized only when the
contractual rights to receive cash flows from
the asset have expired or the Company has
transferred the financial asset and substantially
all the risks and rewards of ownership of the
asset.
iv) Impairment of Financial Assets:
Expected credit losses are recognized for
all financial assets subsequent to initial
recognition other than financials assets in
FVTPL category.
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 lifetime
ECL allowances 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
ECL to provide for impairment loss where there
is no significant increase in credit risk. If there is
significant increase in credit risk lifetime ECL is
used.
The impairment losses and reversals are recognized
in Statement of Profit and Loss.
b) Financial Liabilities:
i) Initial recognition and measurement:
Financial liabilities are recognized when
the Company becomes a party to the
contractual provisions of the instrument.
All financial liabilities are recognized
initially at fair value and, in the case of
loans and borrowings and payables, net of
directly attributable transaction costs, if
any.
The Company's financial liabilities include
trade and other payables, loans and
borrowings including bank overdrafts,
financial guarantee contracts and derivative
financial instruments.
ii) Subsequent measurement:
Financial liabilities are subsequently measured
at amortized cost using the EIR method.
Financial liabilities carried at fair value through
profit or losses are measured at fair value
with all changes in fair value recognized in the
Statement of Profit and Loss.
Loans and borrowings:
After initial recognition, interest bearing loans
and borrowings are subsequently measured
at amortized cost using the EIR method. Gains
and losses are recognized in profit and loss
when the liabilities are derecognized.
Amortized cost is calculated by taking
into account any discount or premium on
acquisition and fees or costs that are an
integral part of the EIR. The EIR amortization
is included as finance costs in the statement
of profit and loss.
iii) Derecognition:
A financial liability is derecognized when
the obligation specified in the contract is
discharged, cancelled or expires.
XIV. Derivatives:
The Company enters into various derivative
financial instruments to manage its exposure
to interest and foreign exchange rate risks,
like foreign exchange forward contracts and
interest rate swaps.
Derivatives are initially recognized at fair
value on the date the derivative contracts
are entered into and are subsequently re¬
measured to their fair value (Mark to Market)
at the end of each reporting period. The
resulting gain or loss is recognized in the
Statement of profit and loss. Company does
not designate any of its derivative instruments
as hedge instruments. Derivatives are carried
as financial assets when fair value is positive
and as financial liabilities when the fair value
is negative.
|