MATERIAL ACCOUNTING POLICIES
2.1 USE OF ESTIMATES
The preparation of the financial
statements in conformity with Ind AS
requires management to make estimates,
judgments and assumptions. These
estimates, judgments and assumptions
affect the application of accounting
policies and the reported amounts of
assets and liabilities, the disclosures
of contingent assets and liabilities at
the date of the financial statements
and reported amounts of revenues and
expenses during the period. Application
of accounting policies that require
critical accounting estimates involving
complex and subjective judgments and
the use of assumptions in these financial
statements. Accounting estimates could
change from period to period. Actual
results could differ from those estimates.
Appropriate changes in estimates are
made as management becomes aware
of changes in circumstances surrounding
the estimates. Changes in estimates are
reflected in the financial statements in
the period in which changes are made
and, if material, their effects are disclosed
in the notes to the financial statements.
2.2 PROPERTY PLANT & EQUIPMENT
a) a) Property, plant and equipment
are stated at cost net of taxes less
accumulated depreciation and/or
impairment loss, if any. All costs
such as freight, non recoverable
duties & taxes and other incidental
expenses until the property, plant
and equipment are ready for use,
as intended by management and
borrowing cost attributable to
the qualifing property, plant and
equipments are capitalized. Assets
costing less than Rs. 5,000/- are
fully depreciated in the year of
purchase in merging unit.
b) Subsequent expenditure relating
to property, plant and equipment
is capitalised only when it is
probable that future economic
benefits associated with these
will flow to the Company and the
cost of the item can be measured
reliably.
c) Capital work in progress represents
expenditure incurred in respect of
capital projects which are carried
at cost. Cost includes land, related
acquisition expenses, development
and construction costs, borrowing
costs and other direct expenditure.
d) The cost and related accumulated
depreciation are eliminated from
the financial statements upon
sale or retirement of the asset
and the resultant gains or losses
are recognized in the Statement
of Profit and Loss. Assets to be
disposed off are reported at the
lower of the carrying value or the
fair value less cost to sell.
e) Depreciation on property, plant
and equipment has been provided
in accordance with written down
value method and in the manner
prescribed in Schedule II to the
Companies Act, 2013.
Intangible assets, Brand
Developments and Trademarks,
have been amortised to their
nominal values and used SLM
method for amortisation of the
assets and computer software,
have been amortised to their
nominal values and used WDV
method for amortisation of the
Assets.
f) In respect of assets added/
disposed off during the year,
depreciation is charged on pro-rata
basis with reference to the month
of addition/disposal.
g) Depreciation methods, useful lives
and residual values are reviewed
periodically, including at each
financial year end.
2.3 INTANGIBLE ASSET
Intangible assets are recognized as per
the criteria specified in Indian Accounting
Standard (Ind As) 38 "Intangible Assets"
issued by the Ministry of Corporate
Affairs, Government of India.
2.4 FINANCIAL INSTRUMENTS
Initial recognition
The Company recognizes financial assets
and financial liabilities when it becomes
a party to the contractual provisions of
the instrument. All financial assets and
liabilities are recognized at fair value
on initial recognition, except for trade
receivables which are initially measured
at transaction price. Transaction costs
that are directly attributable to the
acquisition or issue of financial assets
and financial liabilities, that are not
at fair value through profit or loss,
are added to the fair value on initial
recognition. Regular way purchase and
sale of financial assets are accounted for
at trade date.
Subsequent measurement
Financial assets carried at amortised cost
A financial asset is subsequently
measured at amortised 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.
Investment in subsidiaries
Investment in subsidiaries is carried at
cost in the separate financial statements.
Investment in associates
An associate is an entity over which
the Company has significant influence.
Significant influence is the power to
participate in the financial and operating
policy decisions of the investee, but is
not control or joint control over those
policies.
The Company's investment in its
associates is accounted for using the
equity method. Under the equity
method, the investment in an associate
is initially recognised at cost. The carrying
amount of the investment is adjusted to
recognise changes in the Company share
of net assets of the associate since the
acquisition date. Goodwill relating to
the associate is included in the carrying
amount of the investment and is not
tested for impairment individually.
Derecognition 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 in
accordance with Ind AS 109 "Financial
Instruments" issued by the Ministry
of Corporate Affairs, Government of
India. 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.
2.5 IMPAIRMENT
Financial assets
The Company recognizes loss allowances
using the expected credit loss (ECL)
model for the financial assets which are
not fair valued through profit or loss.
Loss allowance for trade receivables
with no significant financing component
is measured at an amount equal to
lifetime ECL. For all other financial
assets, expected credit losses are
measured at an amount equal to the
12-month ECL, unless there has been
a significant increase in credit risk from
initial recognition in which case those are
measured at lifetime ECL.The amount of
expected credit losses (or reversal) that
is required to adjust the loss allowance at
the reporting date to the amount that is
required to be recognised is recognized
as an impairment gain or loss in profit or
loss.
Non-financial assets
Property, plant and equipment are
evaluated for recoverability whenever
events or changes in circumstances
indicate that their carrying amounts may
not be recoverable. For the purpose of
impairment testing, the recoverable
amount (i.e. the higher of the fair value
less cost to sell and the value-in-use) is
determined on an individual asset basis
unless the asset does not generate cash
flows that are largely independent of
those from other assets. In such cases,
the recoverable amount is determined
for the cash generating unit (CGU) to
which the asset belongs.
If such assets are considered to be
impaired, the impairment to be
recognized in the Statement of Profit and
Loss is measured by the amount by which
the carrying value of the assets exceeds
the estimated recoverable amount of the
asset. An impairment loss is reversed in
the Statement of Profit and Loss, if there
has been a change in the estimates used
to determine the recoverable amount.
The carrying amount of the asset is
increased to its revised recoverable
amount, provided that this amount
does not exceed the carrying amount
that would have been determined (net
of any accumulated amortization or
depreciation) had no impairment loss
been recognized for the asset in prior
years.
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