Note: 2 Material Accounting Policies:
The following note provides list of the material accounting policies adopted in the preparation of these
financial statements.
These policies have been consistently applied to all the years presented unless otherwise stated.
1 Basis of preparation:
A The financial statements have been prepared in accordance with Indian Accounting Standards
(Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended
and other relevant provisions of the Companies Act, 2013.
B The financial statements have been prepared on historical cost basis, except for the following
assets and liabilities which have been measured at fair value or revalued amount:
i Derivative financial instruments
ii Certain financial assets and liabilities measured at fair value [refer accounting policy
regarding financial instruments]
iii Defined benefit plans
iv Certain items of Property, Plant and Equipment
C The amounts mentioned in the financial statements are rounded off to the nearest Lac. Figures
less than J 50,000/- appear as zero (“0”). As the quarterly and yearly figures are taken from
the sources and rounded to the nearest digits, the figures already reported for all the quarters
during the yearly might not always add up to the yearly figures reported in this statement.
2 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
income and expenses during the period. Application of accounting policies that require critical
accounting estimates involving complex and subjective judgments are provided below.
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.
Critical estimates and judgments:
a Determination of revenue under the satisfaction of performance obligation necessarily
involves making estimates, some of which are of a technical nature, concerning, where
relevant, the timing of satisfaction of performance obligation, costs to completion for the
project or activity and the foreseeable losses to completion. Estimates of project income,
as well as project costs, are reviewed periodically. The Company recognises revenue
when the Company satisfies its performance obligation.
b Income Taxes:
Significant judgments are involved in determining the provision for income taxes, including
amount expected to be paid/ recovered for uncertain tax positions, and in estimation of
deferred tax asset or liability.
c Property, plant and equipment:
Property, plant and equipment represent a significant proportion of the asset base of the
Company. The charge in respect of periodic depreciation is derived after determining an
estimate of an asset’s expected useful life and the expected residual value at the end
of its life. Management reviews the residual values, useful lives and methods of
depreciation of property, plant and equipment at reasonable intervals and any revision
to these is recognised prospectively in current and future periods. The useful lives are
based on historical experience with similar assets as well as anticipation of future
events, which may affect their life, such as changes in technology.
Significant judgments are involved in determining the estimated future cash flows and/
or net realisable value from the property, plant and equipment to determine its value in
use to assess whether there is any impairment in its carrying amount as reflected in the
financials.
d Employee Benefits:
Significant judgments are involved in making estimates about the life expectancy,
discounting rate, salary increase, etc. which significantly affect the working of the present
value of future liabilities on account of employee benefits by way of defined benefit
plans.
e Significant judgment is involved in making estimate about the fair value of the non¬
convertible debentures issued by the company on which no interest is payable and
which are to be redeemed at a premium which is calculated based on project IRR as
per terms of the debentures.
f Product quality claims:
Significant judgments are involved in determining estimated value of likely product quality
claims.
g Insurance claims:
Significant judgments are involved in determining estimated value likely to be received
in respect of insurance claims lodged in respect of loss/damage to properties/stock of
the company.
3 Non-Current assets (or disposal groups) held for sale:
Non-Current assets and disposal groups are classified as held for sale if their carrying amount
will be recovered principally through a sale transaction rather than through continuing use.
This condition is regarded as met only when the asset (or disposal group) is available for
immediate sale in its present condition subject only to terms that are usual and customary for
sales of such asset (or disposal group) and its sale is highly probable. Management must be
committed to the sale, which should be expected to qualify for recognition as a completed sale
within one year from the date of classification.
Non-Current assets (and disposal groups) classified as held for sale are measured at the lower
of their carrying amount and fair value less costs to sell except for those assets that are
specifically exempt under relevant Ind AS. Once the assets are classified as “Held for sale”,
those are not subjected to depreciation till disposal.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or
disposal group) to fair value less costs to sell. A gain is recognised for any subsequent
increases in fair value less costs to sell of an asset (or disposal group), but not in excess of
any cumulative impairment loss previously recognised.
A gain or loss not previously recognised by the date of the sale of the non-current asset (or
disposal group) is recognised at the date of derecognition.
Non-current assets classified as held for sale and the assets of a disposal group classified as
held for sale are presented separately from the other assets in the balance sheet.
4 Discontinued operation:
A discontinued operation is a component of an entity that either has been disposed of, or is
classified as held for sale and that represents a separate line of business or geographical area
of operations, is part of single coordinated plan to dispose of such a line of business or area
of operations, or is a subsidiary acquired exclusively with a view to resale. The results of
discontinued operations are presented separately in the statement of profit and loss.
5 Foreign Currency Transactions:
A The Company’s financial statements are presented in Indian Rupees (J), which is the
functional and presentation currency.
B The transactions in foreign currencies are translated into functional currency at the rates
of exchange prevailing on the dates of transactions.
C Foreign Exchange gains and losses resulting from settlement of such transactions and
from the translation of monetary assets and liabilities denominated in foreign currencies
at the year-end exchange rates are recognised in the Statement of Profit and Loss.
D Foreign exchange differences regarded as an adjustment to borrowing costs are presented
in the Statement of Profit and Loss as part of finance costs. All the other foreign
exchange gains and losses are presented in the Statement of Profit and Loss on a net
basis.
6 Revenue Recognition:
A Revenue is recognised to the extent that it is probable that the economic benefits will
flow to the Company and the revenue can be reliably measured, regardless of when the
payment is being made. Revenue is measured at the fair value of the consideration
received or receivable, taking into account contractually defined terms of payment and
excluding taxes or duties collected on behalf of the government and is shown net of
returns, trade allowances, rebates, volume discounts and value added taxes.The Company
derives revenues primarily from sale of manufactured goods, traded goods and related
services. The Company is also engaged in real estate property development. Revenue
is recognized on satisfaction of performance obligation upon transfer of control of promised
products or services to customers in an amount that reflects the consideration the
Company expects to receive in exchange for those products or services.
B In determining the transaction price, the Company considers the effects of variable
consideration and the existence of significant financing components, if any.
C GST is not received by the Company on its own account, but is tax collected on value
added to the goods/ services by the Company on behalf of the government. Accordingly,
it is excluded from revenue.
D For revenue to be recognised, the following specific recognition criteria for each types
of revenue must be satisfied:
a Sale of Goods:
Revenue from the sale of goods is recognised when the control of the goods has
passed to the buyer, usually on delivery of the goods. Revenue from the sale of
goods is measured at the fair value of the consideration received or receivable,
net of returns, trade allowances, rebates, volume discounts and GST.
The goods are often sold with volume discounts/pricing incentives and customers
have a right to return defective products. Revenue from sales is based on the
price in the sales contracts, net of discounts. Historical experience is used to
estimate and provide for customer claims. No element of financing is deemed
present, as the sales are made with the normal credit terms as per prevalent trade
practice and credit policy followed by the Company.
b Real Estate Transactions:
The Company satisfies a performance obligation and recognises revenue over
time, if one of the following criteria is met:
1. The customer simultaneously receives and consumes the benefits provided
by the Company’s performance as the Company performs.
2. The Company’s performance creates or enhances an asset that the customer
controls as the asset is created or enhanced; or
3. The Company’s performance does not create an asset with an alternative
use to the Company and the entity has an enforceable right to payment for
performance completed to date.
For performance obligations where none of the above conditions are met, revenue
is recognised at the point in time at which the performance obligation is satisfied.
Revenue in excess of invoicing are classified as contract asset, while invoicing in
excess of revenues are classified as contract liabilities.
c Service Income:
Service income is recognised as per the terms of contracts with the customers
when the related services are performed and are net of GST, wherever applicable.
d Interest Income:
For all debt instruments measured at amortized cost, interest income is recorded
using the effective interest rate (EIR). EIR is the rate that exactly discounts the
estimated future cash payments or receipts over the expected life of the financial
instrument or a shorter period, where appropriate, to the gross carrying amount
of the financial asset or to the amortized cost of a financial liability. When calculating
the effective interest rate, the Company estimates the expected cash flows by
considering all the contractual terms of the financial instrument, but does not
consider the expected credit losses.
e Claims receivable on account of Insurance are accounted for to the extent the
Company is reasonably certain of their ultimate collection.
f Dividend Income:
Dividend Income is recognized when the right to receive the same is established.
g Other Income:
Other income is recognised when no significant uncertainty as to its determination
or realisation exists.
7 Taxes on Income:
Tax expenses comprise of current and deferred tax.
A Current Tax:
a Current tax is measured at the amount expected to be paid on the basis of reliefs
and deductions available in accordance with the provisions of the Income Tax Act,
1961. The tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted, at the reporting date.
b Current tax items are recognised in correlation to the underlying transaction either
in Statement of Profit and Loss, Other Comprehensive Income (OCI) or directly in
equity.
c Management periodically evaluates positions taken in the tax returns with respect
to situations in which applicable tax regulations are subject to interpretation and
establishes provisions where appropriate.
B Deferred Tax:
a Deferred tax is provided using the liability method on temporary differences between
the tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes at the reporting date.
b Deferred tax liabilities are recognised for all taxable temporary differences.
c Deferred tax assets are recognised for all deductible temporary differences and
carry forward of unused tax losses.
Deferred tax assets are recognised to the extent it is probable that taxable profit
will be available against which the deductible temporary differences and carry
forward of unused tax losses can be utilized.
d The carrying amount of deferred tax assets is reviewed at each reporting date and
reduced to the extent that it is no longer probable that sufficient taxable profit will
be available to allow all or part of the deferred tax asset to be utilized. Unrecognised
deferred tax assets are re-assessed at each reporting date and are recognised to
the extent that it has become probable that future taxable profits will allow the
deferred tax asset to be recovered.
e Deferred tax assets and liabilities are measured at the tax rates (and tax laws)
that have been enacted or substantively enacted at the reporting date and are
expected to apply in the year when the asset is realised or the liability is settled.
f Deferred tax items are recognised in correlation to the underlying transaction
either in Statement of Profit and Loss, Other Comprehensive Income (OCI) or
directly in equity.
g Deferred tax assets and deferred tax liabilities are offset if a legally enforceable
right exists to set off current tax assets against current tax liabilities.
8 Property, Plant and Equipment:
A Property, Plant, and Equipment including leasehold land existing as on January 1, 2005
have been carried at revalued figures and subsequent additions thereto are accounted
for on actual/historical cost basis. Cost includes related expenditure and pre-operative
and project expenses for the period upto completion of construction / upto date of assets
being ready for its intended use, if recognition criteria are met and the present value of
the expected cost for the decommissioning of an asset after its use is included in the
cost of the respective asset if the recognition criteria for a provision are met. Cost is
reduced by accumulated depreciation and impairment and amount representing assets
discarded or held for disposal. On transition to Ind AS as on April 1, 2016, the Company
has elected to measure its Property, Plant and Equipment at carrying value as per
previous GAAP. As per the requirement of paragraph 11 of Ind AS 101, outstanding
amount in the revaluation reserve was transferred to retained earning account upon
transition to Ind AS, since the Company is no longer applying the revaluation model of
Ind AS 16 upon transition and has elected to apply the cost model approach.
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 Company and the cost of the item can be measured reliably.
The carrying amount of any component accounted for as a separate asset is derecognised
when replaced. All other repairs and maintenance are charged to the Statement of Profit
and Loss during the reporting period in which they are incurred.
B Where components of an asset are significant in value in relation to the total value of
the asset as a whole, and they have substantially different economic lives as compared
to principal item of the asset, they are recognised separately as independent items and
are depreciated over their estimated economic useful lives.
C Depreciation on tangible assets is provided on “straight line method”. Useful life of
tangible assets except buildings as per following details are different from that prescribed
in Schedule II of the Act, which have been arrived at based on technical evaluation. The
management believes that these estimated useful lives are realistic and reflect fair
approximation of the period over which the assets are likely to be used. However,
management reviews the residual values, useful lives and methods of depreciation of
property, plant and equipment at reasonable intervals. Any revision to these is recognized
prospectively in current and future periods.
D Depreciation on impaired assets is calculated on its reduced value, if any, on a systematic
basis over its remaining useful life.
E Depreciation on additions/ disposals of the property, plant & equipment during the year
is provided on pro-rata basis according to the period during which assets are used.
F Capital work in progress is stated at cost less accumulated impairment loss, if any. All
other repair and maintenance costs are recognised in Statement of Profit or Loss as
incurred, unless they meet the recognition criteria for capitalisation under property, plant
and equipment.
G An item of property, plant and equipment and any significant part thereof initially
recognised is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising on de-recognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount
of the asset) is included in the Statement of Profit and Loss when the asset is
derecognised.
9 Leases
A The Company has adopted Ind AS 116 “Leases” using the modified retrospective
approach, initially applying this standard from April 1, 2019. Accordingly, the information
presented for previous year ended March 31, 2019, is not restated and reported as per
Ind AS 17.
B The Company evaluates if an arrangement qualifies to be a lease as per the requirements
of Ind AS 116 and this may require significant judgment. The Company also uses
significant judgment in assessing the lease term (including anticipated renewals) and
the applicable discount rate.
The Company determines the lease term as the non-cancellable period of a lease,
together with both periods covered by an option to extend or terminate the lease if the
Company is reasonably certain based on relevant facts and circumstances that the
option to extend or terminate will be exercised. If there is a change in facts and
circumstances, the expected lease term is revised accordingly.
The discount rate is generally based on the interest rate specific to the lease being
evaluated or if that cannot be easily determined the incremental borrowing rate for
similar term is used.
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. The Company recognises the lease payments associated with these leases as
an expense on a straight-line basis over 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, or a change in the estimate of the amount expected
to be payable under a residual value guarantee, or a change in the 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 amount
of the right-of-use asset, or is recorded in the Statement of Profit and Loss if the carrying
amount of the right-of-use asset has been reduced to zero. The right of-use asset is
measured by applying cost model i.e. right-of-use asset at cost less accumulated
depreciation /impairment losses (Refer note no. 13 for impairment).
C The Company as a leassee:
The Company recognises 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 restoration
cost, less any lease incentives received.
The right-to-use assets are subsequently depreciated over the shorter of the asset’s
useful life and the lease term on a straight-line basis. In addition, the right-to-use asset
is reduced by impairment losses, if any.
The lease liability is initially measured at amortised cost at the present value of the
future lease payments. When a lease liability is remeasured, the corresponding adjustment
of the lease liability is made to the carrying amount of the right-of-use asset, or is
recorded in the Statement of Profit and Loss, if the carrying amount of the right-to-use
asset has been reduced to zero.
The right to use appears as part of fixed assets and the lease liability appears as non
current and current liability in the Balance Sheet.
Rent concessions are accounted for as per provisions of the revised Ind-AS 116 “Leases”.
10 Intangible Assets:
A Intangible assets acquired separately are measured on initial recognition at cost. Following
initial recognition, intangible assets are carried at cost less any accumulated amortisation
and accumulated impairment losses.
B Capitalised cost incurred towards purchase/ development of software is amortized using
straight line method over its useful life of six years as estimated by the management at
the time of capitalisation.
C An item of intangible asset initially recognised is derecognised upon disposal or when
no future economic benefits are expected from its use or disposal. Any gain or loss
arising on de-recognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset) is included in the Statement
of Profit and Loss when the asset is derecognised.
11 Borrowing Costs:
A Borrowing costs consist of interest and other borrowing costs that are incurred in
connection with the borrowing of funds. Other borrowing costs include ancillary charges
at the time of acquisition of a financial liability, which is recognised as per EIR method.
Borrowing costs also include exchange differences to the extent regarded as an
adjustment to the borrowing costs.
B Borrowing costs that are directly attributable to the acquisition / construction of a qualifying
asset are capitalised as part of the cost of such assets, up to the date the assets are
ready for their intended use.
C For capitalization of eligible borrowing costs which are not specifically attributable to the
acquisition, construction or production of a particular qualifying asset, a weighted average
capitalization rate is applied for all the eligible assets.
The weighted average rate is considered of the borrowing costs applicable to the
outstanding borrowings of the company during the period, other than borrowings made
specifically for the purpose of obtaining a qualifying asset.
12 Impairment of Assets:
The carrying amounts of Property, Plant and Equipment and intangible assets are reviewed at
each balance sheet date if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds
its recoverable amount. The recoverable amount is the greater of the asset’s net selling price
and value in use. In assessing value in use, the Company measures it on the basis of
discounted estimated cash flows for the remaining years (remaining useful life). Assessment
is also done at each Balance Sheet date as to whether there is any indication that an impairment
loss recognized for an asset in prior accounting periods may no longer exist or may have
decreased. After impairment, depreciation is provided on the revised carrying amount of the
asset over its remaining useful life.
13 Inventories:
A Inventories are valued at the lower of cost and net realisable value (“NRV”). NRV
represents the estimated selling price in the ordinary course of business, less the
estimated costs of completion and the estimated costs necessary to make the sale.
B The cost of inventories comprises direct expenditure related to real estate activities and
other expenditures to the extent that such expenditures are directly attributable to bringing
the asset to its working condition for its intended use.
C Work-in-progress represents costs incurred in respect of unsold areas of real estate
projects or costs incurred on projects for which revenue recognition criteria have not yet
been met.
14 Cash and Cash Equivalents:
Cash and Cash equivalents for the purpose of Cash Flow Statement comprise cash and
cheques in hand, bank balances, demand deposits with banks where the original maturity is
three months or less and other short term highly liquid investments.
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