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 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 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 perfomance 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 is classified as contract asset while invoicing in excess
of revenues is classified as contract liability.
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 Government Grants:
A Government grants are recognised in accordance with the terms of the respective grant on
accrual basis considering the status of compliance of prescribed conditions and ascertainment
that the grant will be received.
B Government grants related to revenue items are recognised on a systematic and net basis in
the Statement of Profit and Loss over the period during which the related costs intended to
be compensated are incurred.
C Government grants related to assets are recognised as income over the expected useful life
of the related asset.
8 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.
9 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 and 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.
10 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, th e 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 lessee:
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”.
11 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.
12 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 taken 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.
13 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.
14 Inventories:
A Inventories are valued at the lower of cost and net realisable value. Net realisable value is the
estimated selling price in the ordinary course of business, less estimated costs of completion
and the estimated costs necessary to make the sale.
B Costs (net of input credit of VAT/GST) comprises all cost of purchase, cost of conversion and
other costs incurred in bringing inventories to their present location and condition. Cost formulae
used are “First In First Out”, “Weighted Average Cost”, or “Specific Identification” as applicable.
C Write down of inventories to net realisable value is recognised as an expense and included
in “Changes in Inventories of Finished goods, Work-in-progress and Stock-in-Trade” and “Cost
of Material Consumed” in the relevant note in the Statement of Profit and Loss.
15 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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