(a) Current-non-current classification
All assets and liabilities are classified into
current and non-current.
Assets
An asset is classified as current when it satisfies
any of the following criteria:
a) it is expected to be realised in, or is intended
for sale or consumption in, the normal
operating cycle;
b) it is held primarily for the purpose
of being traded;
c) it is expected to be realised within 12
months after the reporting date; or
d) it is cash or cash equivalent unless it is
restricted from being exchanged or used to
settle a liability for at least 12 months after the
reporting date.
Current assets include the current portion of
non-current financial assets. All other assets are
classified as non-current.
Liabilities
A liability is classified as current when it satisfies
any of the following criteria:
a) it is expected to be settled in the normal
operating cycle;
b) it is held primarily for the purpose
of being traded;
c) it is due to be settled within 12 months after
the reporting date; or
d) the company does not have an unconditional
right to defer settlement of the liability for
at least 12 months after the reporting date.
Terms of a liability that could, at the option
of the counterparty, result in its settlement
by the issue of equity instruments do not
affect its classification.
Current liabilities include current portion of non¬
current financial liabilities. All other liabilities
are classified as non-current.
Operating cycle
Operating cycle is the time between the
acquisition of assets for processing and their
realisation in cash or cash equivalents. The
Company has determined its operating cycle as
12 months for the purpose of classification of its
assets and liabilities as current and non-current.
(b) Foreign currency transactions
i. Initial recognition
Transactions in foreign currencies are
translated into the functional currency of
the Company at the exchange rates at the
date of the transaction.
ii. Measurement at reporting date
Monetary assets and liabilities denominated
in foreign currencies are translated into the
functional currency at the exchange rate at
the reporting date. Non- monetary assets
and liabilities that are measured based
on historical cost in a foreign currency are
translated at the exchange rate at the date
of the transaction. Exchange differences on
restatement/ settlement of all monetary
items are recognised in the standalone
statement of profit and loss.
(c) 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.
i. Recognition and initial measurement
All financial assets and financial liabilities
are recognised when the Company becomes
a party to the contractual provisions of the
instrument and are measured initially at fair
value adjusted for transaction costs, except
for those carried at fair value through Profit
and Loss which are measured initially at
fair value. However, trade receivables are
recognised initially at the transaction
price as they do not contain significant
financing components.
ii. Classification and subsequent
measurement
Financial assets
On initial recognition, a financial asset is
classified as measured at
- amortised cost; or
- fair value through profit or loss ('FVTPL')
Financial assets are not reclassified
subsequent to their initial recognition,
except if and in the period the Company
changes its business model for managing
financial assets.
A financial asset is measured at
amortised cost if it meets both of the
following conditions:
- the asset is held within a business
model whose objective is to hold assets
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.
All financial assets not classified as
measured at amortised cost as described
above are measured at FVTPL.
Investment in equity instruments are
classified at fair value through profit or
loss, unless the Company irrevocably
elects on initial recognition to present
subsequent changes in fair value in other
comprehensive income for investments
in equity instruments which are not
held for trading.
Financial liabilities
Financial liabilities are classified as
measured at amortised cost or FVTPL. A
financial liability is classified as at FVTPL
if it is classified as held for trading, or it is
a derivative or it is designated as such on
initial recognition. Financial liabilities at
FVTPL are measured at fair value and net
gains and losses, including any interest
expense, are recognised in statement of
profit or loss. Other financial liabilities are
subsequently measured at amortised cost
using the effective interest method. The
Company does not have any fixed liabilities
under the category of FVTPL.
iii. Derecognition
Financial assets
The Company de-recognises a financial
asset when the contractual rights to the
cash flows from the financial asset expire,
or it transfers the rights to receive the
contractual cash flows in a transaction
in which substantially all of the risks and
rewards of ownership of the financial asset
are transferred or in which the Company
neither transfers nor retains substantially
all of the risks and rewards of ownership
and does not retain control of the
financial asset.
Financial liabilities
The Company de-recognises a financial
liability when its contractual obligations
are discharged or cancelled, or expire. The
Company also de-recognises a financial
liability when its terms are modified and the
cash flows under the modified terms are
substantially different. In this case, a new
financial liability based on the modified
terms is recognised at fair value. The
difference between the carrying amount of
the financial liability extinguished and the
new financial liability with modified terms
is recognized in statement of profit and loss.
iv. Offsetting
Financial assets and liabilities are offset and
the net amount is reported in the standalone
balance sheet where there is a legally
enforceable right to offset the recognised
amounts and there is an intention to settle
on a net basis or realise the asset and settle
the liability simultaneously. The legally
enforceable right must not be contingent
on future events and must be enforceable
in the normal course of business and in the
event of default, insolvency or bankruptcy
of the group or the counterparty.
(d) Equity Investment in subsidiary and joint
venture
Investments in equity instruments of joint
venture and subsidiary company are accounted
for at cost less any provision for impairment
in accordance with Ind AS 27 “Separate
Financial Statements”.
(e) Property, plant and equipment
i. Recognition and measurement
Freehold Land is carried at cost and other
items of property, plant and equipment are
initially measured at cost of acquisition or
construction which includes capitalised
borrowing cost. The cost of an item of property,
plant and equipment comprises its purchase
price, including import duties and other non¬
refundable purchase taxes or levies, any
directly attributable cost of bringing the
asset to its working condition for its intended
use and estimated cost of dismantling and
removing the item and restoring the site
on which it is located. Any trade discounts
and rebates are deducted in arriving at the
purchase price. After initial recognition, items
of property, plant and equipment are carried
at its cost less any accumulated depreciation
and / or accumulated impairment loss, if any.
The cost of a self-constructed item of
property, plant and equipment including
dies comprises the cost of materials and
direct labour, any other costs directly
attributable / allocable to bring the item to
working condition for its intended use.
If significant parts of an item of property,
plant and equipment have different useful
lives, then they are accounted for as
separate items (major components) of
property, plant and equipment.
Gains or losses arising on sale/disposal of
items of property, plant and equipment are
recognised in the standalone statement of
profit and loss.
Capital work-in-progress comprises the
cost of fixed assets that are not ready for
their intended use at the reporting date.
ii. Subsequent expenditure
Subsequent expenditure is capitalised only
if it is probable that the future economic
benefits associated with the expenditure
will flow to the Company.
iii. Depreciation
Depreciation on items of property, plant
and equipment is provided on the straight¬
line method based on the estimated useful
life of each asset as determined by the
management. Depreciation is charged over
the number of shift a plant or equipment
is used in the business in accordance
with schedule II of the Companies Act.
Depreciation for assets purchased during
the year is proportionately charged i.e. from
the date on which asset is ready for use.
Depreciation for assets sold during the year
is proportionately charged i.e. up to the
date on which asset is disposed off.
The useful lives have been determined based
on internal evaluation done by management
and are in line with the estimated useful
lives, to the extent prescribed by the
Schedule II of the Companies Act.
Based on internal valuation done by the
management, hangers and trollies are
depreciated at year end based on the
physical availability of respective assets.
Depreciation method, useful lives
and residual values are reviewed at
each financial year-end and adjusted
if appropriate.
Modification or extension to an existing
asset, which is of capital nature, and
which becomes an integral part thereof
is depreciated prospectively over the
remaining useful life of that asset.
(f) Goodwill
Represents amounts paid over the identifiable
assets towards Business Takeover transaction is
carried forward based on assessment of benefits
arising from such goodwill in future. Goodwill is
tested for impairment annually at each balance
sheet date in accordance with the Company's
procedure for determining the recoverable
amount of such assets. The recoverable amount
of Cash Generating Unit (CGU) is based on value
in use. The value in use for Goodwill is determined
based on discounted cash flow projections.
(g) Other Intangible Assets
i. Recognition and initial measurement
Other intangible assets that are acquired by
the Company are measured initially at cost.
After initial recognition, an intangible asset
is carried at its cost less any accumulated
amortisation and any accumulated
impairment loss.
ii. Subsequent expenditure
Subsequent expenditure is included in
the assets carrying amount or recognised
as a separate asset, as appropriate, only
when it is probable that future economic
benefits associated with the expenditure
will flow to the Company and cost can be
measured reliably
Distribution network
Represents allocation of amounts paid
towards Business Takeover transaction is
carried forward based on assessment of
benefits arising from such network in future.
Such expenditure is amortised on period of
ten years on straight line basis.
The above periods also represent
the management's estimation of
economic useful life of the respective
intangible assets.
Amortisation method, useful lives
and residual values are reviewed at
each financial year-end and adjusted
if appropriate.
iii. Amortisation
Technical know-how is being amortised
over a period of seven years on a
straight-line basis.
Computer software is being amortised over
a period of six years on a straight-line basis.
(h) Inventories
Inventories which comprise of raw material,
work in progress, finished goods, packing
material and stores and spares are valued at
the lower of cost and net realisable value. Cost
of inventories comprises all cost of purchase,
cost of conversion and other costs incurred
in bringing the inventories to their present
location and condition.
The basis of determining costs for various
categories of inventories are as follows: -
Net realisable value is 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.
The net realisable value of work-in-progress is
determined with reference to the selling prices
of related finished goods. Raw materials held
for use in production of finished goods are not
written down below cost, except in cases where
material prices have declined, and it is estimated
that the cost of the finished goods will exceed
its net realisable value. The comparison of
cost and net realisable value is made on an
item-by-item basis.
(i) Trade Receivables
Trade receivables are amounts due from
customers for goods sold or services performed
in the ordinary course of business and reflects
Company's unconditional right to consideration
(that is, payment is due only on the passage of
time). Trade receivables are recognised initially
at the transaction price as they do not contain
significant financing components. The Company
holds the trade receivables with the objective
of collecting the contractual cash flows and
therefore measures them subsequently at
amortised cost using the effective interest
method, less loss allowance.
Transfer of Financial Assets
In case of assignment of trade receivables
wherein substantially risk and rewards are
transferred, and the assignee gets absolute
right of disposal/collection, the trade
receivables are derecognized as per Ind AS
109. Trade Receivables which do not qualify for
derecognition, the proceeds received from such
transfers are recorded as loans from banks /
financial institutions and classified under short¬
term borrowings.
(j) Impairment of assets
Impairment of financial assets
The Company recognises 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
financial assets are measured at lifetime ECL.
The changes (incremental or reversal) in loss
allowance computed using ECL model, are
recognised as an impairment gain or loss in the
standalone statement of profit and loss.
Impairment of non-financial assets
The Company's non-financial assets are
reviewed at each reporting date to determine
if there is indication of any impairment. If any
indication exists, the asset's recoverable amount
is estimated. Assets that do not generate
independent cash flows are grouped together
into cash generating units (CGU). An impairment
loss is recognised whenever the carrying
amount of an asset or its cash generating unit
exceeds its recoverable amount. Recoverable
amount is determined:
i. in case of an individual asset, at the
higher of the net selling price and the
value in use; and
ii. in case of a cash generating unit (a group
of assets that generates identified,
independent cash flows), at the higher of
the cash generating unit's net selling price
and the value in use.
(The amount of value in use is determined as
the present value of estimated future cash
flows from the continuing use of an asset and
from its disposal at the end of its useful life.
For this purpose, the discount rate (pre-tax) is
determined based on the weighted average cost
of capital of the respective company suitably
adjusted for risks specified to the estimated
cash flows of the asset). For this purpose, a cash
generating unit is ascertained as the smallest
identifiable group of assets that generates cash
inflows that are largely independent of the cash
inflows from other assets or groups of assets.
Impairment losses are recognised in the
standalone statement of profit and loss. An
impairment loss is reversed if there has been
a change in the estimates used to determine
the recoverable amount. An impairment loss
is reversed only to the extent that the asset's
carrying amount does not exceed the carrying
amount that would have been determined net of
depreciation or amortisation, if no impairment
loss had been recognised.
(k) Trade and other payables
Trade and other payables represent liabilities for
goods or services provided to the Company prior
to the end of financial year which are unpaid.
(l) Borrowings
Borrowings are initially recognised at fair value,
net of transaction costs incurred. Borrowings
are subsequently measured at amortised cost.
Any difference between the proceeds (net of
transaction costs) and the redemption amount
is recognised in profit or loss over the period of
the borrowings using the effective interest rate
method. Borrowings are de-recognised from the
balance sheet when the obligation specified in
the contract is discharged, cancelled or expired.
The difference between the carrying amount of
a financial liability that has been extinguished or
transferred to another party and the consideration
paid, including any non-cash assets transferred or
liabilities assumed, is recognised in profit or loss.
(m) Employee benefits
i) Short-term employee benefits
Employee benefits payable within twelve
months of receiving employee services
are classified as short-term employee
benefits. These benefits include salaries
and wages, bonus, etc. The undiscounted
amount of short-term employee benefits to
be paid in exchange for employee services
is recognised as an expense in standalone
statement of profit and loss as the related
service is rendered by employees.
ii) Other long-term employee benefits:
Other long-term employee benefits are
recognised as an expense in the standalone
statement of profit and loss as and when
they accrue. The Company determines the
liability using the Projected Unit Credit
Method, with actuarial valuations carried
out as at the balance sheet date. Actuarial
gains and losses in respect of such benefits
are charged to the standalone statement of
profit and loss.
iii) Post employment obligations
a. Defined Contribution Plans:
The Company makes payments to
defined contribution plans such as
provident fund and employees' state
insurance. The Company has no
further payment obligations once
the contributions have been paid.
The contributions are accounted for
as defined contribution plans and
the contributions are recognised as
employee benefit expense when they
are due. Prepaid contributions are
recognised as an asset to the extent
that a cash refund or a reduction in the
future payments is available.
b. Defined Benefit Plans:
The liability or asset recognised in the
balance sheet in respect of defined
benefit gratuity plans is the present
value of the defined benefit obligation
at the end of the reporting period
less the fair value of plan assets.
The defined benefit obligation is
calculated annually by actuaries using
the projected unit credit method.
The net interest cost is calculated
by applying the discount rate to
the balance of the defined benefit
obligation and the fair value of plan
assets. This cost is included in employee
benefit expense in the standalone
statement of profit and loss.
Remeasurement gains and losses
arising from experience adjustments
and changes in actuarial assumptions
are recognised in the period in which they
occur, directly in other comprehensive
income. They are included in retained
earnings in the standalone statement
of changes in equity and in the
standalone balance sheet.
Changes in the present value of the
defined benefit obligation resulting
from plan amendments or curtailments
are recognised immediately in profit
and loss as past service cost.
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