1. Summary of material accounting policies
(a) Statement of compliance and basis of preparation
The standalone financial statements have been prepared
in accordance with the Indian Accounting Standards
(hereinafter referred to as the ‘Ind AS') as notified by
Ministry of Corporate Affairs pursuant to Section 133 of the
Companies Act, 2013 (‘the Act') read with the Companies
(Indian Accounting standards) Rules as amended from time
to time and other relevant provisions of the Act.
The accounting policies are applied consistently to all the
periods presented in the standalone financial statements.
(i) Historical cost convention
The standalone financial statements have been
prepared on a historical cost basis, except for the
following:
1) certain financial assets and liabilities that are
measured at fair value;
2) defined benefit plans - plan assets measured at
fair value;
3) share based payments measured at the grant
date fair value.
(ii) Current non-current classification
The Company presents assets and liabilities in the
balance sheet based on current and non-current
classification. As asset is treated as current when it is:
- Expected to be realised or intended to be sold or
consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realised within twelve months
after the reporting period, or
- Cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at
least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- I t is expected to be settled in normal operating
cycle
- It is held primarily for the purpose of trading
- I t is due to be settled within twelve months after
the reporting period, or
- It does not have the right at the end of the reporting
period to defer settlement of the liability for at least
twelve months after the reporting period.
The Company classifies all other liabilities as
non-current.
Deferred tax assets and liabilities are classified as
non-current assets and liabilities.
The operating cycle is the time between the acquisition of
assets for processing and their realisation in cash and cash
equivalents. The Company has identified twelve months as its
operating cycle.
(iii) Rounding off amounts
The standalone financial statements are presented in C
and all values are rounded to the nearest C 0.00 crores,
except when otherwise indicated.
(iv) Going Concern
The Company has prepared the financial statements
on the basis that it will continue to operate as a going
concern.
b) Investments
(i) I nvestments in subsidiaries are accounted at cost less
impairment, if any in accordance with Ind AS 27.
(ii) The Company has invested in various financial
instruments which are accounted at cost and
subsequently measured at Fair Value Through Other
Comprehensive Income. All equity investments in
scope of Ind-AS 109 are measured at Fair Value. Equity
instruments which are held for trading are classified as
at FVTPL. For all other equity instruments, the Company
decides to classify the same either as at FVTOCI or
FVTPL. The Company makes such election on an
instrument-by-instrument basis. The classification is
made on initial recognition and is irrevocable. If the
Company decides to classify an equity instrument as at
FVTOCI, then all fair value changes on the instrument,
excluding dividends, are recognized in the Other
Comprehensive Income (OCI).
The Company reviews its carrying value of investments
carried at cost annually, or more frequently when there
is indication for impairment. If the recoverable amount
is less than its carrying amount, the impairment loss
is recorded in the Statement of Profit and Loss.
When an impairment loss subsequently reverses, the
carrying amount of the Investment is increased to the
revised estimate of its recoverable amount, so that the
increased carrying amount does not exceed the cost
of the Investment. A reversal of an impairment loss is
recognised immediately in Statement of Profit or Loss.
(c) Property, plant and equipment (PPE)
Freehold land is carried at historical cost. All other item of
property, plant and equipment are stated at historical cost
less depreciation and impairment losses, if any. Historical
Cost includes expenditure that is directly attributable to the
acquisition of items.
Capital work-in-progress , property, plant and equipment
is stated at cost, net of accumulated depreciation less
impairment losses, if any. Such cost includes the cost of
replacing part of the property, plant and equipment and
borrowing cost for long-term construction projects if the
recognition criteria are met. When significant parts of
property, plant and equipment are required to be replaced
at intervals, the Company depreciates them separately
based on their specific useful lives. Likewise, when a
major inspection is performed, its cost is recognised in the
carrying amount of the property, plant and equipment as a
replacement if the recognition criteria are satisfied. All other
repairs and maintenance costs are recognised in profit or
loss as incurred.
Capital work-in-progress comprises cost of property, plant
and equipment (including related expenses), that are not yet
ready for their intended use at the reporting date.
Subsequent costs are 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 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 and maintenance are charged to
profit or loss during the reporting period in which they are
incurred.
Depreciation on property, plant and equipment
Depreciation is provided to the extent of depreciable amount
on written down value method (except for leasehold land
which is amortised over the shorter of the lease term and
the estimated useful lives of the assets) over the useful life
of asset as assessed by the management and the same is
similar to the useful lives as prescribed in Part-C of Schedule
II to the Companies Act, 2013. Depreciation is charged on
pro-rata basis for asset purchased / sold during the year.
The assets residual values, useful life and method of
depreciation of property, plant and equipment are reviewed
and adjusted if appropriate, at the end of each reporting
period for factors such as manufacturers warranties, the
nature of the assets, the estimated usage pattern of the
assets, past history of replacement, etc.
(d) Intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired
in a business combination is their fair value at the date of
acquisition. Following initial recognition, intangible assets
are carried at cost less any accumulated amortisation and
accumulated impairment losses. Intangible assets are
amortised on a straight line method basis over the economic
useful life estimated by the management.
Intangible assets with finite lives are amortised over the useful
economic life and assessed for impairment whenever there
is an indication that the intangible asset may be impaired.
The amortisation period and the amortisation method for an
intangible asset with a finite useful life are reviewed at least at
the end of each reporting period. Changes in the expected
useful life or the expected pattern of consumption of future
economic benefits embodied in the asset are considered to
modify the amortisation period or method, as appropriate,
and are treated as changes in accounting estimates. The
amortisation expense on intangible assets with finite lives is
recognised in the statement of profit and loss unless such
expenditure forms part of carrying value of another asset.
Gains or losses arising from derecognition of an intangible
asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset and
are recognised in the statement of profit or loss when the
asset is derecognised.
Amortisation of intangible assets
Amortisation is provided on straight line method over the
useful life of asset as assessed by the management and is
charged on pro-rata basis for asset purchased / sold during
the year. The estimated useful life of Computer Software is
5 years and Trademarks is 5-10 years. The residual value,
useful life and method of amortisation of intangible assets
are reviewed and adjusted if appropriate at the end of each
reporting period.
(e) Investment properties
Investments in properties that are not intended to be
occupied substantially for use by, or in the operations of
the Company, have been classified as investment property.
Investment properties are measured initially at its cost
including transaction cost and where applicable borrowing
costs. Subsequent to initial recognition, investment
properties are stated at cost less accumulated depreciation
and accumulated impairment loss, if any. Subsequent cost
are included in the assets carrying amount or recognized 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. All other repairs and maintenance are
charged to profit or loss during the reporting period in which
they are incurred.
Though the Company measures investment property using
cost based measurement, the fair value of investment
property is disclosed in the notes. Fair values are determined
based on an annual evaluation performed by an accredited
external independent valuer applying a valuation model
recommended by the International Valuation Standards
Committee.
The Company depreciates its investment properties over
the useful life which is similar to that of Property, Plant and
Equipment.
I nvestment properties are derecognised either when they
have been disposed of 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 recognised in profit or loss in the period of derecognition.
(f) Impairment of non financial assets
The Company assesses, at each reporting date, whether
there is an indication that an asset may be impaired. If any
indication exists, or when annual impairment testing for
an asset is required, the Company estimates the asset's
recoverable amount. An asset's recoverable amount is the
higher of an asset's or cash-generating unit's (CGU) fair
value less costs of disposal and its value in use. Recoverable
amount is determined for an individual asset, unless the
asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets.
When the carrying amount of an asset or CGU exceeds its
recoverable amount, the asset is considered impaired and is
written down to its recoverable amount.
I n assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset.
In determining fair value less costs of disposal, recent market
transactions are taken into account.
I mpairment losses are recognised in the statement of profit
and loss, except for properties previously revalued with the
revaluation surplus taken to other comprehensive income.
For assets, an assessment is made at each reporting date
to determine whether there is an indication that previously
recognised impairment losses no longer exist or have
decreased. If such indication exists, the Company estimates
the asset's or CGU's recoverable amount. A previously
recognised impairment loss is reversed only if there has
been a change in the assumptions used to determine the
asset's recoverable amount since the last impairment loss
was recognised. The reversal is limited so that the carrying
amount of the asset does not exceed its recoverable
amount, nor exceed the carrying amount that would have
been determined, net of depreciation, had no impairment
loss been recognised for the asset in prior years. Such
reversal is recognised in the statement of profit or loss unless
the asset is carried at a revalued amount, in which case, the
reversal is treated as a revaluation increase.
(g) Leases
As per Ind AS 116 “Leases”, the determination of whether
an arrangement is (or contains) a lease is based on the
substance of the arrangement at the inception of the lease
except for short-term leases (defined as leases with a lease
term of 12 months or less from inception) and leases of low
value assets. For these leases, the Company recognises the
lease payments as an operating expense on a straight-line
basis over the term of the lease unless another systematic
basis is more representative of the time pattern in which
economic benefits from the leased assets are consumed.
The arrangement is, or contains, a lease if fulfilment of the
arrangement is dependent on the use of a specific asset
or assets and the arrangement conveys a right-of-use the
asset or assets, even if that right is not explicitly specified in
an arrangement.
As a lessee
Leases are capitalised at the commencement of the lease
at the inception date fair value of the leased property or, if
lower, at the present value of the minimum lease payments.
Lease payments are apportioned between finance charges
and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the
liability. Finance charges are recognised in finance costs
in the statement of profit and loss, unless they are directly
attributable to qualifying assets, in which case they are
capitalized in accordance with the Company's general policy
on the borrowing costs.
The non - cancellable period of a lease is determined as
the lease term, that includes periods a lessee is reasonably
certain to exercise an extension option or not to exercise
an option to terminate a lease. The Lease term estimates
are reassessed of either a significant event or a significant
change in circumstances that (a) is within the control of
the lessee and (b) affects whether the lessee is reasonably
certain to exercise an option not previously included in its
determination of the lease term, or not to exercise an option
previously included in its determination of the lease term.
On reassessment of the lease term the lease liability will be
remeasured as an adjustment to the right-of-use asset.
A leased asset is depreciated over the useful life of the
asset. However, if there is no reasonable certainty that the
Company will obtain ownership by the end of the lease term,
the asset is depreciated over the shorter of the estimated
useful life of the asset and the lease term.
Leases in which a significant portion of the risks and rewards
of ownership are retained by the lessor are classified as
operating leases. Payments made under operating leases
are charged to the Statement of Profit and Loss on a
straight-line basis over the period of the lease unless the
payments are structured to increase in line with expected
general inflation to compensate for the lessor's expected
inflationary cost increases.
Depreciation on right-of-use assets
Depreciation is provided on straight line method over the
shorter of the lease term and the estimated useful lives of
the assets as assessed by the management. Depreciation is
charged on pro-rata basis for asset purchased / sold during
the year. The useful life of depreciation are reviewed and
adjusted if appropriate at the end of each reporting period.
As a lessor
Leases in which the Company does not transfer substantially
all the risks and rewards of ownership of an asset are
classified as operating leases. Rental income from operating
lease is recognised on a straight-line basis over the term of
the relevant lease. Initial direct costs incurred in negotiating
and arranging an operating lease are added to the carrying
amount of the leased asset and recognised over the lease
term on the same basis as rental income. Contingent rents
are recognised as revenue in the period in which they are
earned unless the receipts are structured to increase in
line with expected general inflation to compensate for the
expected inflationary cost increases.
Leases are classified as finance leases when substantially
all of the risks and rewards of ownership transfer from the
Company to the lessee. Amounts due from lessees under
finance leases are recorded as receivables at the Company's
net investment in the leases. Finance lease income is
allocated to accounting periods so as to reflect a constant
periodic rate of return on the net investment outstanding in
respect of the lease.
(h) Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprises
cash at banks and on hand and short term deposits with an
original maturity of three months or less, which are subject
to an insignificant risk of change in value. For the purpose
of standalone financial statement of cash flow, cash and
cash equivalent consists of cash and short term deposits,
as defined above, net of outstanding bank overdrafts as
they are considered an integral part of the Company's cash
management.
(i) Trade receivables
Trade receivables are initially measured at transaction price
excluding any financing arrangements in sale transactions of
the Company.
(j) Inventories
I nventories are valued at lower of cost and net realizable
value. Cost of inventories, comprise costs of purchase and
other costs incurred in bringing the inventories to their present
condition and location. Cost is determined by the weighted
average cost method. Costs of purchased inventory are
determined after deducting rebates and discounts. Net
realizable value is the estimated selling price in the ordinary
course of business less the estimated costs of completion
and the estimated cost necessary to make the sale.
(k) Financial instruments
A Financial instrument is any contract that gives rise to a
financial assets of one entity and a financial liability or equity
instrument of another entity.
Financial asset
(i) Classification
The Company classifies its financial assets in the
following measurement categories:
• those to be measured subsequently at fair value
(either through other comprehensive income, or
through the Statement of Profit and Loss), and
• those measured at amortised cost.
The classification depends on the Company's business
model for managing the financial assets and the
contractual terms of the cash flows.
For assets measured at fair value, gains and losses
will either be recorded in the Statement of Profit and
Loss or other comprehensive income. For investments
in debt instruments, this will depend on the business
model in which the investment is held. For investments
in equity instruments, this will depend on whether the
Company has made an irrevocable election at the time
of initial recognition to account for the equity investment
at fair value through other comprehensive income. The
Company reclassifies debt investments when and only
when its business model for managing those assets
changes.
(ii) Measurement
At initial recognition, the Company measures a financial
asset at its fair value plus, in the case of a financial asset
not at fair value through the Statement of Profit and
Loss, transaction costs that are directly attributable to
the acquisition of the financial asset. Transaction costs
of financial assets carried at fair value through Profit
and Loss are expensed in the Statement of Profit and
Loss.
Financial assets with embedded derivatives are
considered in their entirety when determining whether
their cash flows are solely payment of principal and
interest.
Debt instruments:
Subsequent measurement of debt instruments
depends on the Company's business model for
managing the asset and the cash flow characteristics
of the asset. There are three measurement categories
into which the Company classifies its debt instruments:
*Amortised cost: A ‘debt instrument' is measured at
the amortised cost if both the following conditions are
met:
a) The asset is held within a business model
whose objective is to hold assets for collecting
contractual cash flows, and
b) Contractual terms of the asset give rise on
specified dates to cash flows that are solely
payments of principal and interest (SPPI) on the
principal amount outstanding.
This category is the most relevant to the Company.
After initial measurement, such financial assets are
subsequently measured at amortised cost using the
effective interest rate (EIR) method. Amortised 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 amortisation is
included in finance income in the profit or loss. The
losses arising from impairment are recognised in the
statement of profit and loss account. This category
generally applies to trade and other receivables.
*Fair value through other comprehensive income
(FVTOCI): A ‘debt instrument' is classified as at the
FVTOCI if both of the following criteria are met:
a) The objective of the business model is achieved
both by collecting contractual cash flows and
selling the financial assets, and
b) The asset's contractual cash flows represent
SPPI.
Debt instruments included within the FVTOCI category
are measured initially as well as at each reporting date
at fair value. Fair value movements are recognised in
the other comprehensive income (OCI). However, the
Company recognizes interest income, impairment
losses & reversals and foreign exchange gain or
loss in the statement of profit and loss account. On
derecognition of the asset, cumulative gain or loss
previously recognised in OCI is reclassified from the
equity to statement of profit and loss account. Interest
earned whilst holding FVTOCI debt instrument is
reported as interest income using the EIR method.
*Fair value through profit and loss: FVTPL is a residual
category for debt instruments. Any debt instrument,
which does not meet the criteria for categorization
as at amortized cost or as FVTOCI, is classified as at
FVTPL.
In addition, the Company may elect to designate a debt
instrument, which otherwise meets amortized cost or
FVTOCI criteria, as at FVTPL. However, such election
is allowed only if doing so reduces or eliminates a
measurement or recognition inconsistency (referred
to as ‘accounting mismatch'). The Company has not
designated any debt instrument 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.
Equity instruments:
The Company subsequently measures all equity
investments at fair value. Where the Company's
management has elected to present fair value gains and
losses on equity investments in other comprehensive
income, there is no subsequent reclassification of fair
value gains and losses to the Statement of Profit and
Loss. Dividends from such investments are recognised
in the Statement of Profit and Loss as other income
when the Company's right to receive payments is
established.
Changes in the fair value of financial assets at fair
value through the Statement of Profit and Loss are
recognised in other income / other expenses in the
Statement of Profit and Loss. Impairment losses (and
reversal of impairment losses) on equity investments
measured at FVTOCI are not reported separately from
other changes in fair value.
(iii) Impairment of financial assets
The Company assesses on a forward looking basis the
expected credit losses associated with its assets carried
at amortised cost and FVTOCI debt instruments. The
impairment methodology applied depends on whether
there has been a significant increase in credit risk.
For trade receivables only, the Company applies the
simplified approach permitted by Ind AS 109 Financial
Instruments, which requires expected lifetime losses to
be recognised from initial recognition of the receivables.
(iv) Derecognition of financial assets
A financial asset is derecognised only when
• the Company has transferred the rights to receive
cash flows from the financial asset or
• retains the contractual rights to receive the
cash flows of the financial asset, but assumes
a contractual obligation to pay the cash flows to
one or more recipients.
Where the Company has transferred an asset,
the Company evaluates whether it has transferred
substantially all risks and rewards of the financial asset.
In such cases, the financial asset is derecognised.
Where the Company has not transferred substantially
all risks and rewards of ownership of the financial asset,
the financial asset is not derecognised.
Where the Company has neither transferred a financial
asset nor retains substantially all risks and rewards of
ownership of the financial asset, the financial asset is
derecognised if the Company has not retained control
of the financial asset. Where the Company retains
control of the financial asset, the asset is continued to
be recognised to the extent of continuing involvement
in the financial asset.
Financial liabilities
(i) Offsetting financial instruments
Financial assets and liabilities are offset and the
net amount is reported in the 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 Company or the counterparty.
(ii) Trade and other payables
These amount represent liabilities for goods and
services provided to the Company prior to the end
of financial year which are unpaid. The amounts
are unsecured. Trade and other payables are
presented as current liabilities unless payment
is not due within 12 months after the reporting
period. They are recognised initially at their fair
value and subsequently measured at amortised
cost using the effective interest method.
(iii) Borrowings and other financial liabilities
Borrowings and other financial liabilities are
initially recognised at fair value (net of transaction
costs incurred). Difference between the fair value
and the transaction proceeds on initiation is
recognised as an asset / liability based on the
underlying reason for the difference. Subsequently
all financial liabilities are measured at amortised
cost using the effective interest rate method.
Borrowings are removed 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 transferred or liabilities
assumed, is recognised in the Statement of Profit
and Loss.
Borrowings are classified as current liabilities
unless the Company has an unconditional right
to defer settlement of the liability for at least 12
months after the reporting period. Where there is
a breach of a material provision of a long-term
loan arrangement on or before the end of the
reporting period with the effect that the liability
becomes payable on demand on the reporting
date, the entity does not classify the liability as
current, if the lender agreed, after the reporting
period and before the approval of the financial
statements for issue, not to demand payment as
a consequence of the breach.
(iv) Borrowing costs
General and specific borrowing costs that
are directly attributable to the acquisition or
construction of qualifying assets are capitalized
during the period of time that is required to
complete and prepare the asset for its intended
use. Other borrowing costs are expensed in the
period in which they are incurred.
Investment income earned on the temporary
investment of specific borrowings pending their
expenditure on qualifying assets is deducted from
the borrowing costs eligible for capitalization.
Borrowing cost consist of interest and other cost
that an entity incurs in connection with borrowing
of funds.
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