Material Accounting Policies Information
Revenue Recognition
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.
Sale of Goods:
"Revenue from contracts with customers is recognised
when control of the goods or services are transferred to the
customer at an amount that reflects the consideration to
which the Company expects to be entitled in exchange for
those goods or services. In the Company's case, the
obligation of the Company is said to be completed on
movement of the goods from the factory gate.The Company
has generally concluded that it is the principal in its revenue
arrangements, since it is the primary obligor in all of its
revenue arrangement, as it has pricing latitude and is
exposed to inventory and credit risks. Revenue is stated net
of goods and service tax and net of returns, chargebacks,
rebates and other similar allowances. These are calculated
on the basis of historical experience and the specific terms
in the individual contracts. In determining the transaction
price, the Company considers the effects of variable
consideration, the existence of significant financing
components, noncash consideration, and consideration
payable to the customer (if any). The Company estimates
variable consideration at contract inception until it is highly
probable that a significant revenue reversal in the amount of
cumulative revenue recognised will not occur when the
associated uncertainty with the variable consideration is
subsequently resolved.
Other Operating revenue is recognised on accrual basis.”
"Government grants and incentives:
The Company recognizes government grants only when
there is reasonable assurance that the conditions attached
to them will be complied with, and the grants will be
received. Grants related to income and other incentives are
deducted in reporting the related expense in the standalone
statement of Profit and Loss.
Export entitlements under the Duty Drawback (‘DBK'),
Remission of duties & taxes on export of goods
(RoDTEP)are recognized as income when the right to
receive credit as per the terms of the scheme is established
in respect of the exports made and where there is no
significant uncertainty regarding the ultimate collection of
the relevant export proceeds. As the Company derives a
substantial portion of its revenue from export of goods,
such incentives is recognised as ""Other Operating
Income""."
Rendering of Services:
Revenue from services rendered is recognised in the profit
or loss as the underlying services are performed and is
recognised net of service tax and goods and service tax
(provided that it is probable that the economic benefits will
flow to the Company and the amount of income can be
measured reliably).
Interest Income:
Interest income from a financial asset is recognized when it
is probable that the economic benefits will flow to the
Company and the amount of income can be measured
reliably. Interest income is accrued on a time basis, by
reference to the principle outstanding and at the effective
interest rate applicable, which is the rate that exactly
discounts estimated future cash receipts through the
expected life of the financial asset to that asset's net carrying
amount on initial recognition.
Dividend Income
Dividend income from investments is recognized when the
right to receive payment has been established, provided that
it is probable that the economic benefits will flow to the
Company and the amount of income can be measured
reliably.
Rental Income
Rental income is recognised on a straight-line basis over the
term of the lease
3.02 Property, Plant & Equipment, Intangible Assets and
Work -in - Progress
Recognition and Measurement
All items of property, plant and equipment, including
freehold land, are initially recorded at cost. Cost of property,
plant and equipment comprises purchase price, non
refundable taxes, levies and any directly attributable cost of
bringing the asset to its working condition for the intended
use. Expenses directly attributable to new manufacturing
facility during its construction period are capitalized if the
recognition criteria is met. Freehold land has an unlimited
useful life and therefore is not depreciated.
The cost of an item of property, plant and equipment is
recognized as an asset if, and only if, 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 cost includes the cost of replacing part of the property,
plant and equipment and borrowing costs that are directly
attributable to the acquisition, construction or production
of a qualifying property, plant and equipment.The accounting
policy for borrowing costs is set out in note below.
Items such as spare parts, stand-by equipment and servicing
equipment that meet the definition of property, plant and
equipment are capitalized at cost and depreciated over their
useful life. Costs in nature of repairs and maintenance are
recognized in the Statement of Profit and Loss as and when
incurred.
When significant parts of 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 recognized in the
carrying amount of the plant and equipment as a
replacement if the recognition criteria are satisfied.
Subsequent Measurement
Subsequent to initial recognition, property, plant and
equipment other than freehold land are measured at cost
less accumulated depreciation and any accumulated
impairment losses.The carrying values of property, plant and
equipment are reviewed for impairment when events or
changes in circumstances indicate that the carrying value
may not be recoverable.
Disposal/Write-off
An item of property, plant and equipment is derecognized on
disposal, or when no future economic benefits are expected
from use or disposal. Gains or losses arising from
derecognition of property, plant and equipment, measured
as the difference between the net disposal proceeds and the
carrying amount of the asset, are recognized in profit or loss
when the asset is derecognized.
Capital Work-in-Progress
Capital work-in-progress includes cost of property, plant and equipment that are not ready for their intended use. Capital work-in-progress
included property, plant and equipment are not depreciated as these assets are not yet available for use.
Depreciation
Depreciable amount for assets in the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation on
the property, plant and equipment is provided on straight line method, over the useful life of the assets, as specified in schedule II to the
companies Act, 2013 and is recognised in the statement of profit and loss except for the below mentioned assets:
Property, plant and equipment which are added / disposed off during the year, depreciation is provided on pro-rata basis. Building constructed on
leasehold land is depreciated based on the useful life specified in schedule II to the companies Act, 2013 where the lease period of the land is beyond the
life of the building. In other cases, building constructed on leasehold lands are amortised over the primary lease period of the lands.
Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.
3.03 Inventories:
Inventories are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and
condition are accounted for as follows:
Raw materials and accessories:
Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is
determined on first in, first out basis.
Finished goods and work in progress:
Cost includes cost of direct materials and labour and a proportion of manufacturing overheads based on the normal operating capacity, but
excluding borrowing costs. Cost is determined on first in, first out basis.
Trading Goods:
Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. 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.
|