2. Material accounting policies
2.1 Operating and Other income
(a) Revenue from operations
Revenue from contracts with customers is recognised when the contract meets all of the following criteria in
accordance with Ind AS 115 - Revenue from Contracts with Customers:
(i) The parties to the contract have approved the contract (in writing, orally, or in accordance with other
customary business practices) and are committed to perform their respective obligations;
(ii) Each party's rights regarding the goods or services to be transferred are identifiable;
(iii) The payment terms for the goods or services to be transferred are identifiable;
(iv) The contract has commercial substance, i.e. the risk, timing or amount of the entity's future cash flows
is expected to change as a result of the contract; and
(v) It is probable that the consideration to which the entity will be entitled in exchange for the goods or
services will be collected.
The revenue is recognised on discharged of performance obligation, when control over the goods or services
has been transferred and/ or goods/ services are delivered/ provided to the customers. Delivery occurs when
the goods have been shipped or delivered to a specific location and the customer has either accepted the
goods under the contract or the Company has sufficient evidence that all the criteria for acceptance have
been satisfied.
Revenue is measured at the amount of transaction price (consideration specified in the contract with the
customers) allocated to that performance obligation. The transaction price of goods sold is net of variable
consideration on account of discounts offered by the Company and excludes amounts collected on behalf
of third parties.
(b) Other operating revenue
Other operating revenue primarily comprises income generated in the ordinary course of business from
activities other than revenue from contracts with customers. Such revenue is recognised when the associated
risks and rewards have been transferred to the counterparty, there is reasonable certainty of ultimate collection,
and the amount of income can be measured reliably.
(c) Other income
(i) Interest income
For all debt instruments, measured at amortised cost, interest income is recognised using the Effective
Interest Rate ("EIR"). Interest income is included in "Other income" in the standalone statement of profit
and loss.
(ii) Dividend income
Dividend income is recognised when Company's right to receive the dividend is established, i.e. in the
case of interim dividend, on the date of declaration by the Board of Directors; whereas in the case of
final dividend, on the date of approval by the shareholders.
(iii) Insurance claims
Insurance claims are accounted for based on claims admitted/ expected to be admitted and to the
extent that there is no uncertainty in receiving the claims.
2.2 Property, plant and equipment (“PPE") and Capital work-in-progress (“CWIP")
(a) Recognition and measurement
The cost of an item of property, plant and equipment are recognised 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.
Property, plant and equipment are measured at cost less accumulated depreciation and impairment losses,
if any.
Capital work-in-progress are measured at cost less impairment losses, if any.
For this purpose, cost includes deemed cost on the date of transition and the acquisition price, including
non-recoverable duties and taxes and any directly attributable costs of bringing an asset to the location and
condition of its intended use. In addition, interest on borrowings used to finance the construction of qualifying
assets is capitalised as part of the asset's cost until such time that the asset is ready for its intended use.
The carrying amount of the replaced part of property, plant and equipment consequent to additions made
thereto is derecognised. However, the costs of regular servicing of property, plant and equipment are
recognised in the standalone statement of profit and Loss as and when incurred.
The present value of the expected cost for the decommissioning of an asset after its use, if any, is included in
the cost of the respective asset if the recognition criteria for provisions are met.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate components. Otherwise, these are added to and depreciated over the useful life of the main asset.
The cost and related accumulated depreciation and impairment losses, if any, are derecognised from the
standalone financial statements upon sale or when no future economic benefits are expected to arise from
the use of the asset and the resultant gains or losses are recognised in the standalone statement of profit
and loss.
(b) Transition to Ind AS
The cost of property, plant and equipment as at 1st April, 2015, the Company's date of transition to Ind AS was
determined with reference to its carrying value recognised as per the previous GAAP (deemed cost), as at the
date of transition to Ind AS.
(c) Subsequent expenditure
Costs incurred subsequent to initial capitalisation are included in the assets' carrying amount only when it is
probable that future economic benefits will flow to Company and can be measured reliably.
(d) Property, plant and equipment include leasehold land classified as Right-of-use assets.
(e) Depreciation methods, estimated useful lives and residual value
Depreciation on items of property, plant and equipment commences when the assets are available for their
intended use. It is provided on a straight-line basis to allocate their cost, net of their residual value over the
estimated useful life of the respective asset specified under Schedule II to the Companies Act, 2013, except in
respect of items of "Plant and equipment" and "Vehicles" whose estimated useful lives are determined based
on technical assessment and evaluation made by the technical experts to reflect the actual usage of the
assets and past history of its replacement.
The management believes that these estimated useful lives are realistic and reflect a fair approximation of the
period over which the assets are likely to be used.
Each item of property, plant and equipment individually costing H5,000/- or less is depreciated over one year
from the date the said asset is available for use.
The residual values of assets (individually costing more than H5,000/-) are not more than 5% of the asset's
original cost.
The estimated useful lives, residual values and depreciation method are reviewed at least annually during each
financial year-end and adjusted prospectively, wherever appropriate.
(f) Capital work-in-progress and Treatment of expenditure during construction period:
Property, plant and equipment that are not ready for intended use on the balance sheet date are disclosed as
"Capital work-in-progress". Advances paid towards acquisition/construction of property, plant and equipment
outstanding at each balance sheet date are classified as Capital advances under "Other non-current assets".
Directly attributable expenditures (including finance costs relating to borrowed funds for construction or
acquisition of property, plant and equipment) incurred on projects under implementation are treated as pre¬
operative expenses pending allocation to the assets and are shown under "Capital work-in-progress".
2.3 Intangible assets
(a) Recognition and measurement
Intangible assets are measured at cost, less accumulated amortisation and impairment losses, if any.
For this purpose, cost includes deemed cost on the date of transition and acquisition price, license fees,
non-refundabLe taxes and costs of implementation/ system integration services and any directly attributable
expenses, wherever applicable, for bringing the asset to its working condition for the intended use.
Where computer software is not an integral part of a related item of computer hardware, the software is
treated as an intangible asset.
(b) Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the
specific asset to which it relates. ALL other expenditure, is recognised in standalone statement of profit and loss
as incurred.
(c) Amortisation methods, estimated useful lives and residual value
Computer software is amortised on a straight-Line basis over its estimated useful Life of five years from the date
they are avaiLabLe for use.
The estimated useful Lives, residual values and amortisation method are reviewed at Least annually during each
financial year-end and adjusted prospectiveLy, wherever appropriate.
(d) The cost and reLated accumuLated amortisation are eLiminated from the standaLone financiaL statements upon
saLe or retirement of the asset and the resuLtant gains or Losses are recognised in the standaLone statement of
profit and Loss.
(e) Transition to Ind AS
The cost of intangible assets as at 1st ApriL 2015, the Company's date of transition to Ind AS, was determined
with reference to its carrying vaLue recognised as per the previous GAAP (deemed cost), as at the date of
transition to Ind AS.
2.4 Inventories
(a) Inventories (other than By-products) are vaLued at Lower of cost (after providing for obsoLescence, if any) and
net reaLisabLe vaLue.
Cost comprises the purchase price, cost of conversion and other directLy attributabLe costs incurred in
bringing the inventories to their respective present Location and condition. Borrowing costs are not incLuded
in the vaLue of inventories. The cost of inventories is computed on a weighted average basis.
Net reaLisabLe vaLue ("NRV") 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) By-products, which are saLeabLe, are vaLued at an estimated net reaLisabLe vaLue.
(c) Traded goods/ Stock-in-trade
Traded goods/ Stock-in-trade are valued at the lower of cost and net realisable value.
Cost includes purchase cost and other directly attributable expenses incurred to bring the goods to their
present location and condition. Cost is determined on a weighted average basis.
2.5 Government grants
Government grants are recognised when there is reasonable assurance that the grant will be received and the
Company will comply with all the conditions attached to them.
Government grants related to property, plant and equipment, including non-monetary grants, are presented in the
standalone balance sheet by deducting the grant from the asset's carrying amount.
Government grants of revenue in nature are recognised on a systematic basis in the standalone statement of
profit and Loss over the period necessary to match them with the related costs and are adjusted with the related
expenditure. If not related to a specific expenditure, it is considered income and included under "Other operating
revenue" or "Other income", as applicable.
The benefits of a government loan at a below-market rate of interest or loan with interest subvention are treated
as government grants. The loan or assistance is initially recognised at fair value. The government grant is measured
as the difference between proceeds received and the fair value of the loan based on prevailing market interest
rates and recognised on a systematic basis in the standalone statement of profit and loss. The loan is subsequently
measured as per the accounting policy applicable to financial liabilities.
2.6 Borrowing costs
Borrowing costs, general or specific that are directly attributable to the acquisition or construction of a qualifying
asset are capitalised as part of the cost of such asset till such time that is required to complete and prepare the
asset to get ready for its intended use. A qualifying asset is one that necessarily takes a substantial period of time
to get ready for its intended use. Borrowing costs consist of interest and other costs that the Company incurs in
connection with the borrowing of funds. Borrowing costs also include exchange differences to the extent regarded
as an adjustment to the borrowing costs.
All other borrowing costs are charged to the standalone statement of profit and Loss in the period in which they
are incurred.
2.7 Leases
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a
period of time in exchange for consideration.
The Company's lease asset class primarily comprises leases of land. At the inception of a contract, the Company
assesses whether the arrangement is, or contains, a lease. A contract is considered to be, or to contain, a lease if it
conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
To determine whether a contract conveys the right to control the use of an identified asset, the Company
evaluates whether:
(i) the contract involves the use of a specifically identified asset;
(ii) the Company obtains substantially all the economic benefits from the use of the asset during the lease
term; and
(iii) the Company has the right to direct the use of the asset throughout the lease term.
At the date of commencement of the lease, Company recognises a right-of-use asset ("ROU") and a corresponding
lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less
(short-term leases) and low-value leases. For these short-term or low-value leases, the Company recognises the
lease payments as an operating expense on a straight-line basis over the lease term.
The lease liability is initially measured at amortised cost at the present value of the future lease payments. The
lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the
incremental borrowing rates.
Right-of-use assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted
for any lease payments made at or before the commencement date of the lease plus any initial direct cost less any
lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses,
if any.
Leasehold land classified as Right-of-use assets is depreciated from the commencement date on a straight-line
basis over the shorter of the lease term and useful life of the underlying asset.
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