MATERIAL ACCOUNTING POLICIES INFORMATION:A. Property, plant & equipment
a) The cost of an item of property, plant and equipment is recognized as an asset only if it is probable that future
economic benefits associated with the item will flow to the entity and the cost of the item can be measured
reliably.
b) Property, plant and equipment are stated at cost net of tax / duty credit availed, less accumulated depreciation
and accumulated impairment losses, if any
c) The initial cost of an asset comprises its purchase price or construction cost (including import duties and non¬
refundable taxes), any costs directly attributable to bringing the asset into the location and condition necessary
for it to be capable of operating in the manner intended by management, estimate of any decommissioning
obligation (if any) and the applicable borrowing cost till the asset is ready for its intended use.
d) Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with
the expenditure will flow to the Company.
e) Where the cost of a part of asset (“asset component”) is significant to total cost of the asset and useful life of
that part is different from the useful life of the remaining asset, useful life of that significant part is determined
separately, and such asset component is depreciated over its separate useful life.
f) An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits
are expected from its use. Any gain or loss arising on de-recognition of the asset (calculated as the difference
between the net disposal proceeds if any and the carrying amount of the asset) is included in the Statement of
Profit and Loss when the asset is derecognised.
g) Spare parts which meet the definition of property, plant and equipment are capitalized as property, plant and
equipment. In other cases, the spare parts are inventorised on procurement and charged to Statement of Profit
and Loss on issue/consumption.
h) When significant parts of property, plant and equipment are required to be replaced at intervals, the Company
derecognises the replaced part and recognises the new part with its own associated useful life and it is
depreciated accordingly. All other repair and maintenance cost are recognised in the Statement of Profit and
Loss as and when incurred.
i) Property, Plant and Equipment which are not ready for intended use as on date of Balance Sheet are disclosed
as ‘Capital Work in Progress’.
j) On transition to Ind AS Land, Building and Plant and Machinery has been measured at fair value as deemed
cost as per the option available to the Company in accordance with Ind AS 101 - First Time Adoption of Indian
Accounting Standard.
B. Depreciation
a) i) For Manufacturing unit at Udhna and Windmill:
Depreciation on property, plant and equipment is provided on the straight-line basis over the useful lives of
assets (after considering an estimated residual value of up to 10% for factory building, plant and machinery
and 5% for other assets). The useful lives determined are in line with the useful lives as prescribed in Schedule
II of the Act except for factory building and plant and machinery on the date of transition to Ind AS. In case
of factory building and plant and machinery on the date of transition to Ind AS, depreciation is provided over
their remaining useful life for different parts/items of factory building and plant and machinery based on the
technical evaluation made by the valuer which ranges from 7 to 40 years and 7 to 15 years respectively.
ii) For all other units:
Depreciation on tangible assets is provided on Written Down Value Method over the useful lives of the assets
as specified in Schedule II to the Companies Act, 2013. Intangible assets - Software and Technical Know-how
are amortised on Straight Line Method over a period of 3 and 10 years respectively. Improvement to Leasehold
Properties is amoritised on Straight Line Method over the period of lease.
b) The residual values and useful lives of property, plant and equipment are reviewed at each financial year end
and changes, if any, are accounted for in the period in which the estimates are revised.
c) The Company depreciates components of the main asset that are significant in value and have different useful
lives as compared to the main asset separately.
d) The spare parts are depreciated over the estimated useful life based on internal technical assessment.
e) Expenditure on major repairs and overhauls which qualify for recognition in the item of Property, Plant and
Equipment and which result in additional useful life, is depreciated over the extended useful life of the asset as
determined by technical evaluation.
f) Depreciation is charged on additions / deletions on pro-rata monthly basis including the month of addition /
deletion.
C. 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. The arrangement is, or contains, a lease if fulfillment of the
arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use
the asset or assets, even if that right is not explicitly specified in an arrangement.
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 an
estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site
on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated
using the straight-line method from the commencement date to the end of the lease term or useful life of
the underlying asset, whichever is earlier. Right-of-use assets are tested for impairment whenever there is
an indication that their carrying value may not be recoverable. Impairment loss if any is recognized in the
Statement of profit and loss.
The lease liability is measured at the present value of the future lease payments. The lease payments are
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, if there is a change in the Company’s estimate of the
amount expected to be payable under a residual value guarantee, or if the Company changes its 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 carrying amount of the right-of-use asset or is recorded
in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
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. The Company recognises the lease payments associated with these
leases as an expense over the lease term.
D. Inventories
Inventories are stated at cost or net realizable value, whichever is lower. Cost of inventories comprises of
expenditure incurred in the normal course of business in bringing inventories to their present location, including
appropriate overheads apportioned on a reasonable and consistent basis and is determined on the following
basis:
a) Raw materials and finished goods on weighted average basis.
b) Work in progress at raw material cost plus cost of conversion and other cost including manufacturing overheads
net of recoverable taxes incurred in bringing them to their respective present location and condition.
c) Stores and loose tools on weighted average basis.
Obsolete, slow moving, surplus and defective stocks are identified and where necessary, provision is made for
such stocks.
E. Revenue Recognition
Revenue from contracts with customers:
Revenue from contracts with customers is recognized upon transfer of control of promised goods or services
to customers in an amount that reflects the consideration which the Company expects to receive in exchange
for those goods or services. Performance obligations are satisfied at the point of time when the customer
obtains control of the goods.
Revenue is measured based on transaction price, which is the fair value of the consideration received or
receivable, stated net of discounts, returns and value added tax. The transaction price is recognized based on
the price specified in the contract. Revenue excludes taxes collected from customers.
Service Income:
Income from annual maintenance services is recognized proportionately over the period of the contract as the
performance is discharged by the Company and it has the enforceable right to get the payment for the services
rendered.
Revenue from Works Contract:
Revenue from works contracts with customers is recognised as the performance obligation is satisfied by
transferring a promised good (i.e. an asset) to a customer. For performance obligation satisfied over time,
the revenue recognition is made by measuring the progress towards complete satisfaction of performance
obligation. Progress is measured by measuring the performance completed to date, considering the proportion
of actual cost incurred to date, to the total estimated cost attributable to the performance obligation. Expected
loss, if any, on the contract is recognized as an expense in the period in which it is foreseen, irrespective of the
stage of completion of the contract.
Interest Income:
Interest income is recognized using the Effective Interest Rate (EIR) method.
Dividend Income:
Dividend income is recognized when the Company’s right to receive the payment has been established, it is
probable that the economic benefits associated with the dividend will flow to the Company and the amount of
the dividend can be measured reliably.
F. Employee Benefits
Short-term employee benefits are recognized as an expense at an undiscounted amount in the Statement of
Profit and Loss for the year in which the related services are rendered.
The Company’s post-employment benefit consists of provident fund, gratuity and superannuation fund. The
Company also provides leave encashment which is in the nature of long-term benefit.
Defined Contribution Plans:
Provident Fund
Company’s contributions to Provident Fund administered by Regional Provident Fund Authorities and ESIC and
Labour Welfare Fund in the case of employees at manufacturing unit at Udhna, which are defined contribution
plan, are recognized as an expense in the Statement of Profit and Loss for the year in which the services are
rendered and the Company has no further obligation beyond making the contributions.
The Company’s contribution to the Provident Fund for employees other than working at manufacturing unit at
Udhna, which is a defined benefit plan, is remitted to separate trust established for this purpose and charged
to Statement of Profit and Loss. Shortfall, if any, in the fund assets of the Provident Fund Trust, based on the
Government specified minimum rate of return, is made good by the Company and charged to Statement of
Profit and Loss.
Superannuation Fund
The Company’s contribution to Superannuation Fund for Managers/Officers, which is a defined contribution
plan, is made to and administered by Life Insurance Corporation of India and is charged to Profit and Loss
Account.
Defined Benefit Plan:
Gratuity
The Company operates defined benefit plan for Gratuity. The cost of providing such defined benefit is
determined using the projected unit credit method of actuarial valuation made at the end of the year.
Actuarial gains and losses are recognized in other comprehensive income.
Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts
included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts
included in net interest on the net defined benefit liability), are recognized immediately in the Balance Sheet
with a corresponding debit or credit to retained earnings through OCI in the period in which they occur.
Remeasurements are not reclassified to profit or loss in subsequent periods.
Past service costs are recognized in profit or loss on the earlier of:
• The date of the plan amendment or curtailment, and
• The date that the Company recognizes related restructuring costs.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company
recognizes the following changes in the net defined benefit obligation as an expense in the Statement of Profit
and Loss:
• Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non¬
routine settlements; and
• Net interest expense or income.
Compensated absences:
Liabilities recognised in respect of compensated absences such as annual leave and sick leave are measured
at the present value of the estimated future cash outflows expected to be made by the Company in respect of
services provided by employees up to the reporting date using the projected unit credit method with actuarial
valuation being carried out at each year-end Balance Sheet date. Actuarial gains and losses arising from
experience adjustments and changes in actuarial assumptions are charged or credited to the statement of
profit and loss in the period in which they arise.
G. Share-based payment arrangements
The stock options granted pursuant to the Company’s Stock Options Scheme are measured at the fair value of
the options of the grant date. The fair value of the options is treated as discount and accounted as employee
compensation cost over the vesting period on a straight-line basis.
The amount recognized as expenses each year is arrived at based on the number of grants expected to be
vest. If a grant lapses after the vesting period, the cumulative discount recognized as expense in respect of
such grant is transferred to the general reserve within equity.
H. Borrowing costs
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of
funds. Borrowing costs that are attributable to the acquisition or construction of qualifying assets (i.e. an asset
that necessarily takes a substantial period of time to get ready for its intended use) are capitalized as a part of
the cost of such assets till the date on which the asset is ready for use. All other borrowing costs are charged
to the Statement of Profit and Loss.
I. Segment Reporting
The Company operates in ‘Industrial Equipment’ segment and there are no other reportable segments as
defined under Ind AS 108.
J. Foreign Currency Transactions
Monetary items:
Transactions in foreign currencies are initially recorded at their respective exchange rates at the date the
transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at spot rates of exchange at
the reporting date.
Exchange differences arising on settlement or translation of monetary items including exchange differences
arising on a monetary item that forms part of the Company’s net investment in a foreign operation, are
recognised in Statement of Profit and Loss.
Non - Monetary items:
Non-monetary items that are measured in terms of historical cost are recorded at the exchange rates at the
dates of the initial transactions.
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