3. Summary of Material Accounting Policies
3.1. Investment in subsidiaries and joint ventures
A subsidiary is an entity that is controlled by another entity.
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have
rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant activities require unanimous consent of the
parties sharing control.
The Company's investments in its subsidiaries and joint ventures are accounted at cost less impairment.
Impairment of investments
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.
3.2. Current and Non-Current classification
The Company segregates assets and liabilities into current and non-current categories for presentation in the
balance sheet after considering its normal operating cycle and other criteria set out in Ind AS 1, “Presentation of
Financial Statements”. For this purpose, current assets and liabilities include the current portion of non-current
assets and liabilities respectively. Deferred tax assets and liabilities are always classified as non-current. The
operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash
equivalents. The Company has identified period up to twelve months as its operating cycle.
3.3. Foreign Currencies
Items included in the Standalone Financial Statements of the Company are measured using the currency of the
primary economic environment in which the Company operates (‘the functional currency'). The Standalone Financial
Statements are presented in Indian Rupee (INR), which is the Company's functional and presentation currency.
Transactions in foreign currencies are initially recorded by the Company at the functional currency spot rates (i.e.,
INR) at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency spot rates of exchange at the reporting date.
Foreign exchange gains and losses resulting from the settlement of transactions in foreign currencies and from
the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are
generally recognised in Statement of Profit and Loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rates at the dates of the initial transactions. Non-monetary items that are measured at fair value in a
foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain
or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition
of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value
gain or loss is recognised in OCI or Statement of Profit and Loss are also recognised in OCI or Statement of Profit
and Loss, respectively).
In determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part
of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration,
the date of the transaction is the date on which the Company initially recognises the non-monetary asset or non¬
monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, the
Company determines the transaction date for each payment or receipt of advance consideration.
3.4. Fair Value Measurement
The Company measures financial instruments at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability takes place either:
> In the principal market for the asset or liability, or
> In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when
pricing the asset or liability, assuming that market participants act in their best economic interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant that
would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the Standalone Financial Statements are
categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant
to the fair value measurement as a whole:
• Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
• Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement
is directly or indirectly observable
• Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement
is unobservable
For assets and liabilities that are recognised in the Standalone Financial Statements on a recurring basis,
the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing
categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the
end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as
explained above.
The Company determines the policies and procedures for both recurring fair value measurement, such as
unquoted financial assets measured at fair value, and for non-recurring measurement, such as assets held for sale
in discontinued operations, if any.
External valuers are involved for valuation of significant assets, such as properties and unquoted financial assets,
and significant liabilities, such as contingent consideration. Involvement of external valuers is decided upon
annually by the management after discussion with and approval by the Company's Audit Committee. Selection
criteria include market knowledge, reputation, independence and whether professional standards are maintained.
At each reporting date, the management analyses the movements in the values of assets and liabilities which
are required to be remeasured or re-assessed as per the Company's accounting policies. For this analysis, the
management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation
computation to contracts and other relevant documents.
3.5. Revenue from contract with customer
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. The Company has generally concluded that it is the principal in its revenue arrangements
because it typically controls the goods or services before transferring them to the customer.
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of
variable consideration) allocated to that performance obligation. The transaction price of goods sold and services
rendered is net of variable consideration on account of various discounts and schemes offered by the Company as
part of the contract, excluding amounts collected on behalf of third parties.
Sale of Goods
Revenue from sale of goods is recognised on transfer of control in the goods to customers at a point of time by
performance of obligation towards delivery. The normal credit term is 30 to 90 days upon delivery. The revenue is based
on the consideration defined in the contract with a customer, including variable consideration, such as discounts, volume
rebates, rights to return or other contractual reductions. As the period between the date on which the Company transfers
the promised goods to the customer and the date on which the customer pays for these goods is generally one year or
less, no financing components are considered. The Company considers whether there are other promises in the contract
that are separate performance obligations to which a portion of the transaction price needs to be allocated.
The Company provides volume rebates to certain customers once the quantity of products purchased by the customers
during the period exceeds a threshold specified in the contract. Generally, rebates are offset against the amounts payable
by the customer. To estimate the variable consideration for the expected future rebates, the Company applies the expected
value method.
Certain contracts provide a customer with a right to return the goods within a specified period. The Company uses the
expected value method to estimate the goods that will not be returned because this method best predicts the amount
of variable consideration to which the Company will be entitled. The requirements in Ind AS on constraining estimates of
variable consideration to are also applied in order to determine the amount of variable consideration that can be included
in the transaction price.
Revenue from Combined Contracts
Revenue from combined contracts is recognised in accordance with terms and condition of underlying contracts:
- at a point of time when such combined output is delivered to customers' satisfaction and the customers
acknowledge their obligation to pay for such output
- over time by measuring progress towards satisfaction of performance obligation for the services rendered using
output method based on milestones reached.
Interest income
Interest income is accrued on a time proportion basis, by reference to the principal outstanding and effective interest
rate applicable.
Dividend income
Dividend income from investments is recognised when the right to receive payment has been established.
Trade receivables
A receivable represents the Company’s right to an amount of consideration that is unconditional (i.e., only the passage of
time is required before payment of the consideration is due). Refer to accounting policies of financial assets in sections
“Financial instruments - initial recognition and measurement” and “Financial instruments- subsequent measurement”.
Refer note no. 3.21 below.
3.6. Government Grants
Government grants and subsidies are recognised where there is reasonable assurance that the grant will be
received and all attached conditions will be complied with.
When the grant or subsidy relates to revenue and is related to the corresponding costs, it is recognised as income
on a systematic basis in the Statement of Profit and Loss, under Other Operating Revenue over the periods
necessary to match them with the related costs, which they are intended to compensate. When the grant or
subsidy relates to an asset, it is deducted from the carrying amount of the asset. The grant is recognised in the
Statement of Profit and Loss over the useful life of the depreciable asset by way of a reduced depreciation charge.
When the Company receives grants of non-monetary assets, the asset and the grant are recorded at fair value
amounts and released to Statement of Profit and Loss over the expected useful life in a pattern of consumption of
the benefit of the underlying asset i.e., by equal annual instalments.
3.7. Taxes
Tax expense comprises current income tax expense and deferred tax.
Current Income Tax
Current income-tax assets and liabilities are measured at the amount expected to be recovered or paid to the
taxation authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the
respective tax jurisdictions where the Company operates. The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either
in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying
transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns
with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions
where appropriate. The Company reflects the effect of uncertainty for each uncertain tax treatment by using
either most likely method or expected value method, depending on which method predicts better resolution
of the treatment. It establishes provisions where appropriate on the basis of amounts expected to be paid to the
tax authorities.
Deferred Tax
Deferred tax is provided using the balance sheet approach, on temporary differences arising between the tax base
of assets and liabilities and their carrying amounts in the Standalone Financial Statements at the reporting date.
Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction
other than a business combination that at the time of the transaction affects neither accounting profit nor taxable
profit (tax loss).
Deferred tax liabilities are recognised for all taxable temporary differences, except:
> When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction
that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss and does not give rise to equal taxable and deductible temporary differences.
> In respect of taxable temporary differences associated with investments in subsidiaries and interests in joint
ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that
the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is
no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be
utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent
that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
In assessing the recoverability of deferred tax assets, the Company relies on the same forecast assumptions used
elsewhere in the financial statements and in other management reports, which, among other things, reflect the
potential impact of climate-related development on the business, such as increased cost of production as a result
of measures to reduce carbon emission.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the
asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted at the reporting date.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax
liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net
basis, or to realise the asset and settle the liability simultaneously, in each future period in which significant amounts
of deferred tax liabilities or assets are expected to be settled or recovered.
Current and deferred tax is recognised in Statement of Profit and Loss, except to the extent that it relates to items
recognised in Other Comprehensive Income (OCI) or directly in equity. In this case, the tax is also recognised in
OCI or directly in equity, respectively.
In the situations where the Company is entitled to a tax holiday under the Income-tax Act, 1961 enacted in
India or tax laws prevailing in the respective tax jurisdictions where it operates, no deferred tax (asset or liability)
is recognized in respect of temporary differences which reverse during the tax holiday period, to the extent the
Company's gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of
temporary differences which reverse after the tax holiday period is recognized in the year in which the temporary
differences originate. However, the Company restricts recognition of deferred tax assets to the extent that it has
become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realized. For recognition of deferred taxes, the temporary
differences which originate first are considered to reverse first.
Goods and Service tax paid on acquisition of assets or on incurring expenses
Expenses and assets are recognised net of the amount of Goods and Service tax paid, except:
> When the tax incurred on a purchase of assets or services is not recoverable from the taxation authority,
in which case, the tax paid is recognised as part of the cost of acquisition of the asset or as part of the
expense item, as applicable.
> When receivables and payables are stated with the amount of tax included, the net amount of tax recoverable
from, or payable to, the taxation authority is included as part of other current/non-current assets/ liabilities
in the balance sheet.
3.8. Property, Plant and Equipment
Property, plant and equipment (PPE) are carried at cost of acquisition, on current cost basis less accumulated
depreciation and accumulated impairment losses, if any. Cost comprises purchase price and directly attributable
cost of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are
deducted in arriving at the purchase price. Such cost includes the cost of replacing part of the plant and equipment
and borrowing costs for long-term construction projects if the recognition criteria are met. Machinery spares which
can be used only in connection with an item of property, plant and equipment and whose use is expected to be
irregular are capitalised and depreciated over the useful life of the principal item of the relevant assets. Likewise,
when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment
as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in
Statement of Profit and Loss as incurred. The present value of the expected cost for the decommissioning of an
asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.
Refer to note 44 regarding significant accounting judgements, estimates and assumptions and provisions for
further information about the recorded decommissioning provision.
Subsequent expenditure would be recognized in the carrying amount of PPE when that cost/expense would
meet the recognition criteria given in paragraph 7 of Ind AS 16 i.e., 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.
Depreciation is provided on Straight line method over the useful lives of property, plant and equipment as estimated
by management. 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. Pursuant to Notification of Schedule II
of the Companies Act, 2013 depreciation is provided prorata basis on straight line method at the rates determined
based on estimated useful lives of property, plant and equipment where applicable, prescribed under Schedule
II to the Companies Act 2013 with the exception of the following items for which useful lives as estimated by
management based on technical evaluation are different from those specified in aforesaid Schedule II.
• Plant and Machinery: 3 years to 21.05 years
• Electrical Installations: 10 years
• Motor Vehicles: 6.67 years
• Tinting Machines: Based on useful lives of 60 months
• No depreciation is provided on freehold land
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal
or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition
of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset)
is included in the Statement of Profit and Loss when the asset is derecognised.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each
financial year end and adjusted prospectively, if appropriate. The Company also considers the impact of health,
safety and environmental legislation in its assessment of expected useful lives and estimated residual values.
Furthermore, the Company considers climate-related matters, including physical and transition risks. Specifically,
the Company determines whether climate-related legislation and regulations might impact either the useful life or
residual values.
3.8.1 Capital work in progress
Cost of assets not ready for intended use, at the balance sheet date, is shown as capital work in progress. Capital
work in progress is stated at cost, net of accumulated impairment loss, if any.
3.9. Intangible Assets
Intangible Assets are recognized only when future economic benefits arising out of the assets flow to the enterprise
and are amortised over their useful life ranging from 3 to 5 years. Intangible assets acquired separately are measured
on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated
amortisation and accumulated impairment losses, if any. Internally generated intangibles, excluding capitalised
development costs (refer below policy for R&D costs), are not capitalised and the related expenditure is reflected
in Statement of Profit and Loss in the period in which the expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite.
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.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either
individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine
whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made
on a prospective basis.
An intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future
economic benefits are expected from its use or disposal. 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 and Loss when the asset is derecognised.
3.10. Research and Development
Research is original and planned investigation undertaken with the prospect of gaining new scientific or technical
knowledge and understanding. Expenditure incurred on research of an internal project is recognised as an expense
in Statement of Profit and Loss, when it is incurred.
Development is the application of research findings or other knowledge to a plan or design for the production
of new or substantially improved materials, devices, products, processes, systems or services before the start
of commercial production or use. An intangible asset arising from development is recognised if, and only if, the
following criteria are met:
(a) it is technically feasible to complete the intangible asset so that it will be available for use or sale.
(b) the Company intends to complete the intangible asset and use or sell it.
(c) the Company has ability to use or sell the intangible asset.
(d) the Company can demonstrate how the intangible asset will generate probable future economic benefits.
(e) the Company has adequate technical, financial and other resources to complete the development and to
use or sell the intangible asset.
(f) the Company has ability to measure reliably the expenditure attributable to the intangible asset during its
development.
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any
accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development
is complete and the asset is available for use. It is amortised over the period of expected future benefit. Amortisation
expense is recognised in the Statement of Profit and Loss unless such expenditure forms part of carrying value of
another asset.
During the period of development, the asset is tested for impairment annually.
3.11. Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes
a substantial period of time to get ready for its intended use (known as Qualifying assets) or sale are capitalised
as part of the cost of the asset. Borrowing Costs include interest, amortisation of ancillary costs incurred and
exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment
to the borrowing costs. Discount on Commercial papers is amortised over the tenor of the underlying instrument.
Borrowing Costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement
of activities relating to construction / development of the qualifying asset upto the date the asset is ready for its
intended use is added to the cost of the assets. Capitalisation of Borrowing Costs is suspended and charged
to the Statement of Profit and Loss during extended periods when active development activity on the qualifying
assets is interrupted. All other borrowing costs are expensed in the period they occur.
3.12. Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
As a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases
and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use
assets representing the right to use the underlying assets.
i) Right-of-use assets
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying
asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and
impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes
the present value of lease payments to be made over the lease term, initial direct costs incurred, and lease
payments made at or before the commencement date less any lease incentives received. Right-of-use assets are
depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets,
as follows:
• Leasehold Land and Building: 2 years to 99 years
If ownership of the right-of-use asset transfers to the company at the end of the lease term or the cost reflects the
exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment. Refer to the accounting policies in section 3.14 Impairment
of non-financial assets.
ii) Lease Liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value
of lease payments to be made over the lease term. The lease payments include fixed payments (including in
substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index
or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the
exercise price of a purchase option reasonably certain to be exercised by the company and payments of penalties
for terminating the lease, if the lease term reflects the company exercising the option to terminate. Variable lease
payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to
produce inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the
lease commencement date because the interest rate implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for
the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification,
a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a
change in an index or rate used to determine such lease payments) or a change in the assessment of an option to
purchase the underlying asset.
The Company's lease liabilities are included in Note 47.
iii) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of properties taken
on rent (i.e., those leases that have a lease term of 12 months or less from the commencement date and do
not contain a purchase option). It also applies the lease of low-value assets recognition exemption to properties
that are of low value based on certain thresholds. In making this assessment, the Company also factors below
key aspects:
• The assessment is conducted on an absolute basis and is independent of the size, nature, or circumstances
of the lessee.
• The assessment is based on the value of the asset when new, regardless of the asset’s age at the time
of the lease.
• The lessee can benefit from the use of the underlying asset either independently or in combination with other
readily available resources, and the asset is not highly dependent on or interrelated with other assets.
• If the asset is subleased or expected to be subleased, the head lease does not qualify as a lease of a low-
value asset.
Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line
basis over the lease term.
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, i.e., asset given on lease, 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.
3.13. Inventories
Raw materials, stores and spares and packing materials are valued at lower of cost and estimated net realisable
value. Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location
and condition. Cost is determined on weighted average basis. However, materials and other items held for use
in the production of inventories are not written down below cost if the finished products in which they will be
incorporated are expected to be sold are at or above cost.
Finished goods and Work-in-progress are stated at the lower of cost and estimated net realisable value. Cost of
inventories constitutes direct materials and labour and a proportion of manufacturing overheads based on normal
operating capacity.
Traded goods are valued at lower of cost and net realizable value. Cost includes cost of purchase and other costs
incurred in bringing the inventories to their present location and condition. Cost is determined on a weighted
average basis.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of
completion and estimated costs necessary to make the sale.
Provision is recognised for damaged, defective or obsolete stocks where necessary. Cost of all inventories is
determined using weighted average method of valuation.
3.14. Impairment of non-financial assets
The Company assesses at each reporting date whether there is an indication that an asset (including goodwill)
may be impaired. If any indication exists, 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) net selling price and its value in use.
The 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. Where 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.
In 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 net selling price, recent market transactions are taken into account, if available. If no such
transactions can be identified, an appropriate valuation model is used.
For assets excluding goodwill, 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 and loss unless the asset is carried at a revalued amount, in which case, the reversal is
treated as a revaluation increase.
Intangible assets with indefinite useful lives are tested for impairment annually at the CGU level, as appropriate, and
when circumstances indicate that the carrying value may be impaired.
The Company assesses where climate risks could have a significant impact, such as the introduction of emission-
reduction legislation that may increase manufacturing costs. These risks in relation to climate-related matters are
included as key assumptions where they materially impact the measure of recoverable amount, These assumptions
have been included in the cash-flow forecasts in assessing value-in-use amounts, as applicable.
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