2. Material Accounting Policies
Material accounting policies adopted by the
Company are as under:
2.1 Basis of preparation of standalone financial statements
a) Statement of Compliance
The Standalone Financial statements have been prepared in
accordance with 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 Rule 3 of the Companies
(Indian Accounting Standards) Rules, 2015 as amended from
time to time, and presentation requirements of Division II of
Schedule III to the Act.
Basis of Preparation of Standalone Financial Statements
The Standalone Financial Statements have been prepared
on accrual basis and under historical cost convention,
except for certain financial assets and liabilities
which are measured at fair value (refer para 2.2(s) of
accounting policy).
The functional and presentation currency of the Company
is Indian Rupee ("H") which is the currency of the primary
economic environment in which the Company operates.
The Standalone Financial Statements have been prepared
on accrual and going concern basis.
Accounting policies have been consistently applied except
where a newly issued Indian Accounting Standards
is initially adopted or a revision to an existing Indian
Accounting Standards requires a change in the accounting
policy hitherto in use.
All amounts disclosed in the Standalone Financial
Statements and notes have been rounded off to the
nearest "Lakhs", unless otherwise stated. Transactions
and balances with values below the rounding off norm
adopted by the Company have been reflected as "0" in the
relevant notes to these Standalone Financial Statements.
b) Use of Estimates
The preparation of Standalone Financial Statements
in conformity with Ind AS requires the Management to
make estimates and assumptions that affect the reported
amount of assets and liabilities as at the Balance Sheet
date, reported amount of revenue and expenditure for the
period and disclosures of contingent liabilities as at the
Balance Sheet date. The estimates and assumptions used
in the accompanying standalone financial statements are
based upon the Management's evaluation of the relevant
facts and circumstances as at the date of standalone
financial statements. Actual results could differ from
these estimates. Estimates and underlying assumptions
are reviewed on a year basis. Revisions to accounting
estimates, if any, are recognised in the period in which the
estimates are revised and in any future years affected.
(refer para 2.2(t) of accounting policy).
2.2 Summary of Material Accounting Policies
Current Vs Non-Current Classification
The Company presents assets and liabilities in the balance
sheet based on current/ non- current classification. An 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:
• It is expected to be settled in normal operating cycle,
• It is held primary for the purpose of trading,
• It is due to be settled within twelve months after the
reporting period, or
• There is no unconditional right to defer the settlement
of the liability for at least twelve months after the
reporting period.
The Company classifies all other liabilities as non-current.
Based on the nature of business and the time between the
acquisition of assets for processing and their realization in
cash and cash equivalents, the Company has ascertained its
operating cycle as twelve months for the purpose of current
and non- current classification of assets and liabilities.
Deferred tax assets/ liabilities are classified as non-current
assets/ liabilities.
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 twelve months as its
operating cycle.
a) Revenue recognition
Sale of goods
Revenue from sate of goods is recognized when control
of the products being sold is transferred to our customer
and when there are no longer any unfulfilled obligations.
The performance obligations in our contracts are fulfilled
at the time of dispatch, delivery or upon formal customer
acceptance depending on the customer terms.
Revenue is measured based on the transaction price,
which is the consideration, after deduction of any trade
discounts, volume rebates and any taxes or duties
collected on behalf of the government such as goods
and services tax, etc. Accumulated experience is used to
estimate the provision for such discounts and rebates.
Revenue is recognised to the extent that it is highly
probable a significant reversal will not occur.
For sale of goods wherein performance obligation is not
satisfied, any amount received in advance is recorded as
contract liability and recognized as revenue when goods
are transferred to customers. Any amount of income
accrued but not billed to customers in respect of such
contracts is recorded as a contract asset. Such contract
assets are transferred to Trade receivables on actual
billing to customers.
In case customers have the contractual right to return
goods, an estimate is made for goods that will be returned
and a liability is recognized for this amount using the best
estimate based on accumulated experience.
b) Property, plant and equipment
Freehold land is carried at historical cost. All other items
of property, plant and equipment is stated at historical cost
less depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
The cost of a self-constructed item of property, plant and
equipment comprises the cost of materials, direct labour
and any other costs directly attributable to bringing
the item to its intended working condition including
capitalised borrowing costs, if any, and estimated costs of
dismantling, removing and restoring the site on which it
is located, wherever applicable.
Subsequent costs are included in the asset's 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 derecognised when replaced. All other repairs
and maintenance are charged to statement of profit and
loss during the reporting year in which they are 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.
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.
Leasehold improvements are depreciated on a straight¬
line basis over the period of lease.
Capital Work in Progress
The cost of the assets not put to use before such date are
disclosed under the head 'Capital work-in-progress.
c) Depreciation methods, estimated useful life and residual
value
Depreciation is calculated using the straight-line method
to allocate their cost, net of their residual value, over
their estimated useful lives. The Company has used the
following rates to provide depreciation on its property, plant
and equipment which are similar as compared to those
prescribed under the Schedule II to the Act.
Investment 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 the statement of profit and loss in
the year of derecognition.
e) Intangible asset
Intangible assets including those acquired by the
Company are initially measured at acquisition cost. Such
intangible assets are subsequently stated at acquisition
cost, net of accumulated amortisation.
The Company amortises intangible assets with a finite
useful life using the straight-line method over the
following period:
A summary of amortisation policies applied to the
Company intangible assets is as below:
Individual assets costing H 5,000 or less are fully
depreciated in the period of purchase. The residual values
are not more than 5% of the original cost of the asset. The
residual values and useful lives of property, plant and
equipment are reviewed, and adjusted if appropriate, at
the end of each reporting year.
The useful lives is reviewed at least at each year-end.
Changes in expected useful lives are treated as change in
accounting estimates.
d) Investment properties
Property that is held for long-term rental yields or for
capital appreciation or both, and that is not occupied by the
Company, is classified as investment property. Investment
property is measured initially at its cost, including related
transaction costs and where applicable borrowing costs.
Subsequent to initial recognition, investment property
is measured at cost less accumulated depreciation and
accumulated impairment losses, if any. Subsequent
expenditure is capitalised to the asset's carrying amount
only when it is probable that future economic benefits
associated with the expenditure will flow to the Company
and the cost of the item can be measured reliably. All other
repairs and maintenance costs are expensed when 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.
Intangible assets with finite lives are assessed for impairment
whenever there is an indication that the intangible asset may be
impaired. The amortisation method and period for an intangible
asset with a finite useful life are reviewed at least at the end of
each reporting year.
f) Inventories
Raw material, packing material and finished goods
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 packaging materials are valued at lower
of cost and net realisable value. Cost includes purchase price,
(excluding those subsequently recoverable by the enterprise
from the concerned revenue authorities), freight inwards and
other expenditure incurred in bringing such inventories to
their present location and condition. In determining the cost,
FIFO method is used.
Manufactured finished goods are valued at the lower
of cost and net realisable value. Cost of manufactured
finished goods comprises direct material, direct labour
and an appropriate proportion of variable and fixed
overhead expenditure, the latter being allocated on the
basis of normal operating capacity.
Cost of inventories also includes all 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 the estimated
cost of completion and the estimated costs necessary
to make the sale.
g) Segment reporting
Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating
decision maker (CODM).
The board of directors of the Company assesses the
financial performance and position of the Company and
makes strategic decisions. The board of directors, which has
been identified as being the chief operating decision maker,
consists of managing director and other directors. Refer
note 38 for segment information presented.
h) Finance costs
Borrowing cost includes interest, amortisation
of ancillary costs incurred in connection with the
arrangement of borrowings.
General and Specific borrowing costs that are 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 or sale are capitalised as part of the cost
of the respective asset. All the other borrowing costs are
expensed in the year they occur.
i) Employee Benefits
a) Short-term obligations
Liabilities for wages and salaries, including non¬
monetary benefits that are expected to be settled
wholly within 12 months after the end of the period
in which the employees render the related service
are recognised in respect of employees' services up-
to the end of the reporting year and are measured at
the amount expected to be paid when the liabilities
are settled. The liabilities are presented as current
employee benefit obligations in the balance sheet.
Leave encashment: Accumulated leaves which
are expected to be utilised within next 12 months
are treated as short term employee benefit. The
Company measures the expected cost of such
absences as the additional amount that it expects to
pay as a result of the unused entitlement that has
accumulated at the reporting date.
b) Other long-term employee benefit obligations
i. Defined contribution plan
Provident Fund: Contribution towards
provident fund is made to the regulatory
authorities, where the Company has no
further obligations. Such benefits are
classified as Defined Contribution Schemes
as the Company does not carry any further
obligations, apart from the contributions
made on a monthly basis which are charged
to the Statement of Profit and Loss.
Employee's State Insurance Scheme:
Contribution towards employees' state
insurance scheme is made to the regulatory
authorities, where the Company has no
further obligations. Such benefits are
classified as Defined Contribution Schemes
as the Company does not carry any further
obligations, apart from the contributions
made on a monthly basis which are charged
to the statement of profit and loss.
ii. Defined benefit plans
Gratuity: The Company operates a defined
benefit gratuity plan in India, which requires
contributions to be made to a fund set up by
Life Insurance Corporation of India. Provision
in respect of Gratuity is made as per actuarial
valuation carried out by an independent
actuary. The cost of providing benefits under
the defined benefit plan is determined using
projected unit credit method. Remeasurements,
comprising of actuarial gains and losses, the
effect of the asset ceiling, and the return on
plan assets (excluding amounts included in net
interest on the net defined benefit liability), are
recognised immediately in the balance sheet
with a corresponding debit or credit to retained
earnings through Other Comprehensive Income
in the year in which they occur. Remeasurements
are not classified to Statement of Profit and Loss
in subsequent periods. Past service costs are
recognised in Statement of Profit and Loss on
the earlier of the date of the plan amendment
or curtailment and the date on which the
Company recognises related restructuring
costs. Net interest is calculated by applying the
discount rate to the net defined benefit liability
or asset. The Company recognises service costs
comprising current service costs, past- service
costs, gains and losses on curtailment and non¬
routine settlements, and net interest expense or
income in the net defined benefit obligation as
an expense in the statement of profit and loss.
Compensated Absences: Accumulated
compensated absences, which are expected to
be availed or encashed within 12 months from
the end of the year are treated as short term
employee benefits. The obligation towards
the same is measured at the expected cost
of accumulating compensated absences as
the additional amount expected to be paid
as a result of the unused entitlement as
at the year end.
Accumulated compensated absences, which
are expected to be availed or encashed beyond
12 months from the end of the year end are
treated as other long term employee benefits.
The Group's liability is actuariaLLy determined
(using the Projected Unit Credit method) at the
end of each year. Actuarial losses/gains are
recognized in the statement of profit and Loss in
the year in which they arise.
c) Share based payment arrangements
Equity-settled share-based payments to employees
are measured at the fair value of the equity
instruments at the grant date. The fair value
determined at the grant date of the equity-settLed
share-based payments is expensed on a straight¬
Line basis over the vesting period, based on the
Company's estimate of equity instruments that
wiLL eventuaLLy vest, with a corresponding increase
in equity. At the end of each reporting year, the
Company revises its estimate of the number of
equity instruments expected to vest. The impact
of the revision of the originaL estimates, if any, is
recognised in the standalone Statement of profit and
loss such that the cumulative expense reflects the
revised estimate, with a corresponding adjustment
to the Share option's outstanding account.
j) 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 Company
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.
If 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. If no such
transactions can be identified, an appropriate valuation
model is used. These calculations are corroborated by
valuation multiples, quoted share prices for publicly
traded companies or other available fair value indicators.
The Company bases its impairment calculation on
detailed budgets and forecast calculations, which are
prepared separately for each of the Company's CGU's to
which the individual assets are allocated.
Impairment losses are recognised in the statement of
profit and loss.
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 to the extent 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.
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