1) Material accounting Policies
This note provides a list of the significant accounting
policies adopted in the preparation of Standalone
financial statements. These policies have been
consistently applied to all the years presented, unless
otherwise stated.
a) Property, plant and equipmentÝ Recognition and measurement
Freehold land is carried at historical cost.
All other items of property, plant and
equipment are stated at cost less accumulated
depreciation and accumulated impairment
loss, if any. Cost comprises of purchase
price, non-refundable taxes and any directly
attributable costs 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.
Borrowing costs attributable to construction
or acquisition of a qualifying asset for the
period up to the date, the asset is ready for
its intended use are included in the cost of the
asset to which they relate.
Capital work-in-progress comprises of the cost
of property, plant and equipment that are not
yet completely ready for their intended use as
at the balance sheet date.
Advances paid towards the acquisition of
property, plant and equipment outstanding at
each reporting date are disclosed under "Other
non-current assets".
Ý Subsequent costs
The cost of replacing a part of an item of
property, plant and equipment is recognised in
the carrying amount of the item if it is probable
that the future economic benefits embodied
within the part will flow to the company and
its cost can be measured reliably. The carrying
amount of the replaced part is derecognised.
The costs of the day-to-day servicing of
property, plant and equipment are recognized
in the statement of profit and loss as incurred.
Ý Derecognition
An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected from its use
or disposal. Gains and losses on disposal of
an item of property, plant and equipment are
determined by comparing the proceeds from
disposal with the carrying amount of property,
plant and equipment, and are recognised net
and disclosed within other income or expenses
in the statement of profit and loss.
Ý Depreciation methods, estimated useful lives
and residual value
Depreciation on Property, Plant and Equipment
is provided on the straight-line method over
the estimated useful lives of the assets as
determined bythe management.The estimated
useful lives are in accordance with Schedule
II to the Companies Act, 2013, except where
technical evaluation supports different useful
lives. The residual values, useful lives and
methods of depreciation are reviewed at each
financial year-end and adjusted prospectively,
if appropriate except leasehold land which is
amortized equally over the lease period.
Freehold land is not depreciated.
b) Intangible assets
Ý Recognition and measurement
Intangible assets are recognised when the
asset is identifiable, is within the control of
the company, it is probable that the future
economic benefits that are attributable to the
asset will flow to the company and cost of the
asset can be reliably measured.
Intangible assets acquired by the company
that have finite useful lives are measured at
cost less accumulated amortisation and any
accumulated impairment losses.
Ý Derecognition
An item of intangible asset is derecognised
upon disposal or when no future economic
benefits are expected from its use or disposal.
Gains and losses on disposal of intangible asset
are determined by comparing the proceeds
from disposal with the carrying amount of
intangible asset and are recognised net and
disclosed within other income or expenses in
the statement of profit and loss.
Ý Amortisation
Amortisation is calculated over the cost of the
asset, or other amount substituted for cost.
Amortisation is recognised in statement of
profit and loss on a straight-line basis over the
estimated useful lives of intangible assets from
the date that they are available for use, since
this most closely reflects the expected pattern
of consumption of the future economic benefits
embodied in the asset.
The estimated useful lives, residual values and
amortisation method are reviewed at the end of
each reporting period and revised prospectively
where appropriate.
c) Inventories
Raw Material, Components and Work in progress
are valued on weighted average basis. Finished
goods are valued at the lower of cost and net
realizable value.
Cost includes cost of conversion and other costs
incurred in bringing the inventories at their present
location and condition. Cost of conversion for the
purpose of valuation of WIP and finished goods
includes fixed and variable production overheads
incurred in converting the material into their
present condition and location.
Net realizable 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.
d) Cash and cash equivalents
Cash and cash equivalents in the balance sheet
comprise cash at banks and cash on hand and
short-term deposits with an original maturity
of three months or less, which are subject to an
insignificant risk of changes in value.
e) Revenue recognition
Revenue from sale of goods and services is
recognised when all significant risks and rewards
of ownership of the goods are passed on to the
buyer, recovery of the consideration is probable, the
associated costs can be estimated reliably, there is
no continuing effective control over, or managerial
involvement with, the goods, and the amount of
revenue can be measured reliably. It excludes
Goods and Service tax (GST) wherever applicable.
Sales are stated net of discounts, rebates and
returns.
Export sales are recognised when control of the
goods is transferred to the customer in accordance
with the agreed shipping terms (such as FOB,
CIF etc.) and it is probable that the economic
transactions with the company will flow to the
company.
f) Other income
Ý Interest income
Interest income from a financial asset is
recognised when it is probable that the
economic benefits will flow to the Group
and the amount of income can be measured
reliably. Interest income is accrued on a time
basis, by reference to the principal outstanding
and at the effective interest rate applicable
Ý Dividend
Dividends are recognised in the statement of
profit and loss only when the right to receive
the payment is established, it is probable that
the economic benefits associated with the
dividend will flow to the company, and the
amount can be measured reliably.
Ý Export Incentive
Export incentives are recognised when the right
to receive credit as per the terms of incentives
is established in respect of the exports made
and when there is no significant uncertainty
regarding the ultimate collection of the relevant
export proceeds.
g) Borrowing costs
Borrowing costs consist of interest and other
costs that an entity incurs in connection with the
borrowing of funds. Borrowing cost also includes
exchange differences arising from foreign currency
borrowings to the extent they are regarded as an
adjustment to the interest cost.
Borrowing costs that are not directly attributable
to the acquisition, construction or production of
a qualifying asset, are expensed in the period in
which they are incurred.
h) Foreign currency transactions and balances
On initial recognition, transactions in foreign
currencies entered into by the Company are
recorded in the functional currency (i.e. Indian
Rupees), by applying to the foreign currency
amount, the spot exchange rate between the
functional currency and the foreign currency at the
date of the transaction.
Transactions in foreign currency are recorded
at exchange rates prevailing at the date of
transactions. Exchange differences arising on
foreign exchange transactions settled during the
year are recognised in the statement of profit and
loss of the year.
Monetary assets and liabilities denominated in
foreign currencies which are outstanding, as at
the reporting period are translated at the closing
exchange rates and the resultant exchange
differences are recognised in the statement of
profit and loss.
Non-monetary assets and liabilities denominated
in foreign currencies that are measured in terms of
historical cost are translated using the exchange
rate at the date of the transaction.
i) Employee Benefits
Short-term employee benefits
All employee benefits payable wholly within twelve
months of rendering the services are classified
as short-term employee benefits. Benefits such
as salaries, wages, expected cost of bonus and
short-term compensated absences, ex-gratia,
performance pay etc. are recognised in the period
in which the employee renders the related service.
Post-employment benefits Defined contribution
plans
The company's approved superannuation scheme
and central provident fund scheme are a defined
contribution plan. The company has no further
payment obligations once the contributions have
been paid. The contributions are recognised as
employee benefit expenses when they are due.
Defined benefit plans
The Company operates a defined benefit gratuity
plan, which requires contributions to be made
to a fund set up by Life Insurance Corporation of
India The present value of the obligation under
such defined benefit plans is determined based on
actuarial valuation using the projected unit credit
method, which recognises each period of service
as giving rise to additional unit of employee benefit
entitlement and measures each unit separately to
build up the final obligation.
The obligation is measured at the present value
of the estimated future cash flows. The discount
rates used for determining the present value of the
obligation under defined benefit plans, is based
on the market yields on government securities
as at the reporting date, having maturity periods
approximating to the terms of related obligations.
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, are
recognised immediately in the balance sheet with
a corresponding debit or credit to retained earnings
through Other Comprehensive Income (OCI) in the
period in which they occur. Remeasurements are
not reclassified to the statement of profit and loss
in subsequent periods.
In case of funded plans, the fair value of the
plan's assets is reduced from the gross obligation
under the defined benefit plans, to recognise the
obligation on net basis.
Changes in the present value of the defined benefit
obligation resulting from plan amendments or
curtailments are recognised immediately in profit
or loss as past service cost.
Net interest is calculated by applying the discount
rate to the net defined benefit liability or the fair
value of the plan asset. The cost is included in
employee benefit expense in the statement of profit
and loss.
Other long-term employee benefits
The liabilities for earned leave which are not
expected to be settled within twelve months
after the end of the reporting period in which
the employee render the related service. They
are therefore measured as the present value of
expected future payments to be made in respect
of services provided by employee up to the end
of the reporting period using the projected unit
credit method. The benefits are discounted using
the market yields at the end of the reporting period
that have terms approximating the terms of the
related obligation. Remeasurements as a result of
experience adjustments and change in actuarial
assumptions are recognised in the statement of
profit and loss. The obligations are presented as
current liabilities in the balance sheet if the entity
does not have an unconditional right to defer
settlement for at least twelve months after the
reporting period, regardless of when the actual
settlement is expected to occur.
j) Income tax
Income tax expense comprises of current tax and
deferred tax. It is recognised in the statement of
profit and loss except to the extent that it relates to
the items recognised directly in OCI.
Current income tax
Current income tax assets and liabilities are
measured at the amount expected to be recovered
from or paid to the taxation authorities based
on the taxable profits computed for the current
accounting period. The tax rates and tax laws used
to compute the amount are those that are enacted
or substantively enacted, at the reporting date.
Deferred tax
Deferred tax is provided using the balance sheet
method on temporary differences between the tax
base of assets and liabilities and their carrying
amounts for financial reporting purposes at the
reporting date.
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.
Deferred tax assets are recognised for all
deductible temporary differences, the carry
forward of unused tax credits and any unused tax
losses. Deferred tax assets are recognised to the
extent that it is probable that taxable profit will be
available against which the deductible temporary
differences, and the carry forward of unused tax
credits and unused tax losses can be utilised,
except when the deferred tax asset relating to
the deductible temporary difference arises from
the initial recognition of 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.
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.
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 deferred tax liabilities are
offset if a legally enforceable right exists to set off
current tax assets against current tax liabilities and
the deferred taxes relate to the same taxable entity
and the same taxation authority.
MAT
Minimum Alternate Tax credit is recognized as
deferred tax asset only when and to the extent
there is convincing evidence that the Company will
pay normal income tax during the specified period.
Such asset is viewed at each Balance Sheet date
and the carrying amount of the MAT credit asset
is written down to the extent there is no longer a
convincing evidence to the effect that the Company
will pay normal income tax during the specified
period.
k) Government Grant:
Grants from the Government are recognized
at their fair value where there is a reasonable
assurance that the grant will be received and the
Company will comply with all attached conditions.
Government grants relating to income are deferred
and recognized in the profit or loss over the period
necessary to match them with the costs that they
are intended to compensate and presented within
other income.
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