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 and
estimated costs of dismantling, removing and restoring the site on which it is located, wherever applicable.
If significant parts of an item of property, plant and equipment have different useful lives, then they are
accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in the Statement of
Profit and Loss.
ii. Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated
with the expenditure will flow to the Company and the cost can be reliably measured.
iii. Depreciation
Depreciation is calculated on cost of items of property, plant and equipment less their estimated residual
value using straight line method over the useful lives of assets as per schedule II to the Companies Act,
2013 and is recognised in the Statement of Profit and Loss. Assets acquired under lease are depreciated
over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will
obtain ownership by the end of the lease term. Depreciation for assets purchased / sold during the period
is proportionately charged.
3. Material accounting policies
(a) Property, plant and equipment
i. Recognition and measurement
Items of property, plant and equipment, are measured at cost (which includes capitalised borrowing costs,
if any) less accumulated depreciation and accumulated impairment losses, if any.
Cost of an item of property, plant and equipment includes its purchase price, duties, taxes, after deducting
trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for
its intended use and estimated costs of dismantling and removing the item and restoring the site on which
it is located.
Freehold land is not depreciated.
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.
iv. Reclassification to investment property
When the use of a property changes from owner-occupied to investment property, the property is reclassified
as investment property at its carrying amount on the date of classification.
v. Capital work-in-progress (CWIP)
Capital work-in-progress includes cost of property, plant and equipment/ intangible assets under installation
/ under development as at the balance sheet date.
(b) Investment property
Investment property is property held either to earn rental income or for capital appreciation or for both, but
not for sale in the ordinary course of business, use in the production or supply of goods or services or for
administrative purposes. Upon initial recognition, an investment property is measured at cost. Subsequent to
initial recognition, investment property is measured at cost less accumulated depreciation and accumulated
impairment losses, if any.
The Company depreciates investment properties on a straight-line basis over the useful life of the asset as
specified in the para (a) (iii) above.
Any gain or loss on disposal of an investment property is recognised in the Statement of Profit and Loss.
The fair values of investment property is disclosed in the notes accompanying the standalone financial statements.
Fair values are determined by an external independent registered valuer defined under rule 2 of Companies
(Registered Valuers and Valuation) Rules, 2017 who holds recognised and relevant professional qualification and
has recent experience in the location and category of the investment property being valued.
(c) Intangible assets
Internally generated: Research and development
Expenditure on research activities is recognised in the Statement of Profit and Loss as incurred.
Development expenditure is capitalised as part of the cost of the resulting intangible asset only if the expenditure
can be measured reliably, the product or process is technically and commercially feasible, future economic
benefits are probable, and the Company intends to and has sufficient resources to complete the development and
to use or sell the asset. Otherwise, it is recognised in the Statement of Profit and Loss as incurred. Subsequent
to initial recognition, the asset is measured at cost less accumulated amortisation and accumulated impairment
losses, if any.
Others
Other intangible assets including those acquired by the Company in a business combination are initially
measured at cost. Such intangible assets are subsequently measured at cost less accumulated amortisation and
accumulated impairment losses, if any.
Amortisation
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values over
their estimated useful lives using the straight- line method, and is included in depreciation and amortisation in
Statement of Profit and Loss.
Amortisation method, useful lives and residual values are reviewed at the end of each financial year and adjusted
if appropriate.
(d) Impairment
(i) Financial assets
The Company recognises loss allowances using the expected credit loss (ECL) model for the financial
assets which are not fair valued through Statement of Profit and Loss. Loss allowance for trade receivables
with no significant financing component is measured at an amount equal to lifetime ECL under simplified
approach. For all other financial assets, expected credit losses are measured at an amount equal to the
12-month ECL, unless there has been a significant increase in credit risk from initial recognition in
which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is
required to adjust the loss allowance at the reporting date to the amount that is required to be recognised
is recognised as an impairment loss or gain in the Statement of Profit and Loss.
Intangible assets and property, plant and equipment
Intangible assets and property, plant and equipment are evaluated for recoverability whenever events or
changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose
of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the
value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that
are largely independent of those from other assets. In such cases, the recoverable amount is determined
for the cash generated units to which the asset belongs. If such assets are considered to be impaired, the
impairment to be recognised in the Statement of Profit and Loss is measured by the amount by which the
carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is
reversed in the Statement of Profit and Loss if there has been a change in the estimates used to determine
the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount,
provided that this amount does not exceed the carrying amount that would have been determined (net of
any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in
prior years.
(e) Leases
The Company at the inception of a contract, assesses whether a contract, is or contains a lease. 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. A lessee recognises a Right-of-use asset representing its right to use the underlying
asset and a lease liability representing its obligation to make lease payments. The Company does not recognise
right-of-use of assets and lease liabilities for short term leases that have a lease term of 12 months or less and
leases of low value assets. The Company recognises the lease payments associated with these leases as an expense
on a straight line basis over the lease term. As a lessor, the Company shall classify each of leases either as finance
or an operating lease. The arrangement is, or contains, a lease if fulfilment 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.
As a lessee
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 cost incurred and an estimate
of cost 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 earlier of the end of the useful life or the end of the lease term. The estimated useful life of the right-of-use
assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use
asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease
liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Company’s incremental borrowing rate. The lease payments shall include fixed payments,
variable lease payments, residual value guarantees, exercise price of a purchase option where the Company
is reasonably certain to exercise that option and payment of penalties for terminating the lease, if the lease
term reflects the lessee exercising an option to terminate the lease. Subsequent to initial measurement, the
liability is reduced for payments made and increased for interest. It is remeasured to reflect any reassessment
or modification, or if there are changes in in-substance fixed payments. When the lease liability is remeasured,
the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is
already reduced to zero. On the Balance Sheet, right-of-use assets have been included under property, plant and
equipment and lease liabilities have been included under financial liabilities.
As a lessor
Lease income from operating leases, where the Company is a lessor, is recognised on a straight-line basis over
the lease term.
(f) Inventories
Inventories are valued at the lower of cost (including prime cost, non-refundable taxes and duties and other
overheads incurred in bringing the inventories to their present location and condition) and estimated net
realisable value, after providing for obsolescence, where appropriate. The comparison of cost and net realisable
value is made on an item-by-item basis. The net realisable value of materials-in-process is determined with
reference to the selling prices of related finished goods. Raw materials, packing materials and other supplies held
for use in production of inventories are not written down below cost except in cases where material prices have
declined, and it is estimated that the cost of the finished products will exceed their net realisable value.
The provision for inventory obsolescence is assessed regularly based on estimated usage and shelf life of products.
Raw materials, packing materials and stores and spares are valued at cost computed on moving weighted average
basis. The cost includes purchase price, inward freight and other incidental expenses net of refundable duties,
levies and taxes, where applicable.
Work-in-progress is valued at input material cost plus conversion cost as applicable.
Finished goods and stock-in-trade are valued at the lower of net realisable value and cost (including prime
cost, non-refundable taxes and duties and other overheads incurred in bringing the inventories to their present
location and condition), computed on a moving weighted average basis.
(g) Financial instruments
i. Recognition and initial measurement
The Company initially recognises financial assets and financial liabilities when it becomes a party to the
contractual provisions of the instrument. All financial assets and liabilities are measured at fair value on
initial recognition. Transaction costs that are directly attributable to the acquisition or issue of financial
assets and financial liabilities, that are not taken at fair value through profit or loss, are added to the fair
value on initial recognition.
ii. Classification and subsequent measurement
Financial assets
Financial assets carried at amortised cost
A financial asset is subsequently measured at amortised cost if it is held within a business model whose
objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the
financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
A financial asset is subsequently measured at fair value through other comprehensive income if it is held
within a business model whose objective is achieved by both collecting contractual cash flows and selling
financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows
that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories are subsequently fair valued through
profit or loss.
Financial liabilities
Financial liabilities are subsequently carried at amortised cost using the effective interest method. For
trade and other payables maturing within one year from the balance sheet date, the carrying amounts
approximate fair value due to the short maturity of these instruments.
Investment in subsidiaries, joint venture and associates
Investment in subsidiaries, joint venture and associates is carried at cost in the financial statements.
iii. Derecognition
Financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the
financial asset expire, or it transfers the right to receive the contractual cash flows in a transaction in which
substantially all of the risks and rewards of ownership of the financial assets are transferred or in which the
Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not
retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but
retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets
are not derecognised.
Financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled,
or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows under
the modified terms are substantially different. In this case, a new financial liability based on the modified
terms is recognised at fair value. The difference between the carrying amount of the financial liability
extinguished and a new financial liability with modified terms is recognised in the Statement of Profit and
Loss.
iv. Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the Balance Sheet when,
and only when, the Company has a legally enforceable right to set off the amounts and it intends either to
settle them on a net basis or realise the asset and settle the liability simultaneously.
v. Derivative financial instruments and hedge accounting
Initial recognition and subsequent measurement
The Company uses derivative financial instruments, such as forward currency contracts, to hedge its foreign
currency risks. Such derivative financial instruments are initially recognised at fair value on the date on
which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are
carried as financial assets when the fair value is positive and as financial liabilities when the fair value is
negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to the
Statement of Profit and Loss.
Hedge accounting
The Company has not designated any derivative financial instruments to which hedge accounting would
be applied.
(h) (a) Revenue recognition
The Company recognises revenue to depict the transfer of promised goods or services to customers in
an amount that reflects the consideration to which the entity expects to be entitled in exchange for those
goods or services. A 5-step approach is used to recognise revenue as below:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligation in contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Sale of goods
Revenue is recognised when a customer obtains control of the goods which is ordinarily upon delivery
at the customer premises and on completion of performance obligation. Revenue is recognised at a
transaction price allocated to the extent of performance obligation satisfied after deduction of any trade
discounts, volume rebates and any taxes or duties collected on behalf of the government which are levied
on sales such as goods and services tax, etc. For certain contracts that permit the customer to return
an item, revenue is recognised to the extent that it is probable that a significant reversal in the amount
of cumulative revenue recognised will not occur. As a consequence, for those contracts for which the
Company is unable to make a reasonable estimate of return, revenue is recognised when the return period
lapses or a reasonable estimate can be made. A refund liability and an asset for recovery is recognised for
these contracts and presented separately in the balance sheet.
(b) Other recognitions
(i) Income from royalties are recognised based on contractual agreements.
(ii) Dividend income is recognised when the Company’s right to receive the payment is established,
which is generally when shareholders approve the dividend.
(iii) For all financial instruments measured at amortised cost, interest income is recorded using the
effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash
payments or receipts over the expected life of the financial instrument or a shorter period, where
appropriate, to the net carrying amount of the financial asset. Interest income is included in other
income in the Statement of Profit and Loss.
(i) Business combination
Business combinations arising from transfers of interest in entities that are under the control of the shareholder
who control the Company are accounted for as if the acquisition had occurred at the beginning of the earliest
comparative period presented or, if later, at the date that common control was established; for this purpose
comparatives are revised. The assets and liabilities acquired are recognised at their carrying amounts. The
identity of the reserves is preserved and they appear in the financial statements of the Company in the same
form in which they appeared in the financial statements of the acquired entity. The difference, if any, between
the value of net assets and the consequent reduction in value of investment held by the Company is transferred
to the capital reserve or to the accumulated balance of profit and loss.
(j) Foreign currencies
Transactions in foreign currencies are initially recorded by the Company at their functional currency spot rates at
the date of the transaction. Monetary assets and liabilities denominated in foreign currency are translated at the
functional currency spot rates of exchange at the reporting date. Exchange differences that arise on settlement
of monetary items or on reporting at each balance sheet date are recognised as income or expenses in the period
in which they arise. Non-monetary items which are carried at historical cost denominated in a foreign currency
are reported using the exchange rates at the date of transaction. Non-monetary items measured at fair value in a
foreign currency are translated using the exchange rates at the date when the fair value is determined.
(k) Government grants/incentives
Government grants/incentives are recognised where there is reasonable assurance that the grants/incentives will
be received and all attached conditions will be complied with. When the grants/incentives relates to revenue, it
is recognised in the Statement of Profit and Loss on a systematic basis over the periods to which it relate. When
the grants/incentives relates to an asset, it is treated as deferred income and recognised in the Statement of Profit
and Loss on a systematic basis over the useful life of the asset.
(l) Income tax
Income tax comprises current and deferred tax. It is recognised in the Statement of Profit and Loss except
to the extent that it relates to a business combination or to an item recognised directly in equity or in other
comprehensive income.
i. Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year
and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax
reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty,
if any related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively
enacted by the reporting date.
ii. Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes.
Deferred tax is also recognised in respect of carried forward tax losses and tax credits. Deferred tax is not
recognised for:
- temporary differences arising on the initial recognition of assets or liabilities in a transaction that is
not a business combination and that affects neither accounting nor taxable profit or loss at the time
of transaction.
- temporary differences related to investments in subsidiaries, associates 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 to the extent that it is probable that future taxable profits will be available
against which they can be used.
Deferred tax assets recognised or unrecognised are reviewed at each reporting date and are recognised /
reduced to the extent that it is probable / no longer probable respectively that the related tax benefit will
be realised.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised
or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting
date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in
which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and
liabilities.
The Company offsets, the current tax assets and liabilities (on a year on year basis) and deferred tax
assets and liabilities, where it has a legally enforceable right and where it intends to settle such assets and
liabilities on a net basis.
(m) Borrowing costs
Borrowing costs directly attributable to the acquisition or construction of those property, plant and equipment
which necessarily takes a substantial period of time to get ready for their intended use are capitalised. All other
borrowing costs are expensed in the period in which they incur in the Statement of Profit and Loss.
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