2.00 Significant accounting policies:
2.01 Basis of accounting and preparation of financial statements
These Rnancial Statements have been prepared in accordance with the provisions of the Companies Act, 2013 and the Indian
Accounting Standards ('Ind AS') as notified under the Companies (Indian Accounting Standard ) Rules, 2015 and Companies
(Indian Accounting Standard) Amendment Rules, 2016 as applicable.
The Ind AS financial statement have been prepared on accrual & going concern basis. The Accounting policies are applied
consistently to all the periods presented in the Ind AS financial statements.
2.02 Basis of measurement
The financial statements have been prepared on the historical cost basis except for:
-certain financial assets and liabilities, plan assets of the defined benefit plan and equity settled share based payment that are
measured at fair values at the end of each reporting period;
-certain fixed assets of the company were fair valued in earlier years (prior to transition date),
2.03 Use of estimates and judgements
The preparation of Ind AS financial statements in conformity with the recognition and measurement principles of Ind AS requires
management to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures of
contingent liabilities as at the date of the Ind AS financial statements and reported amounts of income and expense for the years
presented.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and future periods are affected
Key source of estimation of uncertainty at the date of financial statements, which may cause a material adjustment to the carrying
amounts of assets and liabilities within the next financial year, is in respect of impairment of goodwill, useful lives of property, plant
and equipment, valuation of deferred tax assets, provisions and contingent liabilities.
Useful lives of property, plant and equipment
The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may
result in change in depreciation expense in future periods.
Valuation of Deferred Tax assets
The Company reviews the carrying amount of deferred tax assets at the end of each reporting period.
Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding
retirement benefits and compensated absences ) are not discounted to its present value and are determined based on best
estimate required to settle the obligations at the Balance sheet date. These are reviewed at each Balance sheet date and adjusted
to reflect the current best estimates. Contingent liabilities are not recognised in the financial statements. A contingent asset is
neither recognised nor disclosed in the financial statements.
2.04 Revenue recognition
Revenue is measured at the fair value of consideration received or receivable. Revenue is reduced for estimated customer returns,
rebates and other similar allowances.
2.04.1 Sale of Goods:
Timing of Recognition: Revenue from sale of goods are recognised when significant risks and rewards are transferred in
accordance with the terms of sale, and there is no unfulfilled obligation that could affect the customers'acceptance of the products.
Measurement of Revenue: Revenue is measured at the Fair Value of the consideration received or receivables sales are recognised
when the significant risks and rewards of ownership are transferred to the buyer. Revenue is disclosed net of GST and net of returns
trade allowances, rebates and liquidated damages.
2.04.2 Rendering of Services: Revenue from services is recognised on rendering of services
Timing of Recognition: Installation and commissioning revenue is recognised in the period in which the services are rendered.
Service revenue from extended warranty and annual maintenance contract are recognised on time proportion basis over the period
of contract.
Measurement of Revenue: Revenue from services are disclosed exclusive of GST
2.04.3 Dividend and Interest Income: Dividend income from investments is recognised when the shareholder's right to receive payment
has been established (provided that it is probable that the economic benefits will flow to the company and the amount of income
can be measured reliably)
2.05 Government grants - Export incentives:
Grants from the government are recognised 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 recognised in
the profit or loss over the penod necessary to match them with the costs that they are intended to compensate and presented
within other income.
2.06 Borrowing costs
Borrowing costs include:
(i) Interest expense calculated using the effective interest rate method,
(ii) finance charges in respect of finance leases, and
(iii) exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to
interest costs.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until
such time as the assets are substantially ready for their intended use or sale.
Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is
deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in statement of profit and loss in the period in which they are incurred.
2.07 Leases
Finance Lease
Assets taken on lease by the company in its capacity as lessee, where the company has substantially all the risks and rewards of
ownership are classified as finance lease. Such leases are capitalised at the inception of the lease at lower of the fair value or the
present value of the minimum lease payments and a liability is recognised on an equivalent amount. Each lease rent paid is
allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for
each year.
Operating Lease
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor, are
recognised as operating lease. Operating lease payments are recognised on a straight line basis over the lease term in the
statement of profit and loss, unless the lease agreement explicitly states that the increase is on account of inflation.
2.08 Employee benefits
- Retirement benefits costs and termination benefits
Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service
entitling them to the contributions.
For defined benefit retirement plans, the cost of providing benefits is determined using the projected unit credit method, with
actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and
losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), Is reflected
Immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they
occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and is not
reclassified to statement of profit and loss. Past service cost is recognised in statement of profit and loss in the period of a plan
amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability
or asset. Defined benefit costs are categorised as follows:
• service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
- net Interest expense or income; and
- remeasurement
The Company presents the first two components of defined benefit costs in statement of profit and loss in the line item 'Employee
benefits expense'. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognised in the consolidated balance sheet represents the actual deficit or surplus in the
company's defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits
available in the form of refunds from the plans or reductions in future contributions to the plans.
A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination
benefit and when the entity recognises any related restructuring costs.
-Defined contribution plan
Contribution to defined contribution plans are recognised as expense when employees have rendered services entitling them to
such benefits.
-Compensated absences
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee
renders the related services are recognised at an actuarially determined liability at the present value of the defined benefit
obligation at the Balance sheet date. In respect of compensated absences expected to occur within twelve months after the end of
the period in which the employee renders the related services, liability for short-term employee benefits is measured at the
undiscounted amount of the benefits expected to be paid in exchange for the related service.
2.09 Cost recognition
Cost and Expenses are recognised when incurred and have been classified according to their nature.
The cost of the Company are broadly categorised in employee benefit expense, depreciation and amortisation and other expense.
Employee benefit expenses include employee compensation, allowances paid, contribution to various funds and staff welfare
expenses. Other expenses mainly include fees to external consultant, travel expenses, cost of equipment and software licenses,
communication costs, and other expenses. Other miscellaneous expenses is aggregation of costs which are individually not
material such as printing & stationery, AGM expenses, festival celebration expenses, other general expense etc.
2.10 Taxes on income
Income tax expense represents the sum of the tax currently payable and deferred tax.
-Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from ‘profit before tax' as reported in the
consolidated statement of profit and loss because of items of income or expense that are taxable or deductible in other years and
items that are never taxable or deductible. The Company's current tax is calculated using tax rates that have been enacted or
substantively enacted by the end of the reporting period.
-Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated
financial statements and the corresponding tax bases used In the computation of taxable profit Deferred tax liabilities are generally
recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary
differences to the extent that it is probable that taxable profits will be available against which those deductible temporary
differences can be utilized. Such deferred tax assets and liabilities are not recognised If the temporary difference arises from the
initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the
Initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is
settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the
reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which
the company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India which Is likely to give future
economic benefits in the form of availability of set-off against future tax liability. Accordingly, MAT is recognised as deferred tax
asset in the Balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated
with the asset will be realised.
-Current and deferred tax for the year
Current and deferred tax are recognised in statement of profit and loss, except when they relate to items that are recognised in
other comprehensive income or directly in equity, In which case, the current and deferred tax are also recognised in other
comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a
business combination, the tax effect is included in the accounting for the business combination.
2.11 Property, plant and equipment
Property, plant and equipment held for use in the production or supply of goods or services, or for administrative purposes, are
stated in the consolidated balance sheet at cost less accumulated depreciation and accumulated impairment losses.
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised
impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the
company's accounting policy. Such properties are classified to the appropriate categories of property, plant and equipment when
completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when
the assets are ready for their intended use.
Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II
to the Companies Act, 2013.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in
statement of profit and loss.
When an item of property, plant and equipment is acquired in exchange for a non-monetary asset or assets, or a combination of
monetary and non-monetary assets, the cost of that item is measured at fair value (even if the entity cannot immediately
derecognise the asset given up) unless the exchange transaction lacks commercial substance or the fair value of neither the asset
received nor the asset given up is reliably measurable. If the acquired item is not measured at fair value, its cost is measured at the
carrying amount of the asset given up.
.12 Investment property
Properties that Is held for long-term rentals 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 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. When part of the investment property is replaced, the
carrying amount of the replaced part is derecognised.
Investment property are depreciated using the straight line method over their estimated useful lives. Investment properties
generally have a useful life of 25-40 year. The useful life would be determined based on technical evaluation performed by the
management’s expert.
2.14 Impairment of assets
2.14.1 Impairment of financial assets:
The company assesses at each date of balance sheet, whether a financial asset or a company of financial assets is impaired. Ind AS
109 requires expected credit losses to be measured though a loss allowance. The company recognises lifetime expected losses for
all contract assets and / or all trade receivables that do not constitute a financing transaction. For all other financial assets, expected
credit losses are measured at an amount equal to the twelve-month expected credit losses or at an amount equal to the life time
expected credit losses if the credit risk on the financial asset has increased significantly, since initial recognition.
2.14.2 Impairment of other assets:
At the end of each reporting penod, the company reviews the carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the Impairment loss (if any). When it is not possible to estimate
the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which
the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to
individual cash-generating units, or otherwise they are allocated to the smallest company of cash-generating units for which a
reasonable and consistent allocation basis can be Identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least
annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. 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 for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in
statement of profit and loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) Is increased to the
revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior year A reversal
of an impairment loss is recognised immediately in statement of profit and loss.
2.15 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost of raw materials comprises cost of purchases. The cost of
finished goods and work in progress includes raw materials, direct labour, other direct costs and appropriate portion of vanable and
fixed overhead expenditure, computed on normal capacity. Costs are assigned to individual items of inventory on a first-in first-out
basis. Cost of inventories also include all others costs incurred in bringing the inventones to their present location and condition.
Costs of purchased inventory are determined after deducting rebates, discounts and refundable duties and taxes. Net realisable
value is the estimated selling price In the ordinary course of business less the estimated costs of completion and the estimated costs
necessary to make the sale.
2.16 Cash and bank balances
Cash and bank balances also include fixed deposits, margin money deposits, earmarked balances with banks and other bank
balances which have restrictions on repatriation. Short term and liquid investments being subject to more than Insignificant risk of
change in value, are not included as part of cash and cash equivalents.
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