3. Significant accounting policies
The Company has applied the following accounting policies to all periods presented in the
financial statements.
a) Functional and presentation currency
The financial statements are prepared in Indian Rupees, which is the Company's presentation
currency and the functional currency for all its operations.
b) Current and non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non¬
current classification. An asset is classified as current when it is:
• expected to be realised or intended to be sold or consumed in the 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 date.
All other assets are classified as non-current.
A liability is classified as current when:
• It is expected to be settled in the normal operating cycle;
• It is held primarily for the purpose of trading;
• it is due to be settled within twelve months after the reporting date; or
• There is no unconditional right to defer the settlement of the liability for at least twelve
months after the reporting date.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current only.
Operating cycle of the Company is the time between the acquisition of assets for processing
and their realisation in cash or cash equivalents. As the Company’s normal operating cycle is
not clearly identifiable, it is assumed to be twelve months.
c) Revenue recognition
Sale of goods
Revenue is recognised upon transfer of control of promised goods to customers in an amount
that reflects the consideration which the company expects to receive in exchange for those
goods.
Revenue from the sale of goods is recognised at the point in time when control is transferred
to the customer which is usually on dispatch of goods, based on contracts with the customers.
Revenue is measured based on the transaction price, which is the consideration, adjusted for
volume discounts, price concessions, incentives, and returns, if any, as specified in the
contracts with the customers. Revenue excludes any taxes or duties collected from customers
on behalf of the government such as goods and services tax, etc. Due to the short nature of
credit period given to customers, there is no financing component in the contract.
Rendering of services
income recognition for services takes place as and when the services are performed in
accordance with Ind AS 115.
d) Other Income
i. Interest Income
Interest Income is accrued on time basis, by reference to the principal outstanding and at the
effective interest rate applicable. Interest income is included in finance income in the
statement of profit and loss.
ii. Dividends
Dividend income is recognised in the Statement of Profit and Loss when the Company’s
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 of the dividend can
be measured reliably.
Since the Company is under the Corporate Insolvency Resolution Process (“CIRP”)
pursuant to the Insolvency and Bankruptcy Code, 2016, such income is recognised based on
the confirmation and directions of the Resolution Professional (RP), who is managing the
affairs of the Company during the process.
iii. Rental Income
Rental income arising from operating leases on investment properties is accounted for on a
straight-line basis over the lease termed is included in other income in the statement of
profit and loss.
e) Expenditure
Expenses are accounted on accrual basis.
f) Property, plant and equipment
All property, plant and equipment are stated at historical cost, net of accumulated
depreciation (other than freehold land) and accumulated impairment losses, if any.
The initial cost of property, plant and equipment comprises its purchase price, including
import duties and non-refundable purchase taxes, and any directly attributable costs of
bringing an asset to working condition and location for its intended use. It also includes the
initial estimate of the costs of dismantling and removing the item and restoring the site on
which it is located. Items such as spares are capitalized when they meet the definition of
property, plant and equipment.
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. Likewise, expenditure towards major inspections and overhauls are identified as
a separate component and depreciated over the expected period till the next overhaul
expenditure.
Subsequent expenditure related to an item of property, plant and equipment is added to its
book value only if it increases the future economic benefits from the existing asset beyond
its previously assessed standard of performance/life. All other expenses on existing
property, plant and equipment, including day-to-day repair and maintenance expenditure
and cost of replacing parts, are charged to the statement of profit and loss for the period
during which such expenses are incurred.
An asset's carrying amount is written down immediately to its recoverable amount if the
asset's carrying amount is greater than its estimated recoverable amount.
Depreciation on property, plant and equipment is calculated using the straight-line method
(SLM) to allocate their cost, net of their residual values, over their estimated useful lives, as
per the useful life prescribed in Schedule II to the Companies Act, 2013except in case of
property, plant and equipment relating to PVC Cable Division, where depreciation is
provided using the written down value method (WDV).
The assets’ residual values and useful lives are reviewed and adjusted if appropriate, at the
end of each reporting year.
Freehold Land is not depreciated
Leasehold buildings are amortised over the duration of the shorter of the useful life or lease
term.
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.
Any gain or loss arising on the disposal or retirement or de-recognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of
the asset) is recognised in the statement of profit and loss.
Capital work-in-progress represents cost of property, plant and equipment that are not yet
ready for their intended use and are carried at cost determined as aforesaid.
g) Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. Following
initial recognition, intangible assets are carried at cost less accumulated amortization and
accumulated impairment losses, if any. internally generated intangible assets are not
capitalised and the expenditure is recognised in the 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 useful lives are amortised over their useful economic lives 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 to be adjusted prospectively.
The amortisation expense on intangible assets with finite lives is recognised in the statement
of profit and toss.
The Company does not have any intangible assets with indefinite useful life.
Software’s are amortized on a straight-line basis over a period of 4-5 years.
Gains or losses arising from de-recognition 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 toss when the asset is derecognised.
h) Investment property
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 wherevers applicable
borrowing costs. Subsequent expenditure is capitalised to the asset's carrying amount only
when it is probable that future economic benefits associated which the expenditure wilt flow
the Company and the cost of the item can be measured reliably. All other repair and replaced,
the carrying amount of the replaced part is derecognised.
Depreciation On investment properties is calculated using the straight-tine method (SLM) to
allocate their cost, net of their residual values, over their estimated useful lives, as per the
useful fife prescribed in Schedule II to the Companies Act, 2013.
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
assets recognised in the statement of profit and loss 1n the period of de-recognition.
i) Inventories
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and conditions are accounted
for as follows:
• Raw materials, components, stores and spares, packing materials and others: cost
includes cost of purchase and other costs incurred in bringing the inventories to their
present location and condition. Cost is determined on first-in, first-out (FIFO) basis.
• Work in progress: cost includes cost of direct materials and labour and estimated
overheads up to the stage of completion. Cost is determined on first-in, first-out
(FIFO) basis.
• Finished goods: cost includes cost of direct materials, labour, cost of manufacturing,
cost of conversion and other costs incurred in finishing the goods. Cost is determined
on first- in, first-out (FIFO) basis.
• Traded goods: cost includes cost of purchase and other costs incurred in bringing the
inventor1es to their present location and condition. Cost is determined on first-in,
first-out (FIFO)basis.
Scrap is valued at estimated net realizable value.
Net realisable 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.
j) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided
to the chief operating decision maker.
k) 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 or sale are
capitalised as part of the cost of the asset. Borrowing costs consist of interest and other costs
that the Company incurs in connection with the borrowing of funds. Borrowing costs also
include exchange differences to the extent regarded as an adjustment to the borrow.
All other borrowing costs are expensed in the period in which they occur and are recognised
in the statement of profit and loss using the effective interest rate method.
l) Leases
The determination of whether an arrangement is (or contains) a lease is based on the
substance of the arrangement at the inception of the 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 convey a right to use the asset or assets, even if that right is not explicitly
specified in an arrangement.
The Company as a lessee
The Company's lease asset classes primarily consist of leases for Land, Buildings, Plant &
Machinery including vehicles. The Company assesses whether a contract is or contains a
lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the
right to control the use of an identified asset for a period in exchange for consideration. To
assess whether a contract conveys the right to control the use of an identified asset, the
Company assesses whether:
i. the contract involves the use of an identified asset.
ii. the Company has substantially all of the economic benefits from use of the asset
through the period of the lease, and
iii. the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognises a right-of-use asset
("ROU”) and a corresponding lease liability for alt tease arrangements in which it is a lessee,
except for leases with a term of twelve months or less (short term teases) and leases of low
value assets. For these short term and leases of low value assets, the Company recognises the
lease payments as an operating expense on a straight-line basis over the term of the lease.
The right-of-use assets are initially recognised at cost, which comprises the initial amount of
the lease liability adjusted for any lease payments made at or prior to the commencement date
of the lease plus any initial direct costs less any lease incentives. They are subsequently
measured at cost less accumulated depreciation and impairment losses, if any. Right-of-use
assets are depreciated from the commencement date on a straight-line basis over the shorter
of the lease term and useful life of the underlying asset.
The lease liability is initially measured at the present value of the future lease payments. The
lease payments are discounted using the interest rate implicit in the lease or, if not readily
determinable, using the incremental borrowing rates. The lease liability is subsequently
remeasured by increasing the carrying amount to reflect interest on the lease liability,
reducing the carrying amount to reflect the lease payments made.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease
payments have been classified as financing cash flows.
The Company as a lessor
Leases under which the Company is a lessor are classified as finance or operating leases.
Lease contracts where all the risks and rewards are substantially transferred to the lessee, the
lease contracts are classified as finance leases. All other leases are classified as operating
leases.
For leases under which the Company is an intermediate lessor, the Company accounts for the
head-lease and the sub-lease as two separate contracts. The sub-lease is further classified
either as a finance’ lease or an operating lease by reference to the ROU asset arising from the
head-lease.
m) Income taxes
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. 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 recognized outside of profit or loss is recognized outside
of profit or loss [either in other comprehensive income (OCI) or in equity]. Current tax items
are recognized 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 appropriation the basis of amounts expected to be paid to the tax authorities.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax
bases 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;
• in respect of taxable temporary differences between the carrying amount and tax bases
of investments in subsidiaries, branches, associates and interests in joint ventures,
when the timing of the reversal of the temporary differences can be controlled by the
Company and it is probable that the temporary differences wil not reverse in the
foreseeable future.
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 profits or loss;
• In respect of deductible temporary differences between the carrying amount and tax
bases of investments in subsidiaries, branches, associates and interests in joint
ventures, deferred tax assets are recognised only to the extent that it is probable that
the temporary differences will reverse in the foreseeable future and taxable profit will
be available against which the temporary differences can be utilised.
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 as at the reporting date.
Current tax and deferred tax relating to items recognised outside profit or toss are recognised
outside profit or loss (either in other comprehensive income or in equity).
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the
same taxation authority and the Company intends to settle its current tax assets and tax
liabilities on a net basis.
n) Employee benefits
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefit’s 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
period and are measured at the amounts expected to be paid when the liabilities are settled.
The liabilities are presented as current employee benefit obligations in the balance sheet.
Other long-term employee benefits obligations
The liabilities for earned leave and sick leave are not expected to be settled wholly within
12 months after the end of the period in which the employees 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 employees 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 to the terms of the related obligation. Re¬
measurements as a result of experience adjustments and changes in actuarial assumptions are
recognised in profit or loss.
The obligations are presented as current liabilities the balance sheet if the entity does not haye
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.
Post employment obligations
The Company operates the following post-employment schemes:
a. Defined benefit plans in the nature of gratuity, and
b. Defined contribution plans such as provident fund.
Gratuity obligations
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity
plans is the present value of the defined benefit obligation at the end of the reporting period
less the fair value of plan assets. The defined benefit obligation is calculated annually by
actuaries using the projected unit credit method.
The present value of the defined benefit obligation denominated in Indian Rupees is
determined by discounting the estimated future cash outflows by reference to market yields at
the end of the reporting period on government bonds that have terms approximating to the
terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the
defined benefit obligation and the fair value of plan assets. This cost is included in employee
benefits expense in the statement of profit and loss.
Re-measurement gains and losses arising from experience adjustments and changes in
actuarial assumptions are recognised in the period in which they occur, directly in other
comprehensive income. They are included in retained earnings in the statement of changes in
equity and in the balance sheet.
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.
Defined contribution plans
The Company pays provident fund contributions to publicly administered provident funds as
per local regulations. The Company has no further payment obligations once the
contributions have been paid. The contributions are accounted for as defined contribution
plans and the contributions are recognised as employee benefits expense when they are due.
o) Exceptional Items
Exceptional items are those items that management considers, by virtue of their size or
incidence, should be disclosed separately to ensure that the financial information allows an
understanding of the underlying performance of the business in the year, so as to facilitate
comparison which prior periods. Such items are material by nature or amount to the year's
result and require separate disclosure in accordance with Ind AS.
p) Impairment of non-financial assets
Goodwill and intangible assets that have an indefinite useful life are not subject to
amortisation and are tested annually for impairment, or more frequently if events or changes
in circumstances indicate that they might be impaired. Other assets are tested for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's
fair value less costs of disposal and value in use. For the purposes of assessing impairment,
assets are grouped at the lowest level for which there are separately
identifiable cash inflows which are largely independent of the cash inflows from other assets
or groups of assets (cash-generating units). Non-financial assets other than goodwill that
suffered impairment are reviewed for possible reversal of the impairment at the end of each
reporting period.
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