1B. Material Accounting Policies:
The material accounting policies applied in the
preparation of these financial statements are set out
below. These policies have been consistently applied
to all the years presented, unless otherwise stated.
(a) Basis of Preparation
i. Compliance with Ind AS
The financial statements comply in all material
aspects with Indian Accounting Standards (Ind AS)
notified under Section 133 of the Companies Act, 2013
(the Act) and Companies (Indian Accounting
Standards) Rules, 2015 (as amended from time to
time) and presentation requirements of Division II of
Schedule III to Companies Act, 2013, (Ind AS compliant
Schedule III), as applicable to financial statements.
The financial statements are presented in 5 and all
values are rounded to the nearest lakhs (5 00,000),
except when otherwise indicated.
ii. Historical Cost Convention
These financial statements have been prepared
on a historical cost basis, except as disclosed in
the accounting policies below:
• Certain financial assets and liabilities are
measured at fair value;
• Defined Benefit Plans - plan assets measured
at fair value; and
• Share-Based payments.
iii. Current Versus 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 realized or intended to be sold
or consumed in normal operating cycle
• Held primarily for the purpose of trading
• Expected to be realized 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 primarily 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.
Deferred tax assets and liabilities are classified as
non-current assets and liabilities.
Based on the nature of products 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 /
non-current classification of assets and liabilities.
(b) Foreign Currency Translation
i. Functional and Presentation Currency
Items included in the financial statements of the
Company are measured using the currency of the
primary economic environment in which the
entity operates ('the functional currency'). The
financial statements are presented in Indian
currency (INR), which is the Company's functional
and presentation currency.
ii. Transactions and Balances
Foreign currency transactions are translated into
the functional currency using the exchange rates
at the dates of the transactions. Realized gains
and losses on settlement of foreign currency
transactions are recognized in the Statement of
Profit and Loss. Foreign currency denominated
monetary assets and liabilities at the year-end are
translated at the year-end exchange rates, and
the resultant exchange difference is recognized in
the Statement of Profit and Loss. Non-monetary
items are carried at cost.
(c) Property, Plant and Equipment
Property, plant and equipment (except Capital
Work in Progress) are stated at historical cost less
depreciation and impairment loss, if any. Historical
cost includes expenditure that is directly
attributable to the acquisition of the items
including capital spares which are identified as a
part of property, plant and equipment.
Subsequent costs are included in the asset's
carrying amount or recognized 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 derecognized when replaced. All
other repairs and maintenance are charged to the
Statement of Profit and Loss during the reporting
period in which they are incurred.
An item of property, plant and equipment and any
significant part initially recognized is derecognized
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 derecognized.
Capital Work-In-Progress
Cost and direct expenses incurred for construction of
assets or assets to be acquired, which are not ready
to use in the manner intended by the management
are disclosed under Capital Work- In-Progress.
Depreciation Methods, Estimated useful Lives and
Residual Value
The useful lives of the assets are based on technical
estimates approved by the Management, and are
lower than or same as the useful lives prescribed
under schedule II to the Companies Act, 2013 in order
to reflect the period over which depreciable assets
are expected to be used by the Company.
Depreciation is calculated on a pro-rata basis on the
straight line method so as to write-down the cost of
property, plant and equipment to its residual value
systematically over its estimated useful life based on
useful life of the assets as prescribed under Part C of
Schedule II to the Companies Act, 2013 except in
case of following assets, wherein based on internal
assessment and technical evaluation, a different
useful life has been determined.
Estimated useful lives, residual values and depreciation
methods are reviewed annually, taking into account
commercial and technological obsolescence as well as
normal wear and tear and adjusted prospectively, if
appropriate.
(d) Leases
As a Lessee
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 of time 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 commencement date of a lease, the
Company recognizes a liability to make lease
payments (i.e., the lease liability) and an asset
representing the right to use the underlying asset
during the lease term (i.e., the right-of-use asset).
Right-of-use assets are measured at cost, less
any accumulated depreciation, impairment losses
and adjusted for any re-measurement of lease
liabilities. The cost of right-of-use assets includes
the amount of lease liabilities recognized and lease
payments made at or before the commencement
date. Right-of-use assets are depreciated on a
straight-line basis over the shorter of the lease
term and the estimated useful lives of the assets. If
ownership of the leased asset transfers to the
Company at the end of the lease term or the cost
reflects the exercise of a purchase option,
depreciation is calculated using the estimated
useful life of the asset.
The Company recognizes lease liabilities measured
at the present value of lease payments to be
made over the lease term. The lease payments
also include the exercise price of a purchase
option reasonably certain to be exercised by the
Company. In calculating the present value of lease
payments, the Company uses its incremental
borrowing rate at the lease commencement date.
After the commencement date, the amount of
lease liabilities is increased to reflect the accretion
of interest and reduced for the lease payments
made. In addition, the carrying amount of lease
liabilities is re-measured if there is a modification
or a change in the lease term. The Company
separately recognizes the interest expense on the
lease liability as finance cost and the depreciation
expense on the right-of-use asset.
The Company accounts for a lease modification
as a separate lease when both of the following
conditions are met:
• The modification increases the scope of the
lease by adding the right to use one or more
underlying assets.
• The consideration for the lease increases
commensurate with the standalone price for
the increase in scope and any adjustments
to that stand-alone price reflects the
circumstances of the particular contract.
For a lease modification that fully or partially
decreases the scope of the lease the Company
decreases the carrying amount of the right-of-use
asset to reflect partial or full termination of the
lease. Any difference between those adjustments
is recognized in profit or loss at the effective date
of the modification.
The Company has elected to use the exemptions
proposed by the standard on lease contracts for
which the lease terms ends within 12 months as of
the date of initial application, and lease contracts
for which the underlying asset is of low value
which is considered to be 5 3.5 Lakhs.
As a Lessor
Leases in which the Company does not transfer
substantially all the risks and rewards incidental to
ownership of an asset are classified as operating
leases. Rental income arising is accounted for on
a straight-line basis over the lease terms. Initial
direct costs incurred in negotiating and arranging
an operating lease are added to the carrying
amount of the leased asset and recognized over
the lease term on the same basis as rental
income. Contingent rents are recognized as
revenue in the period in which they are earned.
(e) 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 where applicable borrowing
costs. Subsequent expenditure is capitalized 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.
Investment properties are depreciated using the
straight-line method over their estimated useful
lives which are 40 years.
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.
Investment properties are derecognized 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 recognized
in profit or loss in the period of de-recognition.
(f) Intangible Assets
Intangible Assets are stated at acquisition cost,
net of accumulated amortization and accumulated
impairment loss, if any.
Amortization
Intangible assets comprise Goodwill, Trademarks,
Copyright and Technical Know-how. Intangible
assets (other than Goodwill) are amortized over
the useful life of assets, not exceeding 10 years.
The estimated useful life and amortization
methods are reviewed at the end of each annual
reporting period, with the effect of any changes
in the estimate being accounted for on a
prospective basis.
Expenditure on research is recognized as an
expense when it is incurred. Development costs of
products are also charged to the Statement of
Profit and Loss unless all the criteria for
capitalization have been met by the Company.
Development expenditures on an individual project
are recognized as an intangible asset when the
Company can demonstrate:
• The technical feasibility of completing the
intangible asset so that the asset will be
available for use or sale
• Its intention to complete and its ability and
intention to use or sell the asset
• How the asset will generate future economic
benefits
• The availability of resources to complete the
asset
• The ability to measure reliably the expenditure
during development
(g) Impairment of Nonfi inancial Assets
At each balance sheet date, the Company reviews
whether there is an indication that an asset may be
impaired. If any indication exists, the company
estimates the recoverable amount of its assets
other than inventory and deferred tax. An
impairment loss is recognized when the carrying
amount of an asset exceeds its recoverable
amount. The recoverable amount is determined as
higher of the asset's fair value less costs of disposal
and value in use. For the purpose of assessing
impairment, assets are grouped at the levels for
which there are separately identifiable cash flows
(cash generating unit). Assessment is done at each
Balance Sheet date as to whether there is any
indication that an impairment loss recognized for an
asset in the prior accounting period may no longer
exist or may have decreased. An impairment loss is
reversed to the extent that the assets carrying
amount does not exceed the carrying amount that
would have been determined if no impairment loss
had previously been recognized.
(h) Inventories
Inventories of raw and packing materials, stores,
work-in-progress, finished goods and stock in trade
are valued at lower of cost or net realizable value.
- Cost is determined using standard cost method
that approximates actual cost.
- Cost of work-in-progress and finished goods
includes materials, labour and manufacturing
overheads and other costs incurred in bringing
the inventories to their present location and
condition.
Spares that do not qualify to be recognized as
Property, Plant and Equipment are included in
stores and spares.
Net realizable 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.
(i) Trade Receivables
Trade receivables are measured at contracted
price and subsequently measured at amortized
cost net of any expected credit losses, if any. The
Company provides for expected credit loss using
simplified approach based on the probability of
defaults which are possible over the lifetime of
assets.
(j) Cash and Cash Equivalents
For the purpose of presentation in the Statement
of cash flows, cash and cash equivalents include
cash in hand, demand deposits with banks and
other short-term highly liquid investments with
original maturities of three months or less that are
readily convertible to known amounts of cash
and which are subject to an insignificant risk of
changes in value.
(k) Financial Assets:
i. Initial Recognition and Measurement
All financial assets are recognized initially at fair
value plus transaction costs that are attributable to
the acquisition of the financial asset, except in the
case of financial assets not recorded at fair value
through profit or loss. Transaction costs of financial
assets carried at fair value through profit or loss are
expensed through the Statement of Profit and Loss.
Subsequent Measurement
For purposes of subsequent measurement, the
Company classifies its financial assets in the
following measurement categories:
• those to be measured subsequently at fair
value (either through other comprehensive
income, or through profit or loss), and
• those measured at amortized cost.
The classification depends on the entity's
business model for managing the financial assets
and the contractual terms of the cash flows. For
assets measured at fair value, gains and losses
will either be recorded in the Statement of Profit
and Loss or other comprehensive income. For
investments in debt instruments, this will depend
on the business model in which the investment is
held. For investments in equity instruments, this
will depend on whether the Company has made
an irrevocable election at the time of initial
recognition to account for the equity investment
at fair value through other comprehensive income.
Amortized Cost
Assets that are held for collection of contractual
cash flows where those cash flows represent
solely payments of principal and interest are
measured at amortized cost. A gain or loss on a
debt investment that is subsequently measured at
amortized cost is recognized in Statement of
Profit and Loss when the asset is derecognized or
impaired. Interest income from these financial
assets is included in finance income using the
effective interest rate method.
Fair Value through Other Comprehensive
Income (FVOCI)
Assets that are held for collection of contractual
cash flows and for selling the financial assets,
where the assets cash flows represent solely
payments of principal and interest, are measured
at fair value through other comprehensive income
(FVOCI). Movements in the carrying amount are
taken through OCI, except for the recognition of
impairment gains or losses, interest revenue and
foreign exchange gains and losses which are
recognized in the Statement of Profit and Loss.
When the financial asset is derecognized, the
cumulative gain or loss previously recognized in
OCI is reclassified from equity to Statement of
Profit and Loss. Interest income from these
financial assets is included in other income using
the effective interest rate method.
Fair Value Through Profit or Loss (FVTPL)
Assets that do not meet the criteria for amortized
cost or FVOCI are measured at fair value through
profit or loss. A gain or loss on a debt investment
that is subsequently measured at fair value
through Profit or Loss is recognized in the
Statement of Profit and Loss in the period in which
it arises. Interest income from these financial
assets is included in other income.
ii. Derecognition
A financial asset is derecognized only when:
• the rights to receive cash flows from the
financial asset have expired, or
• the Company has transferred its rights to
receive cash flows from the financial asset or
has assumed an obligation to pay the received
cash flows to one or more recipient
Where the entity has transferred an asset, the
Company evaluates whether it has transferred
substantially all risks and rewards of ownership of
the financial asset. In such cases, the financial
asset is derecognized. Where the entity has not
transferred substantially all risks and rewards of
ownership of the financial asset, the financial
asset is not derecognized.
Where the entity has neither transferred a
financial asset nor retains substantially all risks and
rewards of ownership of the financial asset, the
financial asset is derecognized if the company has
not retained control of the financial asset. Where
the Company retains control of the financial asset,
the asset is continued to be recognized to the
extent of continuing involvement in the financial
asset. Expected credit losses are recognized for all
financial assets subsequent to initial recognition.
(l) Financial Liabilities
i. Classification as Liability or Equity
Financial liabilities and equity instruments issued
by the Company are classified according to the
substance of the contractual arrangements
entered into and the definitions of a financial
liability and an equity instrument.
ii. Initial Recognition and Measurement
Financial liabilities are recognized when the
Company becomes a party to the contractual
provisions of the instrument. Financial liabilities
are initially measured at the amortized cost
unless at initial recognition, they are classified as
fair value through profit or loss.
iii. Subsequent Measurement
Financial liabilities are subsequently measured at
amortized cost using the effective interest rate
method. Financial liabilities carried at fair value
through profit or loss is measured at fair value
with all changes in fair value recognized in the
Statement of Profit and Loss.
iv. Derecognition
A financial liability is derecognized when the
obligation specified in the contract is discharged,
cancelled or expires.
Trade and Other Payables
These amounts represent liabilities for goods and
services provided to the Company prior to the
end of financial year which are unpaid. The
amounts are usually unsecured. Trade and other
payables are presented as current liabilities
unless payment is not due within twelve months
after the reporting period. They are recognized
initially at their fair value.
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