2. Material Accounting Policies
The material accounting policies applied by the Company in the preparation of its standalone financial statements are
listed below. Such accounting policies have been applied consistently to all the periods presented in these financial
statements, unless otherwise indicated.
I. Basis of preparation
The Standalone financial statements are presented in Indian Rupees and all values are rounded to the nearest lakhs,
exceptwhen stated otherwise.
The Standalone financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS)
notifiedunder the Companies (Indian Accounting Standards) Rules, 2015 (as amended).
The Standalone financial statements have been prepared on a historical cost basis, except for the following assets and
liabilities which have been measured at fair value refer note no.36
Current / Non-current Classification:
Company has determined current and non-current classification of its assets and liabilities in the financial statements
as per the requirement of Ind AS 1 - 'Presentation of Financial Statements', wherever applicable. Based on its
assessment, the Company has ascertained its normal operating cycle as 12 months for the purpose of current and
non-current classification of its assets and liabilities.
II. Summary of Material Accounting policy
a) Revenue Recognition
i. Sale of Goods
Revenue is recognized upon satisfaction of performance obligation at the amount of transaction price allocated
to the performance obligation. The transaction price of goods sold and services rendered is net of variable
consideration on account of various discounts, rebates or other similar items in a contract when they are
highly probable to be provided. Revenue excludes any amount collected as taxes on behalf of statutory
authorities.
The Company recognizes revenue generally at the point in time when the products are delivered to customer or
when it is delivered to a carrier for export sale, which is when the control over product is transferred to the
customer.
ii. Interest Income
Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to
the Company 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.
Free hold land is carried at historical cost, all Property, plant and equipment are stated at historical cost less
recoverable tax and accumulated depreciation. Historical cost includes expenditure that is directly attributable to the
acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised 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. All other repairs and maintenance are charged to profit or loss during the reporting
period in which they are incurred.
Property, plant, and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as
"Capitalwork-in-progress".
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is
classifiedas capital advances under "Other Non-Current Assets".
Depreciation methods, estimated useful lives and residual value:
Depreciation is calculated using the written down value method to allocate their cost, net of their residual values, over
their estimated useful lives.
The useful lives have been taken as prescribed in Schedule II to the Companies Act, 2013.
The residual value is not more than 5% of the original cost of the asset. The assets' residual values and useful lives are
reviewed, and adjusted if appropriate, at the end of each reporting period.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in
profit orloss.
C) Investment in Subsidiary
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any
indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset's
recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's (CGU) fair
value less costs of disposal and its value in use. [When it is not possible to estimate the recoverable amount of an
individual asset, the Company estimates the recoverable amount of the CGU to which the asset belongs]. When the
carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is
written down to its recoverable amount.
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.
D) Financial Assets & Liabilities
i) Financial Assets
Initial recognition and measurement
All financial assets are recognized initially at fair value, plus in the case of financial assets not recorded at fair
value through profit or loss (FVTPL), transaction costs that are attributable to the acquisition of the financial
assets. However, trade receivables that do not contain a significant financing component are measured at
transaction prices.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in three categories:
- Debt instruments at amortised cost
- Debt / equity instruments at fair value through other comprehensive income (FVTOCI)
- Debt instruments, derivatives, and equity instruments at fair value through profit or loss (FVTPL)
Impairment of financial assets
The Company assesses on a forward-looking basis the expected credit loss associated with its assets carried at
amortized cost and FVOCI debt instruments. The impairment methodology applied depends on whether there
has been a significant increase in credit risk.
ii) Financial Liabilities
Initial recognition and measurement
All financial liabilities are recognised initially at fair value.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
- Financial liabilities at fair value through profit or loss
Financial liabilities are measured at fair value through profit or loss.
- Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised
cost using the Effective Interest Rate (EIR) method. Gains and losses are recognised in profit or loss when
the liabilitiesare de-recognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or
costs that are material and an integral part of the EIR. The EIR amortisation is included as finance costs in
the statement of profit and loss.
E) Inventories
Raw materials, Consumables Stores:
Raw materials /Consumables Stores are valued at cost after providing for cost of obsolescence / depletion.
Cost is determined on weighted average basis.
Costs includes, expenses incurred in bringing each product to its present location and condition.
Stock in Trade:
Inventories are valued at the lower of cost and net realisable value. Cost is determined on weighted average
basis.Costs includes, expenses incurred in bringing each product to its present location and condition.
Finished goods and work in progress
Inventories are valued at the lower of cost and net realisable value.
Cost includes cost of direct materials and labour and a proportion of manufacturing overheads based on the
normal operating capacity but excluding borrowing costs. Cost of direct material is determined on weighted
average basis.
For the purpose of valuation of Stock in Trade, Finished Goods and Work in Progress, Net realisable value
means the estimated selling price in the ordinary course of business, less estimated costs of completion and the
estimated costsnecessary to make the sale.
F) Trade Receivable
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of
business.
G) Cash & Cash equivalent
Cash and cash equivalent in the balance sheet comprise cash on hand, bank balances and short-term deposits in
banks.
H) 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 recognised outside profit or loss is recognised outside profit or loss (either in
other comprehensive income or in equity). Current tax items are recognised 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 appropriate.
Deferred Tax
Deferred tax is provided using the Balance sheet approach 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.
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 utilized.
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
utilized. 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 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.
I) Borrowing costs
General and specific borrowing costs directly attributable to the acquisition, construction or production of
qualifying assets are added to the cost of those assets, until such time as the assets is substantially ready for
their intended use. The Company considers a period of twelve months or more as a substantial period. Qualifying
assets are assets that necessarily take a substantial period to get ready for their intended use.
Transaction costs in respect of long-term borrowings are amortised over the tenor of respective loans using
effective interest method.
All other borrowing costs are expensed in the period in which they are incurred.
J) Trade and other payable
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 unsecured. Trade and other payables are presented as current liabilities
unless payment is not due within 12 months after the reporting period.
K) Employee Benefit
Short Term and other long-term Employee Benefits
The contractual amount of short-term employee benefits expected to be paid in exchange for the services
rendered by employees are recognised as an expense during the period when the employees render the services.
Post-Employment BenefitsDefined Contribution Plans
The Company has a defined contribution plan is a post-employment benefit plan under which the Company will pay
specified contributions to Provident Fund and Pension Scheme authorities whenever company will hit threshold limit
for provident fund limit.
Defined Benefit Plans
The Company plans to pay gratuity to the employees whoever has completed specified period of service with the
Company as per the Payment of Gratuity Act, 1972, at the time of resignation/retirement from the employment.
whenever company will hit threshold limit for gratuity. Annual gratuity provision will made based on an actuarial
valuation on hitting threshold limit.
The gratuity liability amount is contributed to the approved gratuity fund formed exclusively for gratuity payment to
the employees. The liability in respect of gratuity and other post-employment benefits is calculated using the Projected
Unit Credit Method and spread over the period during which the benefit is expected to be derived from employees'
services.
Re-measurement of defined benefit plans in respect of post-employment is charged to the Other Comprehensive Income.
L) Earnings per Share Basic earnings per share
Basic earnings per share is calculated by dividing:
- the profit attributable to owners of the Company
- by the weighted average number of equity shares outstanding during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account:
- the after-income tax effect of interest and other financing costs associated with dilutive potential equity
- the weighted average number of additional equity shares that would have been outstanding assuming the
conversionof all dilutive potential equity shares.
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