2. SIGNIFICANT ACCOUNTING POLICIES
2.1. Property, plant and equipment
Tangible Assets:
Property, plant and equipment are stated at cost of acquisition or
construction less accumulated depreciation and any accumulated impairment
losses. The cost of fixed assets comprises of its purchase price, non¬
refundable taxes & levies, freight and other incidental expenses related to
the acquisition and installation of the respective assets. Borrowing cost
attributable to financing of acquisition or construction of the qualifying fixed
assets is capitalized to respective assets when the time taken to put the
assets to use is substantial.
When major items of property, plant and equipment have different useful
lives, they are accounted for as separate items of property, plant and
equipment. The cost of replacement of any property, plant and equipment is
recognized in the carrying amount of the item if it is probable that the future
economic benefit associated with the item will flow to the Company and its
cost can be measured reliably.
The Estimated Useful Lives of assets are in accordance with the Schedule II
of the Companies Act, 2013.
2.2. Financial Instruments
2.2.1. Cash and cash equivalents
Cash and cash equivalents consists of cash on hand, short demand deposits
and highly liquid investments, that are readily convertible into known
amounts of cash and which are subject to an insignificant risk of change in
value. Short term means investments with original maturities / holding
period of three months or less from the date of investments. Bank
overdrafts that are repayable on demand and form an integral part of the
Company's cash management are included as a component of cash and cash
equivalent for the purpose of statement of cash flow.
2.2.2. Trade Receivables
Trade receivables are amounts due from customers for sale of goods or
services performed in the ordinary course of business. Trade receivables
are initially recognized at its transaction price which is considered to be
its fair value and are classified as current assets as it is expected to be
received within the normal operating cycle of the business.
2.2.3. Borrowings
Borrowings are initially recorded at fair value and subsequently measured
at amortized costs using effective interest method. Transaction costs are
charged to statement of profit and loss as financial expenses over the term
of borrowing.
2.2.4. Trade payables
Trade payables are amounts due to vendors for purchase of goods or
services acquired in the ordinary course of business and are classified as
current liabilities to the extent it is expected to be paid within the normal
operating cycle of the business.
2.2.5. Other financial assets and liabilities
Other non-derivative financial instruments are initially recognized at fair
value and subsequently measured at amortized costs using the effective
interest method.
2.3. Inventories
Items of inventories are measured at lower of cost and net realisable
value after providing for obsolescence, if any except inventory of shares
and securities held for trading are valued at fair value through P&L.
Cost of inventories comprises of cost of purchase, cost of conversion
and other costs including manufacturing overheads incurred in bringing
them to their respective present location and condition. Cost of raw
materials, process, stores and spares, packing materials, trading and
other products are determined on weighted average basis.
2.4. Impairment of Assets
Financial assets
At each balance sheet date, the Company assesses whether a financial
asset is to be impaired. Ind AS 109 requires expected credit losses to be
measured through loss allowance. The Company measures the loss
allowance for financial assets at an amount equal to lifetime expected
credit losses if the credit risk on that financial asset has increased
significantly since initial recognition. If the credit risk on a financial asset
has not increased significantly since initial recognition, the Company
measures the loss allowance for financial assets at an amount equal to 12-
month expected credit losses. The Company uses both forward-looking and
historical information to determine whether a significant increase in
credit risk has occurred.
Non-financial assets
Tangible and intangible assets
Property, plant and equipment and intangible assets with finite life are
evaluated for recoverability whenever there is any indication that their
carrying amounts may not be recoverable. If any such indication exists, the
recoverable amount (i.e. 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 generating unit (CGU) to which the asset belongs.
If the recoverable amount of an asset (or CGU) is estimated to be less than
its carrying amount, the carrying amount of the asset (or CGU) is reduced
to its recoverable amount. An impairment loss is recognized in the
statement of profit and loss to such extent.
2.5. Employee Benefit
Short term employee benefits
Short term benefits payable before twelve months after the end of the
reporting period in which the employees have rendered service are
accounted as expense in statement of profit and loss.
Long term employee benefits
Defined Contribution Plan
A defined contribution plan is a post-employment benefit plan under
which the Company pays specified contributions for provident fund and
pension as per the provisions of the Provident Fund Act, 1952 to the
government. The Company's contribution is recognised as an expense in
the Profit and Loss Statement during the period in which the employee
renders the related service. The company's obligation is limited to the
amounts contributed by it.
Compensated absences and earned leaves
The company offers a short term benefit in the form of encashment of
unveiled accumulated compensated absence above certain limit for all of
its employees and same is being provided for in the books at actual cost.
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