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 accumulate
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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